TAMG Transnational Group Inc (PK)

Transnational Automotive Group, Inc. (TAUG) (OTCBB: TAMG) today reported improved financial results, including sharp increases in revenue and gross profit and a significantly reduced operating loss, for the fiscal 2009 second quarter ended August 31, 2008. Revenue for the most recent second quarter increased 67% to $3.6 million from $2.1 million in the same quarter last year. The company achieved net income of $1.9 million, or $0.04 per share, compared with a net loss of $1.8 million, or $0.04 per share, in the same quarter of fiscal 2007. Net income for the fiscal 2009 period includes a gain of $2.1 million from exoneration by the Minister of Finance of Cameroon of VAT and custom duty taxes on the company�s purchase of 47 city buses used in the operations of its LeBus division. Gross profit for the second quarter nearly quadrupled to $1.1 million from $217,718 in the prior year period. Total operating expenses for fiscal 2009 second quarter were reduced slightly to $1.1 million from $1.2 million, a year ago. The company�s operating loss for the fiscal 2009 second quarter declined to $60,242 from $955,315. For the year-to-date period of fiscal 2009, revenue advanced 72% to $6.4 million from $3.7 million a year ago. The company posted net income of $509,617, or $0.01 per share, for the first half of fiscal 2009, compared with a net loss of $3.5 million, or $0.09 per share, for the same period last year. Gross profit for the first half of fiscal 2009 more than doubled to $1.3 million from $624,819 in the prior year period. Total operating expenses amounted to $2.7 million, compared with $2.4 million last year. The company�s operating loss for the first half of fiscal 2009 declined to $1.3 million from $1.8 million a year ago. TAUG, which provides public bus transportation services in Cameroon, began operations in September 2006, with the introduction of LeBus in the capital city of Yaound�, followed by launch of LeCar in December 2006. Today, the company transports more than 30,000 passengers per day. �Our second fiscal quarter was marked by continued steady increases in ridership, demonstrating the importance of the vital transportation services we are providing to the cities we serve in Cameroon,� said Seid Sadat, TAUG�s chief financial officer, who also is serving as interim chief executive officer. �Results also benefited from a near tripling in government subsidies during the quarter, amounting to $1.4 million, which validates the positive social and economic change we are bringing to the region. �We believe the need for professional transportation services in sub-Saharan African nations, combined with our proven ability to serve this area will provide growth opportunities for the company in the years ahead,� Sadat added. About Transnational Automotive Group Founded with the goal to improve millions of lives through its economic and social development projects, TAUG currently employs more than 700 people in Cameroon. TAUG established and currently is operating the country�s government supported mass transportation urban bus system, LeBus, in the capital city of Yaound� and an inter-city, rural bus system, LeCar, between Yaound� and Douala, Cameroon�s two leading commercial and population centers, with plans for several new urban and inter-city route openings. The company has been invited by a number of Sub-Saharan African governments and business communities to undertake operations in transportation and energy-related programs. For more information about TAUG, visit www.transauto-group.com. Forward-Looking Statements This news release contains certain forward-looking statements, which in accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause actual results and performance in future periods to be materially different from that suggested by the forward-looking statements. Such statements include, but are not limited to, solid growth opportunities that exist both in Cameroon and other sub-Saharan African nations. Although management believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, no assurance can be given that actual results will not differ materially from these expectations. From time to time, these risks, uncertainties and other factors are discussed in filings with the U.S. Securities and Exchange Commission. TRANSNATIONAL AUTOMOTIVE GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) � � Three Months Ended Six Months Ended August 31, August 31, � 2008 � � 2007 � 2008 � 2007 NET REVENUE � Transportation services $ 2,053,217 $ 1,510,455 $ 3,967,826 $ 2,543,465 Government subsidy 1,384,564 512,236 2,169,690 993,424 Other � 132,575 � 111,075 � 243,071 176,920 Total revenue 3,570,356 2,133,766 6,380,587 3,713,809 � COST OF REVENUE - Transportation services � 2,488,681 � 1,916,048 � 5,041,138 3,088,990 � GROSS PROFIT 1,081,675 217,718 1,339,449 624,819 � OPERATING EXPENSES Sales and marketing 17,147 30,084 56,643 103,399 General and administrative 1,092,276 1,227,201 2,263,932 2,412,546 Stock based compensation - - 300,000 - Depreciation and amortization 32,494 25,230 66,441 40,764 Foreign currency exchange loss � - � (109,482 ) � - � (166,667 ) � TOTAL OPERATING EXPENSES � 1,141,917 � 1,173,033 � 2,687,016 2,390,042 � OPERATING LOSS (60,242 ) (955,315 ) (1,347,567 ) (1,765,223 ) � OTHER (INCOME) EXPENSE Gain on extinguishment of government debt (2,057,291 ) - (2,057,291 ) - Finance costs from beneficial conversion feature - 109,704 - 121,982 Finance costs from issuance of warrants - 430,241 - 950,667 Loss on accident of buses - 29,837 - 63,274 Interest expense 101,704 266,965 200,901 611,798 Interest income � (45 ) � (7,719 ) � (794 ) � (7,721 ) TOTAL OTHER (INCOME) EXPENSE � (1,955,632 ) � 829,028 � (1,857,184 ) 1,740,000 � NET INCOME (LOSS) 1,895,390 (1,784,343 ) 509,617 (3,505,223 ) � COMPREHENSIVE INCOME (LOSS) Unrealized foreign currency translation gain (loss) � (135,152 ) � - � (58,382 ) � - COMPREHENSIVE INCOME (LOSS) $ 1,760,238 $ (1,784,343 ) $ 451,235 $ (3,505,223 ) � NET INCOME (LOSS) PER SHARE: BASIC $ 0.04 $ (0.04 ) $ 0.01 $ (0.09 ) � NET INCOME (LOSS) PER SHARE: DILUTED $ 0.04 $ (0.04 ) $ 0.01 $ (0.09 ) � WEIGHTED AVERAGE NUMBER OF SHARES BASIC � 51,679,036 � 43,100,815 � 51,439,906 40,288,938 DILUTED � 51,679,036 � 43,100,815 � 51,439,906 40,288,938 � TRANSNATIONAL AUTOMOTIVE GROUP, INC. CONSOLIDATED BALANCE SHEET � � August 31, February 28, 2008 � 2008 � ASSETS (Unaudited) CURRENT ASSETS Cash & cash equivalents $ 273,556 $ 578,105 Restricted cash 51,274 - Other receivables 1,753,167 665,693 Prepaid expenses, advances and deposits 278,759 315,133 Inventory, net of reserve for obsolescence � 351,817 � � � 304,978 � Total current assets 2,708,573 1,863,909 � PROPERTY, BUSES & EQUIPMENT, net � 5,040,504 � � 6,300,415 � � TOTAL ASSETS $ 7,749,077 � $ 8,164,324 � � LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 2,535,680 $ 2,424,543 Deferred revenue - 338,440 VAT and custom duty taxes payable to governmental agencies of Cameroon 1,634,292 3,377,287 Due to related parties 1,284,401 831,486 Notes payable, net of debt discount 260,000 110,000 Notes payable to related party, net of debt discount 2,815,000 2,815,000 Accrued interest (including $576,876 and $385,466 to related parties as of August 31, 2008 and February 29, 2008, respectively) � 604,693 � � 403,792 � Total current liabilities 9,134,066 10,300,548 � COMMITMENTS AND CONTINGENCIES � STOCKHOLDERS' DEFICIT Common stock, $.001 par value; 200,000,000 shares authorized; 51,679,036 and 51,179,036 shares issued and outstanding, respectively 48,013 51,179 Treasury (400,000 shares owned by subsidiary) (100,000 ) (100,000 ) Additional paid-in capital 16,137,286 15,837,786 Accumulated deficit (17,866,569 ) (18,376,186 ) Other comprehensive gain � foreign currency � 392,615 � � 450,997 � Total stockholders' deficit � (1,384,989 ) � (2,136,224 ) � TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 7,749,077 � $ 8,164,324 �