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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2005
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. 0-8693
TRANSNET 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)
Registrant's Telephone Number, Including Area Code: 908-253-0500
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last Report
Indicate 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 issuer's classes of
common stock, as of May 3, 2005: 4,818,304.
TRANSNET CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PAGE NO.
PART I. FINANCIAL INFORMATION
Consolidated Balance Sheets
March 31, 2005 (unaudited) and June 30, 2004 1
Consolidated Statements of Operations (unaudited)
Three Months Ended March 31, 2005 and 2004 2
Nine Months Ended March 31, 2005 and 2004 3
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended March 31, 2005 and 2004 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis 8
Item 4. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Shareholders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
Certifications 13
i.
TRANSNET CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
2 0 0 5 2 0 0 4
------- -------
(unaudited)
ASSETS:
CURRENT ASSETS
Cash and Cash Equivalents $ 4,128,853 $ 7,064,644
Accounts Receivable - Net 4,453,526 3,902,458
Inventories 1,658,161 1,131,503
Other Current Assets 141,796 0
Deferred Tax Asset 582,479 195,649
--------------- ----------------
TOTAL CURRENT ASSETS $ 10,964,815 $ 12,294,254
PROPERTY AND EQUIPMENT - NET 548,053 438,251
OTHER ASSETS 329,113 231,104
--------------- ----------------
TOTAL ASSETS $ 11,841,981 $ 12,963,609
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable $ 453,922 $ 364,228
Accrued Expenses 177,203 210,022
State Taxes Payable 8,000 9,826
Floor Plan Payable 229,791 1,052,021
--------------- ----------------
TOTAL CURRENT LIABILITIES $ 868,916 1,636,097
DEFERRED TAX LIABILITY 58,220 30,976
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Capital Stock - Common, $.01 Par Value, Authorized
15,000,000 Shares; Issued 7,403,524 and
7,391,024 Shares at March 31, 2005 and June 30, 2004
[of which 2,585,220 are in Treasury
at March 31, 2005 and June 30, 2004] 74,035 73,910
Paid-in Capital 10,574,720 10,559,445
Retained Earnings 7,418,925 7,816,016
--------------- ----------------
Totals 18,067,680 18,449,371
Less: Treasury Stock - At Cost (7,152,835) (7,152,835)
--------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 10,914,845 11,296,536
--------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,841,981 $ 12,963,609
=============== ================
See Notes to Consolidated Financial Statements.
1
TRANSNET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
----------------------------
2 0 0 5 2 0 0 4
------- -------
REVENUE:
Equipment Sales $ 3,600,863 $ 3,283,777
Service 3,814,034 3,572,076
------------------- --------------------
TOTAL REVENUE 7,414,897 6,855,853
------------------- --------------------
COST OF REVENUE:
Equipment Sales 3,387,951 3,004,255
Service 2,833,612 2,811,185
------------------- --------------------
TOTAL COST OF REVENUE 6,221,563 5,815,440
------------------- --------------------
GROSS PROFIT 1,193,334 1,040,413
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,752,618 1,498,247
------------------- --------------------
OPERATING (LOSS) (559,284) (457,834)
------------------- --------------------
OTHER INCOME:
Interest Income 14,602 13,004
(LOSS) BEFORE INCOME TAXES (544,682) (444,830)
INCOME TAXES (BENEFIT) (124,403) --
------------------- ---------------------
NET (LOSS) $ (420,279) $ (444,830)
=================== =====================
BASIC NET (LOSS) PER COMMON SHARE $ (0.09) $ (0.09)
=================== =====================
DILUTED NET (LOSS) PER COMMON SHARE $ (0.09) $ (0.09)
=================== =====================
Weighted Average Common Shares Outstanding - Basic 4,818,304 4,774,804
=================== =====================
Weighted Average Common Shares Outstanding - Diluted 4,943,751 4,948,671
=================== =====================
See Notes to Consolidated Financial Statements.
2
TRANSNET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED MARCH 31,
---------------------------
2 0 0 5 2 0 0 4
------- -------
REVENUE:
Equipment Sales $ 14,089,878 $ 12,115,654
Service 11,681,524 11,761,121
-------------------- ------------------
TOTAL REVENUE 25,771,402 23,876,775
-------------------- ------------------
COST OF REVENUE:
Equipment Sales 12,992,094 10,933,160
Service 8,494,606 9,000,272
-------------------- ------------------
TOTAL COST OF REVENUE 21,486,700 19,933,432
-------------------- ------------------
Gross Profit 4,284,702 3,943,343
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,076,809 4,403,175
-------------------- ------------------
OPERATING (LOSS) (792,107) (459,832)
--------------------- ------------------
OTHER INCOME:
Interest Income 35,429 49,335
(LOSS) BEFORE INCOME TAXES (756,678) (410,497)
INCOME TAXES (BENEFIT) (359,587) --
--------------------- ------------------
NET (LOSS) $ (397,091) $ (410,497)
===================== ==================
BASIC NET (LOSS) PER COMMON SHARE $ (0.08) $ (0.09)
===================== ==================
DILUTED NET (LOSS) PER COMMON SHARE $ (0.08) $ (0.09)
===================== ==================
Weighted Average Common Shares Outstanding -Basic 4,818,304 4,774,804
===================== ==================
Weighted Average Common Shares Outstanding -Diluted 4,818,304 4,774,804
===================== ==================
See Notes to Consolidated Financial Statements.
3
TRANSNET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED MARCH 31,
---------------------------
2 0 0 5 2 0 0 4
-------- -------
Operating Activities:
Net (Loss) $ (397,091) $ (410,497)
---------------- -----------------
Adjustments to Reconcile Net Income
to Net Cash:
Depreciation and Amortization 110,713 95,905
Deferred Tax Benefit (386,830) --
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (551,068) 460,043
Inventory (526,658) (306,287)
Other Current Assets (141,796) (1,631)
Other Assets (98,756) 13,034
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 56,875 (116,455)
Other Current Liabilities -- --
Deferred Tax Liabilities 27,244 --
Income Taxes Payable (1,826) (9,599)
---------------- -----------------
Total Adjustments (1,512,102) 135,010
---------------- ----------------
Net Cash - Operating Activities (1,909,193) (275,487)
---------------- -----------------
Investing Activities:
Capital Expenditures (219,768) (116,567)
---------------- -----------------
Net Cash - Investing Activities (219,768) (116,567)
---------------- -----------------
Financing Activities:
Floor Plan Payable - Net (822,230) (105,725)
Stock Options Excercised 15,400 --
---------------- -----------------
Net Cash - Financing Activities (806,830) (105,725)
---------------- -----------------
Net (Decrease) Increase in Cash and Cash Equivalents $ (2,935,791) $ (497,779)
Cash and Cash Equivalents- Beginning of periods $ 7,064,644 $ 6,935,623
--------------- ----------------
Cash and Cash Equivalents- End of periods $ 4,128,853 $ 6,437,844
=============== ================
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ -- $ --
Income Taxes $ -- $ --
See Notes to Consolidated Financial Statements.
4
TRANSNET CORPORATION AND SUBSIDIARY
NOTES 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 Corporation's
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
4,818,304 weighted shares outstanding for the three and nine month
periods ended March 31, 2005 and 4,774,804 weighted shares outstanding
for the three and nine months periods ended March 31, 2004. For the three
and nine month periods ended March 31, 2005, the Corporation had
outstanding options that were not included in the computation of diluted
EPS as they are considered anti-dilutive.
(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 Corporation's
annual report on Form 10-K for the year ended June 30, 2004.
(g) The results of operations for the three months ended March 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
5
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 Nonmonetary
Assets - an amendment to APB No. 29." This Statement amends Opinion No.
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
nonmonetary 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 March 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.
6
THREE MONTHS ENDED
MARCH 31,
---------
2 0 0 5 2 0 0 4
------- -------
NET [LOSS] INCOME:
As Reported $ (420,279) $ (444,830)
DEDUCT:
Stock Based Employee Compensation Expense
Determined under the Fair Value Based Method - Net of Tax -- --
---------------- -----------
PRO FORMA NET [LOSS] INCOME (420,279) (444,830)
---------------- -----------
BASIC [LOSS] EARNINGS PER SHARE:
As Reported $ (0.09) $ (0.09)
Pro-Forma $ (0.09) $ (0.09)
DILUTED [LOSS] EARNINGS PER SHARE:
As Reported $ (0.09) $ (0.09)
Pro-Forma $ (0.09) $ (0.09)
NINE MONTHS ENDED
MARCH 31,
---------
2 0 0 5 2 0 0 4
------- -------
NET [LOSS] INCOME:
As Reported $ (397,091) $ (410,497)
DEDUCT:
Stock Based Employee Compensation Expense
Determined under the Fair Value Based Method - Net of Tax (7,929) --
---------------- -----------
PRO FORMA NET INCOME (405,020)
---------------- -----------
BASIC EARNINGS PER SHARE:
As Reported $ (0.08) $ (0.09)
Pro-Forma $ (0.08) $ (0.09)
DILUTED EARNINGS PER SHARE:
As Reported $ (0.08) $ (0.09)
Pro-Forma $ (0.08) $ (0.09)
(2.) INCOME TAXES
The Corporation has a deferred tax benefit of $582,479 and a deferred tax
liability of $58,220 based upon temporary timing differences including
inventory capitalization, allowance for doubtful accounts, vacation pay
accruals and depreciation.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 2005 were $7,414,897 as compared
with $6,855,853 for the quarter ended March 31, 2004. For the quarter ended
March 31, 2005, the Corporation reported a net loss of $420,279 as compared with
a net loss of $444,830 for the similar period in the prior fiscal year. For the
nine months ended March 31, 2005, revenues were $25,771,402, as compared to
$22,876,775 reported for the similar period in the prior fiscal year, with a net
loss of $397,091 for the nine-month period ended March 31, 2005, compared with a
net loss of $410,497 for the same period in the prior fiscal year. The increase
in revenues for both the three and nine month periods is the result of increased
equipment sales. Results for the three and nine month periods ended March 31,
2005, included tax benefits of $124,403 and $359,587, respectively. Despite a
sluggish IT environment, the Corporation was able to increase revenue levels in
fiscal 2005 as compared to fiscal 2004.
The net loss for the quarter ended March 31, 2005 was primarily attributable to
increased selling, general and administrative expenses. These expenses increased
primarily as a result of the Corporation's expansion of its sales staff based
upon its anticipated growth, particularly in business related to the convergence
of voice, video, and data networks, and internet protocol communications ("IPC")
marketplace. During the quarter, revenues from hardware sales increased due to
increased demand, primarily from the educational market, particularly with
respect to IPC products and services. Service related revenues increased
slightly in conjunction with increased demand for IPC products, though service
revenues continued to be impacted by project delays and a major customer's
budget reductions. The earnings for the three and nine-month periods ended March
31, 2005 include the income tax benefit. The income tax benefit was primarily
derived from the Corporation decreasing the deferred tax asset valuation
allowance recorded at June 30, 2004. The decrease in the deferred tax asset
valuation allowance was recorded in proportion to those existing net operating
losses that the Corporation currently expects to realize in connection with
certain IRS carryback provisions.
During the referenced periods, the Corporation's clients continued to be
conservative in their IT budgetary spending. As a result, management refocused
its attention on utilization rates of its service technicians and selling and
administrative expenses to reduce expenses. Because project delays are
client-based, management cannot determine in which quarters services will be
provided, nor can management give assurances that delays will not be longer than
expected or that orders will be given. During the quarter, the Corporation
received contract awards for IPC products and services. The performance of these
awards will extend over several quarters. In addition, indications of interest
have been received by customers with respect to IPC and security technology,
areas which management has targeted as growth areas for the Corporation.
Management concentrates it efforts on technical service and support, and on
sales of network and system integration products that yield higher profit
margins, and continues its adherence to and implementation of cost control
measures. Service and training related revenues are significant in their
contributions to earnings because these operations yield a higher profit margin
than equipment sales. For the three and nine-month periods ended March 31, 2005
and 2004, respectively, revenues from the provision of service, support,
outsourcing and network integration were largely the result of the Corporation
renewing and/or entering into service contracts with a number of large corporate
clients. Most of these contracts are short-term, usually twelve months or less,
and contain provisions which permit early termination. Although the contracts
generally contain
8
renewal terms, there is no assurance that such renewals will occur. Management
has noted a transition to project based business rather than contract based with
respect to certain support services. The demand for certain legacy support
services, such as help desk, has diminished recently as a result of industry
changes.
During the fiscal years discussed, the computer industry has experienced a trend
of decreasing prices of computers and related equipment. Management believes
that this trend will continue. Industrywide, the result of price erosion has
been lower profit margins on sales, which require businesses to sell a greater
volume of equipment to maintain past earning levels. Another result of the price
decreases has been intensified competition within the industry, including the
consolidation of businesses through merger or acquisition, the initiation of
sales by many manufacturers directly to the end-user, and the entrance of
manufacturers into technical services business. Management believes that the
adoption of policies by many larger corporate customers, which limit the number
of vendors permitted to provide goods and services for specified periods of
time, has further increased price competition.
The Corporation's performance is also impacted by other factors, many of which
are not within its control. These factors include: the short-term nature of
client's commitments; patterns of capital spending by clients; the timing and
size of new projects; pricing changes in response to competitive factors; the
availability and related costs of qualified technical personnel; timing and
customer acceptance of new product and service offerings; trends in IT
outsourcing; product constraints; and industry and general economic conditions.
To meet these competitive challenges and to maximize the Corporation's profit
margin, management has modified its marketing strategy during these years and
has enforced expense controls. Management also utilizes new trends such as
manufacturers' direct shipment and billing of the customers in exchange for
payment to the Corporation of an "agency fee" as a means to reduce equipment
related costs while increasing profits. Management believes that this approach,
although it may impact revenues, insulates the corporation from challenges which
may accompany sudden price decreases, hardware obsolescence and delays
collection of receivables.
Management's current marketing strategy is designed to emphasize provision of
technical services and sales of lower revenue/higher profit margin products
related to service and support operations. In this regard, management continues
its concentration on sales of network and system integration products, and IP
telephony technology, which yield higher profit margins. Management's efforts
include targeting commercial, educational and governmental customers who provide
marketplaces for a wide range of products and services at one time, a
cost-effective approach to sales. These customers often do not have their own
technical staffs and outsource their computer service requirements to companies
such as TransNet. Although there is uncertainty as to the economic future,
management is cautiously optimistic, particularly with respect to education
sales and expansion of its sales of IP telephony products.
Management believes it maximizes profits through concentration on sales of
value-added applications; promotion of the Corporation's service and support
operations; and strict adherence to cost cutting controls. In light of the
above, management emphasizes and continues the aggressive pursuit of an
increased volume of sales of technical service and support programs, and
promotion of its training services. In the near term, the Corporation believes
that product sales will continue to generate a significant percentage of the
Company's revenues. In addition, the Corporation's buying agreement with Ingram
Micro, Inc. enhances the Corporation's competitive edge through product
discounts unavailable through other sources.
9
With respect to selling, general and administrative expenses, actual expenses
increased to 24% of revenue for the quarter and 20% for the nine month period
ended March 31, 2005. This compares to approximately 22% of revenue for the
quarter and 18% for the nine month period ended March 31, 2004. The increases in
fiscal 2005 are primarily attributable to expansion of the Corporation's sales
staff in response to opportunities related to IPC markets. Management continues
its efforts to control administrative and personnel related costs.
Interest income increased in the in the quarter ended March 31, 2005 due to
higher interest rates and decreased for nine month period of fiscal 2005 as
compared to the same periods in fiscal 2004 due to lower amount of funds
invested, as well as a lower interest rate.
To date, inflation has not had a material effect on the Corporation's
operations.
LIQUIDITY AND CAPITAL RESOURCES
There are no material commitments of the Corporation's capital resources.
The Corporation currently finances a portion of its accounts receivable and
finances purchases of portions of its inventory through floor-planning
arrangements under which such inventory secures the amount outstanding. The
amount due under this financing decreased for the quarter and nine-month periods
ended March 31, 2005 due to purchase of equipment through other avenues.
Inventory increased in the quarter and nine-month periods ended March 31, 2005
as compared to the corresponding periods in the prior fiscal year also as a
result of sales orders which were open at the end of the periods.
Accounts receivable increased for the quarter and nine-month period ended March
31, 2005, as compared to the same periods in the prior fiscal year as a result
of increased revenues. Accounts payable similarly increased for the quarter and
nine-month period ended March 31, 2005, compared with the same periods in the
prior fiscal year as a result of purchases required to meet increased revenues.
Cash levels decreased for the three and nine-month periods ended March 31, 2005
as compared to the prior year's periods due to payments of costs associated with
inventory increases to cover open orders, as well as increased accounts
receivable.
For the fiscal quarter and nine months ended March 31, 2005, as in the similar
periods in the prior year, the internal resources of the Corporation were
sufficient to enable the Corporation to meet its obligations.
THE MATTERS DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS AND THROUGHOUT
THIS REPORT THAT ARE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT MANAGEMENT
EXPECTATIONS THAT INVOLVE RISK AND UNCERTAINTIES. POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, WITHOUT LIMITATION: THE IMPACT OF ECONOMIC CONDITIONS
GENERALLY AND IN THE INDUSTRY FOR MICROCOMPUTER PRODUCTS AND SERVICES;
DEPENDENCE ON KEY VENDORS; CONTINUED COMPETITIVE AND PRICING PRESSURES IN THE
INDUSTRY; PRODUCT SUPPLY SHORTAGES; OPEN-SOURCING OF PRODUCTS OF VENDORS; RAPID
PRODUCT IMPROVEMENT AND TECHNOLOGICAL CHANGE, SHORT PRODUCT LIFE CYCLES AND
RESULTING OBSOLESCENCE RISKS; TECHNOLOGICAL DEVELOPMENTS; CAPITAL AND FINANCING
AVAILABILITY; AND OTHER RISKS SET FORTH HEREIN.
10
ITEM 4. CONTROL AND PROCEDURES
The Chief Executive Officer and Chief Financial Officer of the Corporation have
concluded, based on their evaluation as of March 31, 2005, that the
Corporation's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Corporation in the reports filed or
submitted by it under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Corporation in such reports is accumulated and communicated to the Corporation's
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.
There were no significant changes in the Corporation's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation.
11
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
On March 8, 2005, the Corporation held its annual meeting of shareholders for
the purpose of considering and acting upon the election directors. At the
meeting, the election of both nominated directors was approved.
Election of Directors:
Name Shares Voted
---- ------------
For Authority Withheld
--- ------------------
John J. Wilk 3,810,151 335,910
Vincent Cusumano 3,955,261 190,800
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits -
31.1 Certification required by Section 302
31.2 Certification required by Section 302
32 Certification required by Section 906
B. Reports on Form 8-K -
On February 12, 2004, TransNet Corporation filed a Form 8-K under
Item 9.
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 thereunto duly authorized.
TRANSNET CORPORATION
(Registrant)
/s/ Steven J. Wilk
--------------------------------------
Steven J. Wilk, President and
Chief Executive Officer
/s/ John J. Wilk
---------------------------------------
John J. Wilk,
Principal Financial and Accounting Officer
and Chairman of the Board of Directors
DATE: May 13, 2005
12