TRANSNET CORPORATION AND SUBSIDIARY公司与子公司.docVIP

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549FORM 10-QXQUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended December 31, 2005Or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _to _Commission File No. 0-8693TRANSNET CORPORATION(Exact name of registrant as specified in its charter) DELAWARE_22-1892295_(State or other jurisdiction of (IRS Employer Identification Number)Incorporation or organization)45 Columbia Road, Somerville, New Jersey 08876-3576_ (Address of principal executive offices)(Zip Code)Registrants Telephone Number, Including Area Code:908-253-0500_ Former name, former address and former fiscal year, if changed since last ReportIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 _Indicate by check mark whether the registrant is an accelerated filed (as defined in Rule 12b-2 of the Exchange Act)Yes_ No _X_Indicate the number of shares outstanding of each of the issuers classes of common stock, as of February 3, 2006: 4,823,304.TRANSNET CORPORATIONFORM 10-QTABLE OF CONTENTSPage No.PART I. FINANCIAL INFORMATIONConsolidated Balance SheetsDecember 31, 2005 (unaudited) and June 30, 20051Consolidated Statements of Operations (unaudited)Three Months Ended December 31, 2005 and 20042Six Months Ended December 31, 2005 and 20043Consolidated Statements of Cash Flows (unaudited)Six Months Ended December 31, 2005 and 20044Notes to Consolidated Financial Statements5Item 2. Managements Discussion and Analysis7Item 4. Controls and Procedures12PART II. OTHER INFORMATIONItem 6. Exhibits and Reports on Form 8-K13Signatures13Certifications14I.TRANSNET CORPORATION AND SUBSIDIARYCONSOLIDATED BALANCE SHEETSDecember 31,June 30,20052005(Unaudited)Assets:Current AssetsCash and Cash Equivalents $ 2,600,270 $ 5,752,404 Accounts Receivable - Net 4,796,344 3,522,831 Inventories 3,893,833 1,579,353 Other Current Assets 192,877 92,469 Deferred Tax Asset 23,513 98,183 Total Current Assets $ 11,506,837 $ 11,045,240 Property and Equipment - Net 628,639 701,563 Other Assets 263,922 262,297 Total Assets $ 12,399,398 $ 12,009,100 Liabilities and Stockholders Equity:Current Liabilities:Accounts Payable $ 483,041 $ 465,656 Accrued Expenses 1,471,910 291,177 Income Taxes Payable 19,992 19,992 Floor Plan Payable 346,305 1,284,905 Total Current Liabilities $ 2,321,248 $ 2,061,730 Deferred Tax Liability 11,712 11,712 Commitment and Contingencies - - Stockholders Equity:Capital Stock - Common, $.01 Par Value, Authorized 1515,00015,000,000 Shares; Issued 7,408,524 at December 31, 2005 and June 30, 200515,000,000 shares, Issued 7,408,524 shares at December 31, 2005 andand June 30, 2005 of which 2,585,200 74,085 74,085 are in Treasury at December 31 and June 30, 2005Paid-in Capital 10,574,670 10,574,670 Retained Earnings 6,570,518 6,439,738 Totals 17,219,273 17,088,493 Less: Treasury Stock - At Cost (7,152,835) (7,152,835)Total Stockholders Equity 10,066,438 9,935,658 Total Liabilities and Stockholders Equity $ 12,399,398 $ 12,009,100 See Notes to Consolidated Financial Statements.TRANSNET CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)THREE MONTHS ENDED DECEMBER 31,20052004RevenueEquipment $ 4,678,762 $ 3,872,927 Services 3,825,272 3,790,351 Total Revenue: 8,504,034 7,663,278 Cost of RevenueEquipment 4,038,585 3,570,140 Services 2,712,432 2,746,990 Total Cost of Revenue 6,751,017 6,317,130 Gross Profit 1,753,017 1,346,148 Selling, General and Administrative Expenses 1,679,697 1,622,443 Operating Income (Loss) 73,320 (276,295)Interest Income 7,139 10,680 Income (Loss) Before Tax Expense 80,459 (265,615)Income Tax (Benefit) 28,161 (124,403)Net Income (Loss) $ 52,298 $ (141,212)Basic Net Income (Loss) Per Common Share $ 0.01 $ (0.03)Diluted Net Income (Loss) Per Common Share $ 0.01 $ (0.03)Weighted Average Common Shares Outstanding - Basic 4,823,304 4,805,804 Weighted Average Common Shares Outstanding - Diluted 4,916,505 4,805,804 See Notes to Consolidated Financial Statements.TRANSNET CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)SIX MONTHS ENDED DECEMBER 31,20052004RevenueEquipment $ 11,977,665 $ 10,489,015 Services 7,608,229 7,867,490 Total Revenue: 19,585,894 18,356,505 Cost of RevenueEquipment 10,491,931 9,604,141 Services 5,475,929 5,660,994 Total Cost of Revenue 15,967,860 15,265,135 Gross Profit 3,618,034 3,091,370 Selling, General and Administrative Expenses 3,438,942 3,324,193 Operating Income (Loss) 179,092 (232,823)Interest Income 20,280 20,827 Income (Loss) Before Tax Expense 199,372 (211,996)Provision for Income Tax (Benefit) 68,591 (235,184)Net Income $ 130,781 $ 23,188 Basic Net Income Per Common Share $ 0.03 $ - Diluted Net Income Per Common Share $ 0.03 $ - Weighted Average Common Shares Outstanding - Basic 4,823,304 4,805,804 Weighted Average Common Shares Outstanding - Diluted 4,925,992 4,935,243 See Notes to Consolidated Financial Statements.TRANSNET CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)SIX MONTHS ENDED DECEMBER 31,20052004Operating Activities:Net Income $ 130,781 $ 23,188 Adjustments to Reconcile Net Income To Net Cash:Depreciation and Amortization 120,316 87,497 Provision for Doubtful Accounts 30,000 - Deferred Tax Benefit 74,670 (235,184)Changes in Assets and Liabilities:(Increase) Decrease in:Accounts Receivable (1,303,514) (7,785)Inventory (2,314,480) (324,506)Other Current Assets (100,408) (88,376)Other Assets (2,122) (93,544)Increase (Decrease) in:Accounts Payable and Accrued Expenses 1,198,118 162,329 Other Current Liabilities -Income Tax Payable (9,826)Total Adjustments $ (2,297,420) $ (509,395)Net Cash - Operating Activities - Forward $ (2,166,639) $ (486,207)Investing Activities:Capital Expenditures $ (46,895) $ (183,208)Net Case - Investing Activities $ (46,895) $ (183,208)Financing Activities - Floor Plan Payable - Net $ (938,600) $ (605,691)Net Cash - Financing Activities $ (938,600) $ (605,691)Net (Decrease) Increase in Cash And Cash Equivalents $ (3,152,134) $ (1,275,106)Cash and Cash Equivalents atBeginning of Periods $ 5,752,404 $ 7,064,644 Cash and Cash Equivalents at End of Periods $ 2,600,270 $ 5,789,538 Supplemental Disclosures of Cash Flow Information:Cash paid during the period for:Interest - $ - Income Taxes - $ - See Notes to Consolidated Financial Statements.18TRANSNET CORPORATION AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)(1.)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Consolidation: The consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiary, Century American Corporation. Intercompany transactions and accounts have been eliminated in consolidation. (b) Inventory: Inventory consists of finished goods. The Corporations inventory is valued at the lower of cost (determined on the average cost basis) or market. (c) Cash and Cash Equivalents: For the purposes of the statement of cash flows, the Corporation considers highly liquid debt instruments, purchased with a maturity of three months or less, to be cash equivalents.(d) Earnings Per Share: Earnings per common share - basic are based on 4,823,304 and 4,805,804 weighted shares outstanding for the three months ended December 31, 2005 and 2004, respectively, and 4,823,404 and 4,805,804 weighted shares outstanding for the six months ended December 31, 2005 and 2004, respectively. Diluted are based on 4,916,505 and 4,805,804 weighted shares outstanding for the three months ended December 31, 2005 and 2004, respectively, and 4,925,992 and 4,935,243 weighted shares outstanding for the six months ended December 31, 2005 and 2004, respectively. (e) In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments consisting only of normal recurring adjustments necessary to present fairly the financial position, the results of operations and cash flows for the periods presented.(f) These statements should be read in conjunction with the summary of significant accounting policies and notes contained in the Corporations annual report on Form 10-K for the year ended June 30, 2005.(g) The results of operations for the three months ended December 31, 2005 are not necessarily indicative of the results to be expected for the entire year. (h) In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs an amendment to ARB No. 43.” This statement provides guidance to clarify the accounting for abnormal amounts of idle facility expense, freight handling costs, and wasted material (spoilage), among other production costs. Provisions of ARB No. 43 stated that under some circumstances, items such as idle facility expense, excessive spoilage and other 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, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production overheads to the costs of conversion be based on the normal capacity of the production facilities. Adoption of the Statement is not expected to have a material impact on the financial statements of the Company.In November 2004, the FASB issued SFAS No. 152 “Accounting for Real Estate time-Sharing Transactions An amendment of SFAS No. 66 and 67. This Statement amends SFAS 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 SFAS No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects,” to state the guidance for (a) incidental costs 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 guidance in SOP 04-2. Effective for financial statements with fiscal years beginning after June 15, 2005. Adoption of this Statement is not expected to have a material impact on the financial statements of the Company.In November 2004, the FASB issued SFAS No. 153, “Exchanges of No monetary Assets an amendment to APB No. 29.” This Statement amends Opinion No. 29 to eliminate the exception for no monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of no monetary assets that do not have commercial substance. A no monetary exchange has commercial substance if the future cash flows of the entity expected to change significantly as a result of the exchange. Adoption of this statement is not expected to have a material impact on the financial statements of the Company.In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123R). SFAS No 123R requires companies to recognize in the income statement the grant date fair value of stock options and other equity-based compensation issued to employees. SFAS No. 123R eliminates the intrinsic value-based method prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations, that the Company currently uses. SFAS No. 123R requires the Company to adopt the new accounting provisions beginning on July 1, 2005. Management estimates that the adoption will not have a material impact on the financial statements of the Company.(I) At December 31, 2005, the Corporation had a stock-based employee compensation plan. The Corporation accounts for the plan under the measurement principals of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise equal to the market value of the underlying common stock on the date of grant. The following tables illustrate the effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of FASB Statement No. 123 to stock based employee compensation.Six months endedDecember 31,20052004Net Income:As Reported $ 130,781 $ 23,188 Deduct:Stoc