-----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, AVGkk7ArRs3y6kDIvSUGPliN5L3bK3TUR/Hp7S2unPW6t9Erg+/rpP05LkJpU5DY laHxhL1notDoGnNz3G6qFg== 0001010412-06-000108.txt : 20060330 0001010412-06-000108.hdr.sgml : 20060330 20060330144206 ACCESSION NUMBER: 0001010412-06-000108 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 FILED AS OF DATE: 20060330 DATE AS OF CHANGE: 20060330 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: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19470 FILM NUMBER: 06722580 BUSINESS ADDRESS: STREET 1: 1517 NORTH 260 EAST STREET 2: * CITY: NORTH LOGAN STATE: UT ZIP: 84321 BUSINESS PHONE: 435-755-0188 MAIL ADDRESS: STREET 1: 1517 NORTH 260 EAST CITY: NORTH LOGAN STATE: UT ZIP: 84321 FORMER COMPANY: FORMER CONFORMED NAME: DIGITRAN SYSTEMS INC /DE DATE OF NAME CHANGE: 19930328 10KSB 1 k05.txt ANNUAL REPORT ON FORM 10KSB FOR THE YEAR ENDED DECEMBER 31, 2005 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________ FORM 10-KSB [x] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2005 [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file Number: 0-19470 TGFIN HOLDINGS, INC. (Name of small business issuer in its charter) Delaware 13-4069968 (State or other jurisdiction I.R.S. Employer of incorporation or organization) Identification Number) 1517 North 260 East North Logan, UT 84341 (Address of principal executive offices) (Zip Code) Issuer's telephone number: (435) 755-0188 Securities registered under Section 12(b) of the Exchange Act: Name of each exchange on Title of each class which registered Common Stock $.01 Par value OTC Bulletin Board Series 1 Class A 8% Cumulative Convertible Preferred Stock None Securities registered under Section 12(g) of the Exchange Act: None Check whether the issuer is not required to file report pursuant to Section 13 or 15(d) of the Exchange Act. [ ] Check whether the Issuer (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 [ ] Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10- KSB or any amendment to this Form 10-KSB. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- State Issuer's revenues for its most recent fiscal year: 2005 - $-0-. State the aggregate market value of the voting and non voting common equity held by non-affiliates of the Registrant computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within the past 60 days. The aggregate market value of the Registrant's voting stock held by non-affiliates of the Registrant was approximately $1,376,302 at December 31, 2005, computed at the closing quotation for the Registrant's common stock of $0.07 as of December 31, 2005. State the number of shares outstanding of each of the Issuer's classes of common equity as of the latest practicable date: at March 17, 2006 there were 22,220,845 shares of the Registrant's Common Stock and 50,500 shares of Series 1 Class A 8% Cumulative Preferred Stock outstanding. Documents Incorporated by Reference: None Transitional Small Business Disclosure Format (Check one):Yes[ ]No [X] PART I ITEM 1 DESCRIPTION OF BUSINESS BUSINESS DEVELOPMENT Form and Year of Organization The Registrant consists of TGFIN Holdings, Inc. (non-operating parent corporation) and its sole and wholly-owned operating subsidiary, TradinGear.Com, Incorporated (combined, the "Company"). TGFIN Holdings, Inc. was incorporated under the laws of Delaware in March 1985 as Mark, Inc. From March 1992 to September 12, 2002 TGFIN Holdings, Inc. was known as Digitran Systems, Incorporated ("DSI"). On September 12, 2002 DSI acquired TradinGear.com, Incorporated in a reverse merger whereby the shareholders of TradinGear.com, Incorporated acquired control of DSI and (effective September 13, 2002) changed its name to TGFIN Holdings, Inc.; at which time, TradinGear.com, Incorporated (incorporated under the laws of the State of Delaware on July 7, 1999) became the operating subsidiary of TGFIN Holdings, Inc. TGFIN Holdings, Inc. sold the assets of Tradingear.com Incorporated effective March 31, 2003. BUSINESS OF TRADINGEAR.COM, INCORPORATED: These policies were applicable to the TradinGear.com business until its operations were discontinued on March 31, 2003 and are maintained until such time as TGFIN Holdings, Inc. merges with another operating entity. Principal products or services and their markets The Company's software technology was designed to offer its customers an on-line electronic system for securities trading. The Company originally targeted three markets within the financial services industry and developed core products for each: broker dealers, fund managers and exchanges. The broker dealer and fund manager markets were targeted first due to their comparatively more desirable market characteristics (i.e. larger market size, more potential customers, etc.) Nevertheless, market response by the exchange market ultimately encouraged management to favor advanced development of exchange market products. Marketing and Distribution methods Located in the financial district in New York City, NY the Company relied upon direct contact with its potential customers, and referrals generated from those contacts, for additional potential customers. The Company's products were always delivered directly and were not offered through distributors or sales representatives. 2 Competitive business conditions The Company competed in a market dominated by a few large, established competitors. These competitors enjoyed the advantages of long-standing relationships; legacy integration of, and attachment to, their systems; name recognition and the financial resilience afforded by long-term contracts. The Company tried to counter its competitive disadvantages by delivering products, designed in accordance with customer specifications, more quickly than its competitors. Nevertheless, the Company's lack of financial resources greatly strained its ability to exploit any competitive advantage it may have gained. Patents, Copyrights and Trademarks The Company owned the trademark: "Trade Virtually Anywhere" and owned the rights to its internally-developed proprietary products. Effective March 31, 2003, the Company sold the rights to its exchange trading platform "TGFIN/X". Research and Product Development The company spent no resources on research and project development in 2005 and 2004. Employees As of December 31, 2005 and 2004, the Company had one full-time employee and two part time employees. The Company is not a party to any collective bargaining agreements. REPORTS TO SECURITY HOLDERS The Company files with the SEC an annual report on Form 10-KSB, quarterly reports on Form 10-QSB, and information reports on Form 8-K and other reports as required by law. The investing public may read and copy any materials the company files with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers, such as ourselves, that file electronically with the SEC at (http://www.sec.gov.) 3 ITEM 2 DESCRIPTION OF PROPERTY The company leases approximately 900 square feet of office space at 1517 North 260 East in North Logan, Utah for an annual rate of approximately $8,820. The company has no ownership in real estate or buildings. The company's six month lease expires on April 30, 2006 and requires monthly lease payments of $735. At the end of the lease, the company has the option of renewing for an additional six months or to lease on a month-to-month basis. ITEM 3 LEGAL PROCEEDINGS In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of December 31, 2005 there were no claims asserted or threatened against the Company. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None PART II ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information The Company's common shares trade on the Electronic Bulletin Board of the National Association of Securities Dealers, Inc. under the symbol "TGFN.OB". The following table shows, for the calendar periods indicated, the range of reported high and low bid quotations for those shares. Such prices reflect inter dealer prices, without retail markup, mark down or commission and may not necessarily represent actual transactions. 2005 2004 High Close Low Close High Close Low Close 1st Quarter 1/8 5/64 7/64 1/24 2nd Quarter 1/8 5/64 7/64 5/64 3rd Quarter 7/64 5/64 3/32 1/24 4th Quarter 3/32 5/64 7/48 1/24 4 Shareholders As of December 31, 2005, the Company had 806 record holders of its Common Stock, and 14 record holders of its Series 1, Class A 8% Cumulative Convertible Preferred Stock (the Preferred Stock) as reflected on the books of the Company's transfer agent. Dividends The Company had not paid any dividends on its Common Stock and the Board of Directors of the Company presently intends not to declare dividends, but to pursue a policy of retaining earnings, if any, for use in the Company's operations and to finance expansion of its business. The declaration and payment of dividends in the future on the Common Stock will be determined by the Board of Directors in light of conditions then existing, including the Company's earnings, financial condition, capital requirements and other factors. In addition, as noted below, the Company is in arrears in the payment of dividends on its Preferred Stock. Holders of preferred shares are entitled to cumulative dividends of 8% per annum on the stated value of the stock, designated at $7 per share. Dividends are payable semi-annually on September 15 and March 15. No dividends have been paid since March 15, 1993, resulting in dividends in arrears at December 31, 2005 of approximately $325,220 or $6.44 per share. Dividends are not payable on any other class of stock ranking junior to the preferred stock until the full cumulative dividend requirements of the preferred stock have been satisfied. There are not sufficient preferred shares (left unconverted) to trade publicly and the financial condition of the company has made the probability of dividend payment to preferred shareholders unlikely. Securities authorized for issuance under equity compensation plans. None Description of Securities Common Stock The authorized capital stock of the Company consists of 50,000,000 shares of common stock, par value $.01 per share, of which 22,954,178 were outstanding as of December 31, 2005. Holders of common stock are entitled to one vote per share. Preferred Stock The Series 1 Class A 8% Cumulative Convertible Preferred Stock has a par value of $0.01 per share. As of December 31, 2005 there were 50,500 shares outstanding. The preferred stock carries a liquidation preference equal to its stated value plus any unpaid dividends. Holders of the preferred stock are entitled to one-tenth of a vote for each share of preferred stock held. The Company may, at its option, redeem at any time all shares of the preferred stock or some of them upon notice to each preferred stockholder at a per share price equal to the stated value ($7.00) plus all accrued and unpaid dividends thereon (whether or not declared) to the date fixed for redemption, subject to certain other provisions and requirements. Preferred Shares may be converted into Common Shares on a one share of Preferred Stock for two shares of Common Stock basis. ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto. See "ITEM 7 FINANCIAL STATEMENTS". 5 Management's Discussion and Analysis: The following discussion should be read in conjunction with the consolidated historical financial statements of the Company and related notes thereto included elsewhere in this Form 10-KSB for the year ended December 31, 2005. This discussion contains forward-looking statements regarding the business and industry of the Company within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of the Company and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward- looking statements. The information set forth and discussed below for the years ended December 31, 2005 and December 31, 2004 was derived from the consolidated financial statements included elsewhere herein. 2005 VERSUS 2004: Operating costs for the year ended December 31, 2005 of $542,670 increased $63,130, or 11.6%, over those of the year ended December 31, 2004 of $479,540. This net difference was due primarily to the following net differences in the year ended December 31, 2005 over corresponding balances for the year ended December 31, 2004: (1) A one-time payment of $115,000 in settlement of a lawsuit. The company received 883,333 shares in settlement of a counter suit but since settlement of the counter suit was in the company's shares, no income or loss was recognized; (2) Decline in Legal Fees of $82,600 to $48,100 for a decrease of $34,500 or 60%, due to settlement of the lawsuit and counter suit; and (3) Decline in Insurance expense from $61,500 to $42,400 for a decrease of 31%, due to the settlement of the lawsuit. In addition, Interest income increased from $21,996 to $33,928 for an increase of $11,933 or 54%, over the previous year due to increased interest rates. 6 Liquidity and Capital Resources: At its current level of operations, the Company has more than adequate liquidity and capital resources for the next fiscal year. There were no capital expenditures in 2004 and none are planned for 2005 as long as the Company continues at its current level of operations. Capital expenditures could be made in conjunction with a business combination or investment. CURRENT PLAN OF OPERATIONS Management's Plans are to acquire, merge or otherwise combine with an operating company. Management is currently seeking an entity with which to affiliate. The Company is free to seek alternative businesses in its existing or other industries. Management's main objective is to seek to increase shareholder value. All viable alternatives will be evaluated, including, but not limited to: investments, mergers, purchases, or the offering of Company securities, etc. Alternatives that provide existing shareholders with the greatest potential benefit will be favored. As of the date of this report, management had carefully evaluated several potential affiliation candidates. To date, no formal or informal agreement has been reached with respect to any potential candidate, although some evaluations are currently still in progress. Until a suitable business opportunity presents itself, the Company intends for its resources to continue to be invested primarily in interest bearing accounts. Management encourages its shareholders to communicate directly with the Company for its typical investor relations, including address changes and for general corporate information by calling or writing to the Company at its administrative offices or by posting a message to tradingear@comcast.net. Management also encourages shareholders to keep their address current with the Company. 2004 VERSUS 2003: Results from Operations: Development Stage and Continuing operations Operating costs for the year ended December 31, 2004 of $479,540 represented a full year's expense versus operating costs of continuing operations for the year ended December 31, 2003 of $394,795, which represented costs of the last nine months of 2003. Annualized, 2003 operating costs would have been $522,393. Therefore, total 2004 operating costs of $479,540 represent a $45,853, or 9% decline from the previous year's expense rate. This net difference was due primarily to the following net differences in the year ended December 31, 2004 over corresponding balances for the year ended December 31, 2003: (1) Decline in stock issuance costs from $51,000 to $19,500, for a decrease of $31,500 or 61%, due primarily to lower stock prices in 2004; (2) Decline in Auditor's fees from $46,932 to $18,724 for a decrease of $28,208 or 60%, due to simplification of the Company's operations; and (3) Increase in Insurance expense from $52,241 to $61,537 or 15%, due to increases in Director's and Officer's insurance, which have subsequently declined to the 2003 level, for 2005. Results of Operations: Discontinued Operations The sale of Tradingear's Asset on March 31, 2003 was the dominant transactional event for the year ended December 31, 2003. Therefore, the net gain from Asset Sale of $2,841,860 represented an unique event that was not repeated in the year ended December 31, 2004. As well, all revenue, cost of sales, and development cost accounts contributing to the net loss from discontinued operations of $310,606, as of March 31, 2003, represent 100% decreases in 2004. DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS This annual report includes forward looking statements which involve risks and uncertainties. Such statements can be identified by the use of forward-looking language such as "will likely result", "may", "are expected to", "is anticipated", "estimate", "believes", "projected", or similar words. All statements, other than statements of historical fact included in this section, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company's actual results could differ materially from those anticipated in any such forward-looking statements as a result of various risks, including, without limitation, the dependence on a single line of business; the failure to close proposed financing; rapid technological change; inability to attract and retain key personnel; the potential for significant fluctuations in operating results; the loss of a major customer; and the potential volatility of the Company's common stock. ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements are filed as part of this Annual Report on Form 10-KSB. 9 TGFIN HOLDINGS, INC. {A Development Stage Company) CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 AND 2004 10 INDEPENDENT AUDITOR'S REPORTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors TGFIN Holdings, Inc. (A Development Stage Company) North Logan, Utah We have audited the accompanying balance sheet of TGFIN Holdings, Inc.(a Development Stage Company) as of December 31, 2005 and 2004 and the related statements of operations, stockholders' equity and cash flows for the years then ended and for the period from inception of the development stage beginning April 1, 2003 through December 31, 2005. These 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 standards of the Public Company Accounting Oversight Board (United States). 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 used 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 TGFIN Holdings, Inc.(a Development Stage Company) as of December 31, 2005 and 2004 and the results of its operations and its cash flows for the years then ended and for the period from inception of the development stage beginning April 1, 2003 through December 31, 2005 in conformity with United States generally accepted accounting principles. /s/HJ & Associates, LLC HJ & Associates, LLC Salt Lake City, Utah March 23, 2006 11 TGFIN HOLDINGS, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEETS December 31, December 31, 2005 2004 ------------- ------------ ASSETS Current Assets: Cash and cash equivalents $ 1,508,184 $ 2,025,600 Prepaid expenses 23,130 8,389 ----------- ------------ Total Current Assets 1,531,314 2,033,989 Property and equipment, net - Deposits 500 500 ------------ ------------ Total Assets $ 1,531,814 $ 2,034,489 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ - $ 10,498 Accrued expenses - 935 ------------ ------------ Total Current Liabilities - 11,433 ------------ ------------ Stockholders' Equity: Preferred stock ($0.01 par value 8% cumulative preferred stock, 1,000,000 shares authorized, 50,500 shares issued and outstanding as of December 31, 2005 and 2004 respectively) 506 506 Common stock ($.01 par value, 50,000,000 shares authorized, 22,220,845 and 22,904,178 shares issued and outstanding at December 31, 2005, and 2004 respectively) 222,208 229,042 Additional paid-in-capital 3,728,158 3,703,824 Retained deficit prior to development stage (1,077,064) (1,077,064) Retained deficit during development stage (1,341,994) (833,252) ------------ ------------ Total Stockholders' Equity 1,531,814 2,023,056 ------------ ------------ Total Liabilities and Stockholders' Equity $ 1,531,814 $ 2,034,489 ============ ============ These accompanying notes are integral part of these consolidated financial statements. 12 TGFIN HOLDINGS, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS From Inception Of the Development For the Stage on Years Ended April 1, 2003 December 31, To 2005 2004 December 31, 2005 REVENUES $ - $ - $ - ---------- ----------- ---------- OPERATING COSTS 542,670 479,540 1,412,911 ---------- ----------- ---------- OPERATING LOSS (542,670) (479,540) (1,412,911) ---------- ----------- ---------- OTHER INCOME: INTEREST INCOME 33,928 21,996 70,917 ---------- ----------- ---------- TOTAL OTHER INCOME 33,928 21,996 70,917 OPERATING LOSS (508,742) (457,544) ( 1,341,994) ---------- ----------- ---------- ---------- ----------- ---------- NET LOSS $ (508,742) $ (457,544) ($1,341,994) ========== =========== ========== BASIC AND DILUTED LOSS PER SHARE: $ (.02) $ (.02) ========== =========== Weighted Average Number of shares Outstanding 22,602,078 22,678,159 ========== =========== The accompanying notes are an integral part of these consolidated financial statements. 13 TGFIN HOLDINGS, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Preferred Stock Common Stock Par Value $.01 Par Value $.01 ------------------------ ----------------------- Preferred Common Number Stock Number Stock of shares Amount of shares Amount ------------ --------- ------------ --------- Balances April 1, 2003 50,500 $ 506 22,431,168 $ 224,312 Net loss from operations for nine months ended December 31, 2003 - - - - ----------- ---------- ---------- ---------- Balances December 31, 2003 50,500 506 22,431,168 224,312 Common stock issued for accrued liabilities - - 273,010 2,730 Common stock issued for compensation - - 200,000 2,000 Net loss from operations for year ended December 31, 2004 - - - - ----------- ---------- ---------- ---------- Balances December 31, 2004 50,500 506 22,904,178 229,042 Common stock issued for compensation 200,000 2,000 Retirement of shares in settlement of countersuit (883,333) (8,834) Net loss from operations for year ended December 31, 2005 ------------ ---------- ----------- --------- Balances December 31, 2005 50,500 $ 506 22,220,845 $ 222,208 ============ ========== =========== ========= [continued] TGFIN HOLDINGS, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued) Additional Retained Total Paid-in Earnings Stockholders' Capital (Deficit) Equity Balances April 1, 2003 $3,637,824 $(1,077,064) $ 2,785,578 Net loss from operations for nine months ended December 31, 2003 - (375,708) (375,708) ---------- ---------- ---------- Balances December 31, 2003 $3,637,824 $(1,452,772) $ 2,409,870 Common stock issued for accrued liabilities 48,500 - 51,230 Common stock issued for compensation 17,500 - 19,500 Net loss from operations for year ended December 31, 2004 - (457,544) (457,544) ---------- ---------- ---------- Balances December 31, 2004 3,703,824 (1,910,316) 2,023,056 Common stock issued for compensation 15,500 - 17,500 Retirement of shares in settlement of countersuit 8,834 - - Net loss from operations for year ended December - (508,742) (508,742) 31, 2005 ---------- --------- ---------- Balances December 31, 2005 $3,728,158 $(2,419,058) $1,531,814 ========== =========== ========== 14 TGFIN HOLDINGS, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS From Inception Of the Development For the Stage on Years Ended April 1, 2003 December 31, To 2005 2004 December 31, 2005 Cash Flows from Operating activities: Net Income(Loss) $ (508,742) $ (457,544) $ (1,341,994) Adjustments to reconcile Net income loss to net cash used in operating activities: Amortization of deferred compensation - - 13,751 Compensation costs of common stock issued to employees and consultants 17,500 70,730 88,230 Changes in assets and - liabilities Decrease (increase) in: Accounts receivable - 31,250 Prepaid expenses (14,741) 15,614 (8,378) Deposits - - (500) Increase (decrease)in: Accounts payable and accrued expenses (11,433) (72,858) (227,493) ---------- ---------- ---------- Net cash used in Operating Activities (517,416) (444,058) (1,445,134) ---------- ---------- ---------- Net cash provided by investing activities - - - ---------- ---------- ---------- Net cash from financing Activities - - - ---------- ---------- ---------- Net Increase (Decrease) in Cash and Cash Equivalents (517,416) (444,058) (1,445,134) Cash and Cash Equivalents, beginning of year 2,025,600 2,469,658 2,953,318 ---------- ---------- ---------- Cash and Cash Equivalents, end of year 1,508,184 $2,025,600 $1,508,184 ========== ========== ========== These accompanying notes are an integral part of these consolidated financial statements. 15 TGFIN HOLDINGS, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) From Inception Of the Development For the Stage on Years Ended April 1, 2003 December 31, To 2005 2004 December 31, 2005 Cash paid during the period for: Income Taxes $ 2,218 $ 10,391 $ 12,609 ========== ========== ========== Interest $ - $ - $ - ========== ========== ========== Supplemental Disclosures of Non-cash Investing and Financing Activities: Common stock issued For accrued liabilities $ - $ 51,230 $ 51,230 ========== ========== ========== Common stock issued For compensation $ 17,500 $ 19,500 $ 37,000 ========== ========== ========== These accompanying notes are an integral part of these consolidated financial statements. 16 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company The Company consists of TGFIN Holdings, Inc. ("TGFIN") and its sole and wholly-owned operating subsidiary, TradinGear.Com, Incorporated ("TradinGear"), together , the "Company". TGFIN was incorporated under the laws of Delaware in March 1985 (originally as Mark, Inc.). TradinGear.com, Incorporated was incorporated under the laws of the State of Delaware on July 7, 1999. On September 12, 2002, TGFIN, formerly Digitran Systems, Incorporated ("Digitran", a publicly held Delaware corporation) acquired TradinGear, in a reverse merger("merger"), whereby the shareholders of TradinGear acquired control of Digitran. The provisions of the Merger included a post-merger name change in which Digitran became TGFIN Holdings, Inc. Former Digitran common stock shareholders exchanged their shares for TGFIN Holdings, Inc. common stock shares on a 21-to-1 reverse split basis; former Digitran common stock Class B shareholders exchanged their shares for TGFIN Holdings, Inc. common stock shares on a 20-to-1 reverse split basis; and former TradinGear.com, Incorporated common stock shareholders exchanged their shares for TGFIN Holdings, Inc. common stock shares on a 1-to-1 basis. TradinGear.Com, Inc. produced trading software designed for the financial services industry. The Company's software technology was 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. All of the operating activities of Tradingear.com up to the date of sale are presented as discontinued operations. Principles of Consolidation The accompanying financial statements consolidate the accounts of the parent company and its wholly-owned subsidiary. All significant inter-company accounts and transactions have been eliminated in consolidation. The financial statements reflect the consolidation of Digitran's Balance Sheet as of September 12, 2002, the date of the merger. Fair Value of Financial Instruments Carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, trade receivables, accounts payable and other accrued liabilities, approximate fair value because of their short maturities. Revenue Recognition With respect to the business of TradinGear.com, whose operations were discontinued on March 31, 2003, the Company's revenues were derived principally from providing its customers with software applications that enabled them to conduct online trading. The Company's principle revenues were 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 recognized 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 was recognized over the period during which the service was expected to be performed. The software arrangements provided for no right of return or refunds and were fixed or determinable. Deferred revenue represented amounts received on project milestones, which were at the time, uncompleted. 17 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 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 With respect to the business of TradinGear.com, whose operations were discontinued on March 31, 2003, 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 are capitalized. Based upon the Company's product development process, technological feasibility is established upon the completion of a working model. To date, the attainment of technological feasibility and the general release to customers have substantially coincided. Impairment of Long-Lived Assets The Company adopted Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144 SFAS 144 develops one accounting model (based on the model in SFAS 121) for long-lived assets that are to be disposed of by sale, and addresses the principal implementation issues. SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. This requirement eliminates APB30's requirement that discontinued operations be measured at net realizable value or that entities include under discontinued operations in the financial statements amounts for operating losses that have not yet occurred. Additionally, SFAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. All long-lived assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable per SFAS 142 "Goodwill and Other Intangible Assets". Any impairment in value is recognized as an expense in the period when the impairment occurs. 18 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (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. As permitted by FASB Statement 148 "Accounting for Stock Based Compensation - Transition and Disclosure", the Company elected to measure and record compensation cost relative to employee stock option costs in accordance with Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations and make proforma disclosures of net income and earnings per share as if the fair value method of valuing stock options had been applied. Earnings (Loss) Per Share The Company computes earnings or loss per share in accordance with the Financial Accounting Standards Board Statement No. 128 "Earnings Per Share" (SFAS 128) which replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes the dilutive effects of options, warrants and convertible securities and thus is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is similar to the previous fully diluted earnings per share. Diluted earnings per share reflects the potential dilution that could occur if securities or other agreements to issue common stock were exercised or converted into common stock. Diluted earnings per share is computed based upon the weighted average number of common shares and dilutive common equivalent shares outstanding. Common equivalent shares also include the incremental common shares issuable upon the conversion of the Preferred Stock (using the if-converted method). Common equivalent shares are excluded from the calculation if their effect is anti-dilutive. 19 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. Recent Accounting Pronouncements On December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based Payment, which is an amendment to SFAS No. 123, Accounting for Stock-Based Compensation. This new standard eliminates the ability to account for share-based compensation transactions using Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and generally requires such transactions to be accounted for using a fair-value-based method and the resulting cost recognized in our financial statements. This new standard is effective for awards that are granted, modified or settled in cash in interim and annual periods beginning after June 15, 2005. In addition, this new standard will apply to unvested options granted prior to the effective date. We will adopt this new standard effective for the fourth fiscal quarter of 2005, and have not yet determined what impact this standard will have on our financial position or results of operations. 20 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . ." This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Management does not believe the adoption of this Statement will have any immediate material impact on the Company. In December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate Time-sharing Transactions, which amends FASB statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions. This statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. This Statement is effective for financial statements for fiscal years beginning after June 15, 2005. Management believes the adoption of this Statement will have no impact on the financial statements of the Company. In December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary Assets. This Statement addresses the measurement of exchanges of nonmonetary assets. The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. This Statement amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetrary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This Statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. Management believes the adoption of this Statement will have no impact on the financial statements of the Company. The implementation of the provisions of these pronouncements are not expected to have a significant effect on the Company's consolidated financial statement presentation. 21 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Reclassifications Certain reclassifications have been made to the prior year balances to conform to the current year presentation. Concentration of Credit Risk The company maintains several accounts with financial institutions. The accounts are insured by the Federal Deposit Insurance Corporation up to $100,000. Several of the Company's balances exceeded that amount at December 31, 2005 and 2004. 2. CASH AND CASH EQUIVALENTS The Company holds the majority of its cash in interest-bearing instruments with short term (less than one year) maturities at several financial institutions. Management intends to continue this practice until a suitable investment or business combination is identified. The Company considers all highly liquid investments with maturities of three months or less when purchased to be a cash equivalent. 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 in a given year could change. Nevertheless, there was neither an allowance for doubtful accounts nor an accounts receivable balance at either December 31, 2005 or 2004. 4. PROPERTY AND EQUIPMENT Property and equipment, at cost, and their respective useful lives consisted of the following at: Estimated December 31, Useful 2005 2004 Lives Computer equipment $ 10,000 $ 10,000 5 Office equipment - - 5 Leasehold improvements - - 5 -------- --------- 10,000 10,000 Less: Accumulated depreciation (10,000) (10,000) -------- --------- $ - $ - ======== ========= 22 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 5. PROVISION FOR INCOME TAXES Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Net deferred tax assets consist of the following components as of December 31, 2005 and 2004: 2005 2004 Deferred tax assets: NOL Carryover $ 907,793 $ 726,100 Deferred tax liabilities: - - Valuation allowance (907,793) (726,100) ----------- --------- Net deferred tax asset $ - $ - =========== ========= The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rates of 39% to pretax income from continuing operations for the years ended December 31, 2005 and 2004 due to the following: 2005 2004 Book Income $ (198,409) $ (178,403) State Taxes (865) (125) Meals and Entertainment 1,424 - Stock for Services 17,500 7,605 Valuation Allowance 180,350 170,923 ---------- ---------- $ - $ - ========== ========== At December 31, 2005, the Company had net operating loss carry-forwards of approximately $2,000,000 that may be offset against future taxable income from the year 2004 through 2024. No tax benefit has been reported in the December 31, 2005 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years. 6. STOCK OPTIONS AND WARRANTS A summary of the status of the Company's outstanding stock options and warrants (all of which were exercisable) as of December 31, 2005 and 2004 and changes during the years then ended, is presented below: 2005 2004 Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price Outstanding, beginning of year - $ 0.00 905,832 $ 0.46 Granted - - - - Expired/Cancelled - $ 0.00 905,832 0.46 Exercised - - - - ------- ------ ------- -------- Outstanding end of year 0 $ 0.00 0 $ 0.00 ======== ====== ======= ======== Exercisable 0 $ 0.00 0 $ 0.00 ======== ====== ======= ======== 7. COMMITMENTS AND CONTINGENCIES In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of December 31, 2005 there were no other claims asserted or threatened against the Company. Leases The Company leases office equipment and office space under noncancellable operating leases. Commitments under these leases are as follows: December 31, 2005 $ 2,900 Thereafter - -------- $ 2,900 ======== 23 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 7. COMMITMENTS AND CONTINGENCIES (Continued) Employment Agreements The Company entered into an employment agreement with Scott Emerson Lybbert, the Chief Executive Officer of the Company. The agreement was for a term of three years, with one year renewal clauses, commencing April 1, 2003 and provided for a base annual compensation of 100,000 shares of the company's stock, $100,000, and for bonuses as determined by the Company's Board of Directors. The Company had previously entered into an employment agreement with Marni Gaer, Secretary of the Board of Directors and In House counsel for the Company. The agreement was for the term of three years, with one year renewal clauses, commencing October 1, 2002 and provided for a base annual salary of $100,000 and for bonuses as determined by the Company's Board of Directors. No bonuses were authorized or paid in 2005 or 2004. 24 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 8. CAPITAL STOCK Common Stock The authorized common stock of the Company consists of 50,000,000 shares, with a par value of $.01 per share. Holders of common stock are entitled to one vote per share. Preferred Stock The authorized preferred stock of the Company consists of 1,000,000 shares, with a par value of $0.01 per share. Holders of Preferred stock are entitled to one-tenth of a vote for each share held. The Series 1 Class A 8% Cumulative Convertible Preferred Stock has a par value of $0.01 per share. As of December 31, 2005, there were 50,500 shares outstanding. Holders of preferred shares are entitled to cumulative dividends of 8% per annum on the stated value of the stock, designated at $7 per share. Dividends are payable semi-annually on September 15 and March 15. No dividends have been paid since March 15, 1993, resulting in dividends in arrears at December 31, 2005 of approximately $325,220 or $6.44 per share. Dividends are not payable on any other class of stock ranking junior to the preferred stock until the full cumulative dividend requirements of the preferred stock have been satisfied. The preferred stock carries a liquidation preference equal to its stated value plus any unpaid dividends. The Company may, at its option, redeem at any time all shares of the preferred stock or some of them upon notice to each preferred stockholder at a per share price equal to the stated value ($7.00) plus all accrued and unpaid dividends thereon (whether or not declared) to the date fixed for redemption, subject to certain other provisions and requirements. Preferred Shares may be converted into Common Shares on a one share of Preferred Stock for two shares of Common Stock basis. The potential liability for dividends in arrears is contingent upon the Company's declaration of a dividend. The Company has represented that it does not intend to declare a dividend. 25 TGFIN HOLDINGS, INC. (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2005 (Continued) 9. CAPITAL STOCK (continued) On January 1, April 1 and October 1, 2005, the Company issued 200,000 shares of common stock for compensation to Directors and Officers in accordance with the terms of their respective compensation or employment agreements. The shares were valued at the market price at the date of issuance, ranging between $.08 and $.10 per share, resulting in current year compensation expense of $17,500. 26 ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 8A CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's required filings is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-14(c). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and of and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls, subsequent to the date of the completion of the Company's evaluation. PART III ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS Directors and executive officers The names, ages and positions of the directors and executive officers of the Company are as follows: NAME AGE POSITION S. Emerson Lybbert 48 Chairman, President Marni Gaer 39 Director, Secretary Aaron Etra 65 Director The Company's By-laws provide that the Directors of the Company shall serve until the next annual meeting of shareholders and until their successors are duly appointed and qualified. All officers serve at the pleasure of the Board of Directors. During the fiscal year ended December 31, 2005 there was one meeting of the Board of Directors, at which all Board members were in attendance. S. Emerson Lybbert - Chairman of the Board, President Scott Emerson Lybbert, 48 years old, was appointed CEO and Chairman of TGFIN and TradinGear by the Board of Directors on April 29, 2003. From October 1, 2002 to April 2003, he had been a consultant under contract to perform and advise the Company with respect to normal CFO duties. Mr. Lybbert held the same position for the parent company, when it was Digitran Systems, Incorporated ("Digitran") in Logan, Utah from March 1998 to March 1999, during which time he also served as a Director and Corporate Secretary. From March 1999 to March 2001, he served as Chief Financial Officer and Chief Information Officer of Reynolds Corporation, a Division of Selkirk Industries, in Lynnwood Washington. From April 2001 until April 2003, he was a self-employed Independent Consultant. Nevertheless, from April 2000 until the merger with TradinGear.com, Incorporated on September 12, 2002, he had been a consultant to Digitran on a limited, volunteer basis, which included an appointment as Corporate Secretary in April 2001. Mr. Lybbert graduated from the University of Utah with a Bachelors and Masters Degree in Professional Accountancy in 1983 and 1984, respectively. He then joined the Tampa, Florida office of Price Waterhouse until leaving in 1991 as an Audit Manager. Since then, and up until his appointment as CEO of the Company, Mr. Lybbert had been, both a CFO and CIO for nine years; Consultant for three years; and Investor for all twelve. He has a wide range of experience in manufacturing, agriculture, food processing, retail, wholesale distribution, public utilities, software, and investment fund management. Mr. Lybbert has been a shareholder since 1991. Marni Gaer - Director, Secretary and In House Counsel Marni Gaer became a Director, Corporate Secretary, and In House Counsel of TradinGear in October 1999. She was then elected to these positions for TGFIN on September 12, 2002. Since 1992, Ms. Gaer also has been and currently serves as Vice-President and General Counsel for International Printing Corporation, a family business located in Queens, New York, where her responsibilities include union and labor negotiations and general corporate law. Ms. Gaer earned her JD from Brooklyn Law School in 1991 and graduated from the University of Pennsylvania with a Bachelor of Arts in Economics in 1988. Aaron Etra - Director Aaron Etra was appointed Director of TGFIN and TradinGear on April 29, 2003. Aaron Etra has been the President of Investors & Developers Associates, Inc., a developer of commercial, residential and industrial property in the U.S., since 1981 as well as Chairman of Molecular Technology Group, a biotechnology and consumer products and research and development group of companies since 1998. He is also a Director of ABSS Corp. Mr. Etra has been an Attorney and a counselor at law since 1966 specializing in commercial, corporate, tax and personal law. His professional education includes a J.D. in Law at Columbia University in 1965, L.L.M. in Law at New York University in 1966, a B.A. in Political Science and Economics at Yale University in 1962 and he attended the Hague Academy of International Law during the summers of 1964- 65. 27 Involvement in certain legal proceedings by Officers and Directors None Compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended. The Company does not believe that any reporting person failed to file in a timely fashion any report required by section 16(a) of the Securities Act of 1934, as amended, for the fiscal year ended December 31, 2005 Audit committee and Financial Expert The Company does not have a formal Audit committee. All members of the Board of Directors serve the functions of the audit committee, with S. Emerson Lybbert, Chairman, CEO and CFO serving as its Chairman. S. Emerson Lybbert is a "Financial expert" within the meaning of such phrase under applicable regulations of the Securities and Exchange Commission, and currently is the Board's only "financial expert," although all Board members are financially literate. The Board members, functioning also as audit committee members, have: 1) reviewed and discussed the audited financial statements with management, 2) discussed with the independent auditors the matters required to be discussed by SAS 61, 3) received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1, and discussed with the independent accountant the independent accountant's independence, and 4) recommended that the audited financial statements be included in the company's annual report 10-K. The Board members performing the function of the audit committee are, S. Emerson Lybbert, Marni Gaer, and Aaron Etra. Code of Ethics The Board of Directors has not yet adopted a Code of Ethics for its CEO and CFO because it believes the design of, and compliance with, its controls and procedures are sufficiently complete to mitigate such risks at its current level of operations given the company is currently a Development Stage Company with no operations. The Board of Directors maintains all approval authority over significant transactions; use or commitment of company resources; and the incurrence of debt or equity, etc. ITEM 10 EXECUTIVE COMPENSATION The following table sets forth certain specified information concerning the compensation of the Chief Executive Officer of the Company and all other officers (the Named Executive Officers): Annual Compensation ____________________________ (a) (b) (c) (d) (e) Long-term compensation Name and ____(f)________(h)______ Principal Restricted Other Position Year Salary Bonus Other Stock Awards - ----------- ---- -------- ----- ----- ------------------------ S. Emerson Lybbert 2005 $100,000 -0- $ -0- $ 8,000 -0- Chairman 2004 100,000 -0- -0- 10,000 -0- CEO 2003 66,667 -0- 14,344 15,000 -0- Marni Gaer 2005 $100,000 -0- -0- $ 5,000 -0- Director, 2004 100,000 -0- -0- 5,000 -0- Counsel 2003 97,200 -0- -0- 11,500 -0- Aaron Etra 2005 $ -0- -0- -0- $ 2,250 -0- Director 2004 -0- -0- -0- 2,500 -0- 2003 -0- -0- -0- 2,500 -0- Other Items There were no exercises of stock options (or tandem stock Appreciation rights) and freestanding appreciation rights (or unexercised options or stock appreciation rights) made during the fiscal year ended December 31, 2005 by any Named Executive Officer. 28 Options and Stock Issuances AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES (a) (b) (c) (d) (e) Number of Value of Unexercised Unexercised Options/SARs Options/SARs at FY-End (#)at FY-End ($) Shares Acquired Value Exercisable/ Exercisable/ Name on Exercise (#) Realized($) Unexercisable Unexercisable S. Emerson Lybbert (Chairman) 2005 -0- -0- 0/0 $0/0 2004 -0- -0- 0/0 $0/0 Marni Gaer (Director) 2005 -0- -0- 0/0 $0/0 2004 -0- -0- 0/0 $0/0 Aaron Etra (Director) 2005 -0- -0- 0/0 $0/0 2004 -0- -0- 0/0 $0/0 Director Compensation At the discretion of the Board of Directors, an option exercisable for a period of five years to acquire 10,000 shares of Common Stock at a price based on the market value on the first trading day in January could be granted to each currently serving Director. No options were granted to Directors or Officers during the fiscal years ended December 31, 2005 or 2004. The Company's Bylaws as well as Delaware corporate statutes provide for indemnification of and advances of expenses (including legal fees) under certain circumstances for officers and directors who are a party to or threaten to be made a party to any proceeding by reason of the fact that they are a director, officer or employee of the Company, against expenses and amounts paid in settlement of such actions. ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of December 31, 2005 the number of shares of Common Stock, Series 1 Class A 8% Cumulative Convertible Preferred Stock (the "Preferred Stock") owned by each person known to be the beneficial owner of more than five percent of the outstanding shares of the Company's Common Stock and Preferred Stock, by each director and each officer of the Company and by all 29 officers and directors as a group. Unless otherwise indicated, all persons have sole voting and investment power over such shares, subject to community property laws. Voting Name and Number Power and Address of of shares Percent of Beneficial of outstanding outstanding Owner\Identity Common Common of Group (1) Stock Stock Samuel Gaer 6,675,000 30.0% 1517 North 260 East North Logan, UT 84341 Marni Gaer (2) * 2,000,000 9.0% 1517 North 260 East North Logan, UT 84341 Ronald Comerchero 2,075,000 9.5% 205 Third Avenue, 7K New York, NY 10003 Kim Hemphill (3) 1,950,351 8.8% 16006 East Jacobs Road Spokane, WA 99217 Bruce Frank 1,710,584 7.7% 238 Christopher Street Montclair, NJ 07043 Global Net Financial 1,338,889 6.0% 7284 West Palmetto Pk. Rd. Suite 120 Boca Raton, FL 33433 Norman Fuchs 975,689 4.4% 5 Flagpole Lane East Setauket, NY 11733 S. Emerson Lybbert * 435,479 2.0% 1517 North 260 East North Logan, UT 84341 Aaron Etra * 123,907 .6% 1350 Ave of Americas 29th Floor New York, NY 10019 All executive officers and directors as a group (3 persons) 2,559,386 11.5% (1) Unless otherwise indicated, each person named in the table exercises sole voting and investment power with respect to all shares beneficially owned. As at the date hereof, TGFIN Holdings, Inc. had outstanding 22,904,178 shares of its common stock. (2) Marni Gaer is the wife of Samuel Gaer. Includes 100,000 shares held in trust for the children of Marni and Samuel Gaer, of which Marni Gaer is the Trustee. (3) Amount includes shares held in Trusts, for which Kim Hemphill is the Trustee. 30 None of the Beneficial Owners or Groups listed above holds any other class of shares other than common stock. *Indicates current officer or director of the Company. ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 31.1 302 Certification of Scott Emerson Lybbert as Chief Executive Officer 31.2 302 Certification of Scott Emerson Lybbert as Chief Financial Officer 32 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K during the last quarter: None ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES AUDIT AND NON-AUDIT FEES Aggregate fees for professional services rendered for the Company by HJ & Associates, LLC for the years ended December 31, 2005 and 2004 are set forth below. YEAR 2005 YEAR 2004 AUDIT FEES $ 15,046 $ 17,919 AUDIT-RELATED FEES $ - $ - TAX FEES $ 757 $ 805 ALL OTHER FEES $ - $ - --------- --------- TOTAL $ 15,803 $ 18,724 Audit Fees for the fiscal years ended December 31, 2005 and 2004 were for the audits of the consolidated financial statements of the Company, quarterly review of the financial statements included in Quarterly Reports on form 10-Q, consents, and other assistance required to complete the year end audit of the consolidated financial statements. Amounts included are for the respective year's audit work. Audit-Related Fees as of the years ended December 31, 2005 and 2004 would have been for assurance and related services reasonably related to the performance of the audit or reviews of financial statements and not reported under the caption Audit Fees. Tax Fees as of the years ended December 31, 2005 and 2004 were for professional services related to tax compliance, tax authority audit support and tax planning. Amounts are included in the year billed. As the company does not have a formal audit committee, the services described above were not approved by the audit committee under the de minimus exception provided by Rule 2-01 (c) (7) (i) (C) under Regulation S-X. 31 Signatures /s/ S. Emerson Lybbert Chairman of the Board, Director ------------------------- S. Emerson Lybbert March 30, 2006 /s/ Marni Gaer Director ------------------------- Marni Gaer March 30, 2006 /s/ Aaron Etra Director ------------------------- Aaron Etra March 30, 2006 32 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: March 30, 2006 TGFIN Holdings, Inc. (Registrant) By/s/ S. Emerson Lybbert ---------------------------- S. Emerson Lybbert, President Principal Executive Officer, Principal Financial Officer 33 EX-31 2 ex31-1.txt 302 CERTIFICATION OF CEO Exhibit 31.1 CERTIFICATIONS I, S. Emerson Lybbert, certify that: 1. I have reviewed this annual report on Form 10-KSB of TGFIN Holdings, Inc.; 2. Based upon my knowledge, this annual report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly represent in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ S. Emerson Lybbert Chief Executive Officer ------------------------- S. Emerson Lybbert March 30, 2006 EX-31 3 ex31-2.txt 302 CERTIFICATION OF CFO Exhibit 31.2 I, S. Emerson Lybbert, certify that: 7. I have reviewed this annual report on Form 10-KSB of TGFIN Holdings, Inc.; 8. Based upon my knowledge, this annual report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 9. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly represent in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 10. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 11. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 12. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ S. Emerson Lybbert Chief Financial Officer ------------------------- S. Emerson Lybbert March 30, 2006 EX-32 4 ex32.txt 906 CERTIFICATION Exhibit 32 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, S. Emerson Lybbert, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of TGFIN Holdings, Inc. on Form 10-KSB for the fiscal year ended December 31, 2005 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 10-KSB fairly presents in all material respects the financial condition and results of operations of TGFIN Holdings, Inc. By: /s/ S. Emerson Lybbert Name: S. Emerson Lybbert Title: Chief Executive Officer I, S. Emerson Lybbert, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of TGFIN Holdings, Inc. on Form 10-KSB for the fiscal quarter ended December 31, 2005 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 10-KSB fairly presents in all material respects the financial condition and results of operations of TGFIN Holdings, Inc. By: /s/ S. Emerson Lybbert Name: S. Emerson Lybbert Title: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----