U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-QSB
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 for the Quarterly
period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 for the transition
period from _______ to _______.
Commission File No. 000-29933
TRANSAMERICAN HOLDINGS, INC.
----------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada, U.S.A. 77-0434471
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
9601 Wilshire Boulevard, Suite 620, Beverly Hills, California 90210
(Address of principal executive offices)
(310) 271-4159
(Issuer's telephone number)
Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
As of September 30, 2002, the Company had 17,121,090 shares of
Common Stock issued and outstanding.
TRANSAMERICAN HOLDINGS, INC.
FORM 10-QSB
for the quarter ended September 30, 2002
TABLE OF CONTENTS
Part I. Financial Information
- -------
Item 1. Financial Statements
Balance Sheet as of September 30, 2002 (unaudited).
Statements of Operations for the three and nine months
ended September 30, 2002 (unaudited) and September 30,
2001 (unaudited) and from inception on July 22, 1996 to
September 30, 2002 (unaudited).
Statement of Stockholders' Equity for the Period from
inception to September 30, 2002 (unaudited).
Statements of Cash Flows for the nine months ended
September 30, 2002 (unaudited) and September 30, 2001
(unaudited) and from inception on July 22, 1996 to
September 30, 2002 (unaudited).
Notes to Financial Statements.
Item 2. Managements Discussion and Analysis or Plan of
Operation
Item 3. Controls and Procedures
Part II. Other Information
- --------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security holders
Item 5. Other Information
Item 6. Exhibits and reports on form 8-K
SIGNATURES
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on form 10-QSB contains "forward-
looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Statements of our intentions, beliefs, expectations
or predictions for the future, denoted by the words "believes,"
"expects," "may," "will," "should," "seeks," "pro forma,"
"anticipates," "intends" and similar expressions are forward-
looking statements that reflect our current views about future
events and are subject to risks, uncertainties and assumptions.
We wish to caution readers that these forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties. Actual events or results may differ
materially from those discussed in the forward-looking statements
as a result of various factors, including, without limitation,
the risk factors and other matters contained in this annual
report generally. All subsequent written and oral forward-
looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the
cautionary statements included in this document. We undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
FINANCIAL STATEMENTS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002
CONTENTS
Page
Financial Statements:
Balance Sheet 2
Statements of Operations 3
Statement of Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7-8
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET - SEPTEMBER 30, 2002
(UNAUDITED)
ASSETS
Current assets:
Cash $ 195,493
Notes receivable, less allowance for
uncollectible amounts of $94,725 51,959
Notes receivable, related parties 219,390
-----------
Total current assets $ 466,842
Property and equipment, net of
accumulated depreciation and amortization 2,199,762
Cash - restricted 32,436
-----------
$ 2,699,040
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 33,872
Payable to related party 2,200,000
-----------
Total current liabilities $ 2,233,872
-----------
Stockholders' equity:
Common stock; $.001 par value, 100,000,000
shares authorized, 17,971,090 shares
issued and 17,121,090 outstanding $ 17,121
Subscriptions receivable (83,750)
Additional paid-in capital 1,752,246
Deficit accumulated during
development stage (1,220,449)
-----------
Total stockholders' equity 465,168
-----------
$ 2,699,040
===========
2
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
For the three months ended
Sept 30, 2002 Sept 30, 2001
--------------- --------------
(Unaudited) (Unaudited)
Net revenues $ - $ -
Cost of sales - -
--------------- --------------
Gross profit - -
General and administrative
expenses 174,069 125,055
--------------- --------------
Net loss from operations
before interest income (174,069) (125,055)
Interest income 246 6,163
--------------- --------------
Net loss $ (173,823) $ (118,892)
=============== ==============
Net loss per share,
basic and diluted $ (0.01) $ (0.01)
=============== ==============
Weighted average number
of shares outstanding,
basic and diluted 16,477,612 16,321,090
=============== ==============
3
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
From inception on
For the nine months ended July 22, 1996 to
Sept 30, 2002 Sept 30, 2001 September 30, 2002
--------------- -------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
Net revenues $ - $ - $ -
Cost of sales - - -
--------------- -------------- -----------------
Gross profit - - -
General and administrative
expenses 336,358 424,282 1,256,525
--------------- -------------- -----------------
Net loss from operations
before interest income (336,358) (424,282) (1,256,525)
Interest income 4,405 27,530 36,076
--------------- -------------- -----------------
Net loss $ (331,953) $ (396,752) $ (1,220,449)
=============== ============== =================
Net loss per share,
basic and diluted $ (0.02) $ (0.02)
=============== ==============
Weighted average number
of shares outstanding,
basic and diluted 16,373,837 16,321,090
=============== ==============
4
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
accumulated Total
Common stock Additional during stock-
---------------------- paid-in Subscription development holders'
Shares Amount capital receivable stage equity
----------------------------------------------------------------------------------
Balance at
January 1, 2000 11,300,000 $ 11,300 $ 3,000 $ $ (5,100) $ 9,200
Issuance of common stock
for cash during
March 2000,
net of shares issued
for services 1,445,090 1,445 296,100 297,545
Issuance of common stock
for cash during
April 2000 230,000 230 114,770 115,000
Issuance of common stock
for cash during
May 2000 1,918,000 1,918 670,790 672,708
Issuance of common stock
for cash during
June 2000 913,000 913 142,150 143,063
Issuance of common stock
for cash during
July 2000 465,000 465 226,337 (33,750) 193,052
Net loss for
the year ended
December 31, 2000 (319,992) (319,992)
---------- -------- ----------- --------- --------- -----------
Balance at
December 31, 2000 16,271,090 $ 16,271 $ 1,453,147 $ (33,750) $(325,092) $ 1,110,576
Issuance of common stock
for cash during
June 2001 50,000 50 99,929 (50,000) 49,979
Net loss for
the year ended
December 31, 2001 (563,404) (563,404)
---------- -------- ----------- --------- --------- -----------
Balance at
December 31, 2001 16,321,090 $ 16,321 $ 1,553,076 $ (83,750) $(888,496) $ 597,151
---------- -------- ----------- --------- --------- -----------
Issuance of common stock
for cash during
September 2002 800,000 800 199,170 199,970
Net loss for
the nine months ended
September 30, 2002
(unaudited) (331,953) (331,953)
---------- -------- ----------- --------- --------- -----------
Balance at
September 30, 2002
(unaudited) 17,121,090 $ 17,121 $ 1,752,246 $ (83,750) $(1,220,449) $ 465,168
========== ======== =========== ========= ========= ===========
5
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
From inception on
For the nine months ended July 22, 1996 to
Sept 30, 2002 Sept 30, 2001 September 30, 2002
--------------- -------------- -----------------
(Unaudited) (Unaudited) (Unaudited)
Cash flows provided by
(used for) operating
activities:
Net loss $ (331,953) $ (396,752) $ (1,220,449)
Adjustments to reconcile net loss
to net cash provided by (used for)
operating activities:
Depreciation 9,145 1,596 12,482
Bad debt 4,725 - 94,725
Issuance of common stock
for services - - 94,500
Changes in assets and liabilities:
(Increase) decrease in assets:
Other receivables - (3,806) -
Interest receivable (2,362) - (4,725)
Increase (decrease) in liabilities:
Accounts payable and
accrued expenses 85 27,661 33,872
----------------- ----------------- -----------------
Total adjustments 11,593 25,451 230,854
----------------- ----------------- -----------------
Net cash used for
operating activities (320,360) (371,301) (989,595)
----------------- ----------------- -----------------
Cash flows provided by (used for)
investing activities:
Acquisition of property
and equipment (100) (2,014) (12,244)
Payments on notes receivable 8,041 - (141,959)
Payments on notes receivable,
related parties 137,906 (142,296) (219,390)
Restricted cash (1,373) (295) (32,436)
----------------- ----------------- -----------------
Net cash used for
investing activities 144,474 (144,605) (406,029)
----------------- ----------------- -----------------
Cash flows provided by (used for)
financing activities:
Proceeds from sale of
common stock 199,970 50,000 1,591,117
Proceeds from note payable,
officer - - 21,540
Payments on note payable,
officer (21,540) 11,540 (21,540)
----------------- ----------------- -----------------
Net cash provided by
financing activities 178,430 61,540 1,591,117
----------------- ----------------- -----------------
Net increase (decrease) in cash 2,544 (454,366) 195,493
Cash, beginning of year 192,949 1,024,732 -
----------------- ----------------- -----------------
Cash, end of period $ 195,493 $ 570,366 $ 195,493
================= ================= =================
Supplemental disclosure of cash flow information:
No amounts were paid for
interest or taxes
6
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2002
(1) Summary of Significant Accounting Policies:
Interim Financial Statements:
The accompanying financial statements include all
adjustments (consisting of only normal recurring
accruals), which are, in the opinion of management,
necessary for a fair presentation of the results of
operations for the periods presented. Interim results
are not necessarily indicative of the results to be
expected for a full year. The financial statements
should be read in conjunction with the financial
statements included in the annual report of
TransAmerican Holdings, Inc. (the "Company") on Form
10-KSB for the year ended December 31, 2001.
General:
TransAmerican Holdings, Inc., formerly Health Research,
Ltd., was incorporated under the laws of the state of
Nevada on July 22, 1996, and is conducting its
operations in California.
Business Activity:
The Company has been in development stage and was
inactive until November 1999, at which time current
management became involved. On November 15, 1999, the
Company changed its name to TransAmerican Holdings,
Inc. The sole purpose of the Company at this time is
to raise capital and to locate and acquire a private
on-going business.
Fair Value:
Unless otherwise indicated, the fair values of all
reported assets and liabilities which represent
financial instruments, none of which are held for
trading purposes, approximate the carrying values of
such amounts.
Use of Estimates:
The preparation of financial statements in conformity
with accounting principles generally accepted in the
United States of America requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities 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.
Development Stage Enterprise:
The Company is a development stage company as defined
in Statement of Financial Accounting Standards No. 7,
"Accounting and Reporting by Development Stage
Enterprises." The Company is devoting substantially
all of its present efforts to establish a new business.
All losses accumulated since inception of TransAmerican
Holdings have been considered as part of the Company's
development stage activities.
7
TRANSAMERICAN HOLDINGS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 2002
(2) Property and Equipment:
In August 2002, the Company acquired 80% of the assets of a
tourist destination resort project located in Sahel Alma,
Kesrwan, Lebanon from two directors of the Company. Neither
director holds more than 3% of the outstanding shares of the
Company, nor are they related to Najib Choufani, Chairman
and CEO. The project is currently named the All Seasons
Resort, and is a time share condominium project. In
exchange, the Company has agreed to pay $2,200,000 in two
installments without interest, the first installment of
$100,000 due upon completion of due diligence, and the
balance due within four months from the date of the signing
of the purchase deed. The first payment has been made as of
the date of this filing, and a payable has been recorded to
recognize the liability.
(3) Subsequent Events:
In October 2002, the Company acquired 51% of the shares of
Shaden Al-Khaleej Est., a Saudi Arabic Kingdom company
("Shaden"). As consideration for the acquisition, the
Company issued (a) 1,683,528 shares of the Company's $0.001
par value common stock, (b) an agreement to fund, within 3
months from the date of closing, $700,000 in the form of
debt to Shaden, and (c) a further agreement to fund, at a
future unspecified date, $1,050,000 in the form of debt to
Shaden. Shaden is a leading Middle Eastern company that
operates in the construction industry, targeting both
commercial and high-end residential projects.
In November 2002, in a private placement of its securities,
the Company issued 2,424,242 units for total offering
proceeds of $1,333,333 in cash. Each unit consists of one
share of the Company's $0.001 par value common stock, and
one warrant to purchase one additional share of the
Company's common stock at $0.55 per share exercisable within
one year of the purchase of the unit. None of the warrants
have been exercised as of the date of this filing.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
Management's Discussion and Analysis.
Significant Accounting Policies and Estimates
Management's Discussion and Analysis of Financial Condition
and Results of Operations discusses the Company's financial
statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those
related to reserves and financial operations. Management bases
its estimates and judgments on historical experiences and on
various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions. The most significant accounting estimates inherent
in the preparation of the Company's financial statements include
estimates as to the appropriate carrying value of certain assets
and liabilities which are not readily apparent from other
sources, primarily allowance for doubtful accounts. These
accounting policies are described at relevant sections in this
discussion and analysis and in the notes to the financial
statements included in our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2001.
Results of Operations
Three months ended September 30, 2002 as compared to September
30, 2001.
Revenues
We are a development stage company. There were no revenues
for the three months ended September 30, 2002 and September 30,
2001.
General and Administrative Expenses
Total expenses amounted to $174,069 for the three months
ended September 30, 2002, as compared to $125,055 at September
30, 2001. The expenses resulted primarily from costs incurred by
the Company in the ordinary course of business and in our review
of potential acquisition candidates.
Loss from Operations
The Company incurred a loss from operations of $174,069 for
the quarter ended September 30, 2002, as compared to $125,055 at
September 30, 2001.
Net loss
The Company had a net loss of $173,823 or $(0.01) per share
for the three months ended September 30, 2002 as compared to
$118,892 or $(0.01) per share for the three months ended
September 30, 2001.
Nine months ended September 30, 2002 as compared to September 30,
2001.
Revenues
There were no revenues for the nine months ended September
30, 2002 and September 30, 2001.
General and Administrative Expenses
Total expenses amounted to $336,358 for the nine months
ended September 30, 2002, as compared to $424,282 at September
30, 2001. The expenses resulted primarily from costs incurred by
the Company in the ordinary course of business and in our review
of potential acquisition candidates.
Loss from Operations
The Company incurred a loss from operations of $336,358 for
the nine months ended September 30, 2002, as compared to $424,282
at September 30, 2001.
Net loss
The Company had a net loss of $331,953 or $(0.02) per share
for the nine months ended September 30, 2002 as compared to
$396,752 or $(0.02) per share for the nine months ended September
30, 2001.
Liquidity and Capital Resources
In the third quarter of 2002, TransAmerican entered into two
separate definitive agreements, one for the acquisition of an
on-going construction and architectural design firm in Saudi
Arabia and one for the acquisition of a resort project in Lebanon
that is in the final stages of construction and whose operations
are expected to commence in the fourth quarter of 2003. In
addition, we are in advanced negotiations with several other
domestic and international entities with going businesses in
varied sectors of the market. We expect to conclude at least one
of these acquisitions in the fourth quarter of 2002 or the first
quarter of 2003.
Plan of Operation.
TransAmerican intends to seek and acquire assets or shares
of an entity actively engaged in a business that generates
revenues in exchange for our securities. We have identified
potential business opportunities and have entered into
discussions with several companies. However, we have not yet
entered into any definitive agreements or understandings as of
the date of this filing.
General Business Plan
TransAmerican's purpose is to seek and acquire an interest
in business opportunities presented to us by persons or firms who
or which desire to seek the advantages of an Issuer who has
complied with the 1934 Act. In our search for a business
opportunity, we will not restrict our selection to any specific
business, industry, or geographic region and we may participate
in a business venture of any kind or nature. This discussion of
the proposed business is purposefully general and is not meant to
restrict our unlimited discretion to search for and enter into
potential business opportunities.
Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available
capital, management believes that there are numerous firms
seeking the benefits of an issuer who has complied with the 1934
Act. Such benefits may include facilitating or improving the
terms on which additional equity financing may be sought,
providing liquidity for incentive stock options or similar
benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes) for all shareholders
and other factors.
Management believes that TransAmerican will be able to offer
owners of acquisition candidates the opportunity to acquire an
interest in an issuer who has complied with the 1934 Act without
incurring the cost and time required to conduct an initial public
offering. The owners of the business opportunity will, however,
incur significant legal and accounting costs in connection with
the acquisition of a business opportunity, including the costs of
preparing and filing required reports on Form 8-K, 10-QSB and
10-KSB, agreements and related reports and documents. The 1934
Act specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements,
which include providing audited financial statements to be
included within the filings relevant to complying with the 1934
Act.
The analysis of new business opportunities will be
undertaken by, or under the supervision of, the officers and
directors of the Company. Management intends to concentrate on
identifying prospective business opportunities, which may be
brought to our attention through present associations with the
Company's officers and directors, or by our shareholders. In
analyzing prospective business opportunities, management will
consider such matters as the available technical, financial and
managerial resources; working capital and other financial
requirements; history of operations; prospects for the future;
nature of present and expected competition; the quality and
experience of management services which may be available and the
depth of that management; the potential for further research,
development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the public recognition of
acceptance of products, services, or trades; name identification;
and other relevant factors. TransAmerican management expects to
meet personally with management and key personnel of the business
opportunity as part of our investigation. To the extent
possible, we intend to utilize written reports and personal
investigation to evaluate the above factors. We will not acquire
or merge with any company for which audited financial statements
cannot be obtained within a reasonable period of time after
closing of the proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, TransAmerican may become a party to a merger,
consolidation, reorganization, joint venture or licensing
agreement with another corporation or entity. We may also
acquire stock or assets of an existing business. Any terms of
sale of the shares presently held by officers and/or directors of
TransAmerican will be also afforded to all other shareholders of
the Company on similar terms and conditions. Any and all such
sales will only be made in compliance with the securities laws of
the United States and any applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of the
transaction, TransAmerican may agree to register all or a part of
such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs,
of which there can be no assurance, it will be undertaken by the
surviving entity after the Company has successfully consummated a
merger or acquisition. The issuance of substantial additional
securities and their potential sale into a trading market, which
may develop in TransAmerican's securities, may have a depressive
effect on the value of our securities in the future.
As part of TransAmerican's investigation, officers and
directors of the Company will meet personally with management and
key personnel, will visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check references of management and key personnel,
and take other investigative measures as the Company's management
may deem necessary. The manner in which the Company participates
in an opportunity will depend upon the nature of the opportunity,
the respective needs and desires of the Company and other
parties, the management of the opportunity and the relative
negotiation strength of the Company and such other management.
With respect to any merger or acquisition, negotiations with
management of the target company are expected to focus on the
percentage of TransAmerican which the target company shareholders
would acquire in exchange for all of their shareholdings in the
target company depending upon, among other things, the target
company's assets and liabilities. The percentage ownership may
be subject to reduction in the event that we acquire a target
company with substantial assets. Any merger or acquisition
effected by TransAmerican is expected to have a dilutive effect
on the percentage of shares held by TransAmerican's then
shareholders.
TransAmerican will participate in a business opportunity
only after the negotiation and execution of appropriate written
agreements. Generally, such agreements will require specific
representations and warranties by all of the parties thereto,
will specify certain events of default, will detail the terms
of closing and the conditions which must be satisfied by each of
the parties prior to and after such closing, will outline the
manner of bearing costs, including costs associated with the
Company's attorneys and accountants, will set forth remedies on
default and will include miscellaneous other terms.
As stated, we will not acquire or merge with any entity
which cannot provide independent audited financial statements
within a reasonable period of time after closing of the proposed
transaction. The Company is subject to all of the reporting
requirements included in the 1934 Act. Included in these
requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K
to be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as
TransAmerican's audited financial statements included in our
annual report on Form 10-K (or 10-KSB, as applicable). If such
audited financial statements are not available at closing, or
within time parameters necessary to insure our compliance with
the requirements of the 1934 Act, or if the audited financial
statements provided do not conform to the representations made by
the candidate to be acquired in the closing documents, the
closing documents will provide that the proposed transaction will
be rescinded, at the discretion of TransAmerican. If such
transaction is rescinded, the agreement will also contain a
provision providing for the acquisition entity to reimburse
TransAmerican for all costs associated with the proposed
transaction.
To assist in the acquisition of a business opportunity, the
Company may retain outside consultants, attorneys or accountants,
as we deem appropriate. We will retain the services of these
consultants, attorneys and accountants from time to time on an
"as needed" basis. At this time, there is no prior arrangement
or understanding regarding the engagement of any particular
consultant for future services.
Investment Company Act of 1940
Although TransAmerican is subject to regulation under the
Securities Act of 1933, as amended, and the 1934 Act, management
believes the Company will not be subject to regulation under the
Investment Company Act of 1940 insofar as TransAmerican will not
be engaged in the business of investing or trading in securities.
In the event that TransAmerican engages in business combinations,
which result in the Company holding passive investment interests
in a number of entities, TransAmerican could be subject to
regulation under the Investment Company Act of 1940. In such
event, TransAmerican would be required to register as an
investment company and could incur significant registration and
compliance costs. TransAmerican has obtained no formal
determination from the Securities and Exchange Commission as to
the status of the Company under the Investment Company Act of
1940 and, consequently, any violation of such Act would subject
TransAmerican to material adverse consequences. TransAmerican's
Board of Directors unanimously approved a resolution stating that
it is the Company's desire to be exempt from the Investment
Company Act of 1940 under Regulation 3a-2 thereto.
The Securities Enforcement and Penny Stock Reform Act of 1990
The Securities Enforcement and Penny Stock Reform Act of
1990 requires additional disclosure relating to the market for
penny stocks in connection with trades in any stock defined as a
penny stock. The Commission has adopted regulations that
generally define a penny stock to be any equity security that has
a market price of less than $5.00 per share, subject to certain
exceptions. Such exceptions include any equity security listed
on NASDAQ and any equity security issued by an issuer that has
(i) net tangible assets of at least $2,000,000, if such issuer
has been in continuous operation for three years, (ii) net
tangible assets of at least $5,000,000, if such issuer has been
in continuous operation for less than three years, or (iii)
average annual revenue of at least $6,000,000, if such issuer has
been in continuous operation for less than three years. Unless
an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks
associated with that market.
Forward Looking Information.
This Quarterly Report on Form 10-QSB contains forward-
looking statements within the meaning of that term in the Private
Securities Litigation Reform Act of 1955 (Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934). Additional written or oral forward-looking
statements may be made by the Company from time to time in
filings with the Securities and Exchange Commission or otherwise.
Statements contained herein that are not historical facts are
forward-looking statements made pursuant to the safe harbor
provisions referenced above.
Forward-looking statements are inherently subject to risk
and uncertainties, some of which cannot be predicted or
quantified based on current expectations. Consequently, future
events and actual results could differ materially from those set
forth in, contemplated by or underlying the forward-looking
statements contained in this Quarterly Report. The statements,
and "Part I, Item 2, Management's Discussion and Analysis or Plan
of Operation", describe certain factors, among others, which
could contribute to or cause such differences.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained herein, which speak only as
of the date hereof. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-
looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence
of unexpected events.
ITEM 3. CONTROLS AND PROCEDURES.
As required by SEC rules, we have evaluated the
effectiveness of the design and operations of our disclosure
controls and procedures within 90 days of the filing of this
quarterly report. This evaluation was carried out under the
supervision and with the participation of our management,
including our principal executive officer. Based on this
evaluation, the officer has concluded that the design and
operation of our disclosure controls and procedures are
effective. There were no significant changes to our internal
controls or in other factors that could significantly affect
internal controls subsequent to the date of the evaluation.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no legal proceedings threatened or pending, except
such ordinary routine matters which may be incidental to the
business currently being conducted by the Company.
ITEM 2. CHANGES IN SECURITIES.
During the three months ended September 30, 2002, the
Company sold a total of 800,000 shares of common voting stock to
Georges E. Hraoui, an individual. The shares were sold at a
price of $0.25 per share for a total purchase price of $200,000.
We did not publicly offer any securities and no underwriter was
utilized. We paid no other finder's fees, discounts or
commissions in connection with the above offers and sales. The
offers and sales were exempt pursuant to Sections 4(2) and 5 of
the Act, Regulations D and S, respectively, promulgated
thereunder, and pursuant to Section 25102(f) of the California
Corporations Code. The purchaser acquired the shares for his own
account with no then present intention of dividing his interest
with others or of reselling or otherwise disposing of all or any
portion of the shares. The shares were offered and sold in
private transactions, which were not part of a distribution of
the shares, and, in the case of those shares sold pursuant to
Regulation S, the offers and sales were made in offshore
transactions and there were no directed selling efforts in the
United States in connection therewith. We, or our officers or
directors or our or their affiliates or representatives, had a
pre existing personal or business relationship with Mr. Hraoui.
The proceeds from the above sales of unregistered securities
were used primarily to fund the day to day operations of the
Company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders in the
quarter covered by this report.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits
None.
Reports on Form 8-K
On August 27, 2002, the Company filed a Current Report on
Form 8-K reporting that TransAmerican had acquired 51% of the
shares of Shaden Al Khaleej Est., a Saudi Arabic Kingdom company
("Shaden"). The acquisition was effected in accordance with the
terms of a Definitive Agreement, first executed on August 7, 2002
and approved by TransAmerican as of August 12, 2002, by and
between TransAmerican and Shaden Al Khaleej Est.
As consideration for the Acquisition, TransAmerican will
deliver to Shaden (i) 1,683,528 shares of TransAmerican's common
stock, $0.001 par value per share (the "Common Stock"); (ii) the
agreement to fund, within 3 months from the date of closing,
US$700,000 from TransAmerican's resources in the form of debt to
Shaden, which funds are to be used only for new business
expansion capital; and (iii) the further agreement to fund, at a
future date yet unspecified, US$1,050,000 from TransAmerican's
resources in the form of debt to Shaden, which funds are to be
used only for capital requirements of new business contracts. In
addition, pursuant to the terms of the Agreement, if for any
reason Shaden is unable to satisfy its debt repayment
requirements, then TransAmerican will receive additional
proportional shares of Shaden to compensate for the value of the
debt repayment.
Shaden Al Khaleej Est. is a leading Middle Eastern firm
whose primary activities include construction, architectural
design, related communications, decorative stamped concrete
applications and specialized interior design and furnishings that
are targeted to both commercial and high end residential
projects.
On August 30, 2002, the Company filed a Current Report on
Form 8-K reporting that TransAmerican had acquired 51% of the
assets of a tourist destination resort project located in Sahel
Alma, Kesrwan, Lebanon; the subject project is currently named
the All Seasons Resort (the "Property"). The acquisition was
effected in accordance with the terms of a Definitive Agreement,
first executed on August 9, 2002 and approved by TransAmerican as
of August 15, 2002 by and between TransAmerican and Dr. Hilmi
Kaseem Al Turky and Mr. Saeb Al Houssary (the "Principals"),
owners of the Project.
As consideration for the Acquisition, TransAmerican will
deliver to the Principals US$2,100,000, which will be paid in two
payments. The first payment will be in the amount of US$100,000,
payable upon completion of due diligence on the Property; and the
second payment of US$2,000,000 is due and payable within 4 months
from the date of the signing of the purchase deed. In addition,
pursuant to the terms of the Definitive Agreement, the Principals
were to acquire a total of 600,000 restricted common shares of
TransAmerican for the total sum of US$300,000 payable at the time
of signing the formal transfer of ownership of the Property.
On November 4, 2002, the Company filed an Amended Current
Report on Form 8 K reporting that subsequent to entering into the
Agreement, TransAmerican and Messrs. Al Turky and Al Houssary
restructured the transactional structure of the acquisition,
pursuant to which the parties entered into an Amendment to
Definitive Agreement, in October 2002. According to the terms of
the Amendment, TransAmerican will now own eighty percent (80%) of
the Property for the total sum of Two Million Two Hundred
Thousand U.S. Dollars (US$2,200,000). This sum is to be paid in
two installments: One Hundred Thousand U.S. Dollars (US$100,000)
payable as a down payment; and the balance of Two Million One
Hundred Thousand U.S. Dollars (US$2,100,000), which management
expects to fund through private placements already in progress,
to be paid within three months of the date of signing the formal
purchase deed. In addition, the Principals may, but are no
longer obliged to, acquire a total of 600,000 restricted common
shares of TransAmerican for the total sum of US$300,000 payable
at the time of signing the formal transfer of ownership of the
Property. All other terms and conditions of the Definitive
Agreement remain unchanged.
The All Seasons Resort is located in an area that has been
and is a popular year round tourist destination near Beirut,
Lebanon. The Property is only a short walk from the
internationally known gaming palace, Casino Du Liban. The Resort
is presently in the final stages of construction, with
commencement of operations anticipated in the fourth quarter of
2003. When completed, the Resort will be a contemporary
destination consisting of studio apartments, a restaurant,
nightclub, retail shops and related parking.
Notwithstanding their shareholdings in and responsibilities
as directors of TransAmerican, the sellers in the foregoing
transactions are not in any way related to the Company's
employees, shareholders or any affiliates thereof.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant has caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized.
TRANSAMERICAN HOLDINGS, INC.
Date: November 18, 2002 By: /s/ Najib E. Choufani
-------------------------
Najib E. Choufani
Chairman, CEO & CFO
Date: November 18, 2002 By: /s/ Tarek Choufani
-------------------------
Tarek Choufani
Director
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report of TRANSAMERICAN
HOLDINGS, INC. on Form 10-QSB for the period ended September 30,
2002 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), each of the undersigned, in the
capacities and on the dates indicated below, hereby certifies
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best
of their knowledge:
1. The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
2. The information contained in the report fairly
presents, in all material respects, the financial
condition and results of operation of the Company.
Date: November 18, 2002 /s/ Najib Choufani
Najib Choufani
Chairman, CEO & CFO
CERTIFICATION PURSUANT TO
SECTION 302
OF THE SARBANES OXLEY ACT OF 2002
I, Najib Choufani, Chairman and Chief Executive Officer of
TransAmerican Holdings, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of
TransAmerican Holdings, Inc. (the "Registrant");
2. Based on my knowledge, this Quarterly Report does not
contain any untrue statement 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 Quarterly Report;
3. Based on my knowledge, the financial statements, and other
financial information included in the Quarterly Report,
fairly present 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
Quarterly Report;
4. I am 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 me by others within those entities,
particularly during the period in which this Quarterly
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 Quarterly
Report (the "Evaluation Date"); and
c) presented in this Quarterly Report my conclusions about
the effectiveness of the disclosure controls and
procedures based on my evaluation as of the Evaluation
Date;
5. I have disclosed, based on my most recent evaluation, to the
Registrant's auditors and the audit committee of the
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. I have indicated in this Quarterly Report whether there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of my most recent evaluation, including any
corrective actions with regard to significant deficiencies
and material weaknesses.
Date: November 18, 2002 /s/ Najib Choufani
Najib Choufani
Chairman, CEO & CFO