UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(D) of The Securities Act of 1934
For the quarterly period ended: December 31, 2003
Commission file number: 000-30734
HUMANA TRANS SERVICES HOLDING CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 11-3255617
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
7466 New Ridge Road, Suite 7, Hanover, Maryland 21076
(Address of principal executive offices)
(410) 855-8758
(Issuer's telephone number)
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 and 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $0.0001 par value 9,376,188
(Class) (Outstanding as of February 16, 2004)
HUMANA TRANS SERVICES HOLDING CORP.
FORM 10-QSB
December 31, 2003
INDEX
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets.........................................F-2
Consolidated Statements of Operations...............................F-3
Consolidated Statements of Cash Flows...............................F-4
Consolidated Statements of Stockholders' Equity.....................F-5
Notes to Consolidated Financial Information.........................F-6
Item 2 Management's Discussion and Analysis or Plan of Operation............11
Item 3 Controls and Procedures..............................................16
Part II - OTHER INFORMATION
Item 1. Legal Proceedings....................................................17
Item 2. Changes In Securities................................................17
Item 3. Defaults Upon Senior Securities......................................17
Item 4. Submission Of Matters To A Vote Of Security Holders..................18
Item 5. Other Information....................................................18
Item 6. Exhibits and Reports on Form 8-K.....................................18
Signatures....................................................................18
Certifications................................................................19
2
PART I: FINANCIAL INFORMATION
Humana Trans Services Holding Corp.
And Subsidiaries
December 31, 2003
TABLE OF CONTENTS Page
FINANCIAL STATEMENTS
Balance Sheet as of December 31, 2003 F-1
Statements of Operations for the year
ended December 31, 2003 and 2002 F-2
Statements of Operations for the year
ended December 31, 2003 and 2002 F-3
Statements of Stockholders' Deficiency for year
ended December 31, 2003 and 2002 F-4
Statements of Cash Flows for the year
ended December 31, 2003 and 2002 F-5
Notes to Financial Statements F6-F11
3
HUMANA TRANS SERVICES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
2003 2002
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 35,216 $ --
Accounts receivable 88,157 --
Loan receivable - related party -- 100
Employee advances 11,990 --
Other current assets 15,995 --
----------- -----------
TOTAL CURRENT ASSETS 151,358 100
----------- -----------
FIXED ASSETS 1,056 --
----------- -----------
OTHER ASSETS:
Client list 68,500 --
----------- -----------
TOTAL OTHER ASSETS 68,500 --
----------- -----------
Total Assets $ 220,914 $ 100
=========== ===========
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES:
Accounts payable $ 207,959 $ 137,191
Accrued expenses 335,447 4,600
Payroll taxes payables 254,925 --
Loans Payable 464,551 62,310
----------- -----------
TOTAL CURRENT LIABILITIES 1,262,882 204,101
----------- -----------
DEFICIENCY IN ASSETS:
Common stock, $.0001 par value, 50,000,000 shares authorized, 1,271 656
6,345,188 shares outstanding in 2003
Less stock subscription receivable -- --
----------- -----------
1,271 --
Additional paid in capital 87,304
Deficit accumulated during development stage (1,130,543) (204,657)
----------- -----------
TOTAL DEFICIENCY IN ASSETS (1,041,968) (204,001)
----------- -----------
Total liabilities and deficiency in assets $ 220,914 $ 100
=========== ===========
See notes to financial statements.
F-2
HUMANA TRANS SERVICES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
----------- -----------
REVENUES $ 955,639 $ --
COST OF REVENUES 631,721
----------- -----------
GROSS PROFIT 323,918 --
GENERAL AND ADMINISTRATIVE 462,216 38,265
----------- -----------
Loss from operations (138,298) (38,265)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (21,876) --
----------- -----------
(21,876) --
----------- -----------
NET INCOME (LOSS) $ (160,174) $ (38,265)
----------- -----------
LOSS PER SHARE
Basic $ (0.03) $ (0.03)
=========== ===========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 6,345,188 1,200,000
=========== ===========
See notes to financial statements.
F-3
HUMANA TRANS SERVICES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIENCY IN ASSETS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002
COMMON STOCK ADDITIONAL
----------------------- PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ---------- ---------- ---------- ----------
Balance at September 30, 2003 6,345,187 1,161 87,414 (970,369) (881,794)
Net loss the three months ended December 31, 2003 -- -- -- (160,174) (160,174)
---------- ---------- ---------- ---------- ----------
Balance at September 30, 2003 (1,130,543) (1,041,968)
========== ========== ========== ========== ==========
F-4
HUMANA TRANS SERVICES HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(160,174) $ (38,265)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment loss on Goodwill -- --
Stock compensation expenses -- 455
Amortization of customer list 3,500 --
Changes in assets and liabilities:
Accounts receivable 189 --
Employee advances -- --
Other current assets (47) --
Accounts payable 30,794 6,000
Accrued expenses 72,615 4,600
Payroll taxes payable 93,349 --
--------- ---------
Net cash used in operating activities 40,226 (27,210)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Goodwill -- --
Acquisition of customer list -- --
Loan receivable - related party -- (100)
--------- ---------
Net cash used in investing activities -- (100)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase(Decrease) in loans payable (21,094) --
Proceeds from stockholder advances -- 27,310
Proceeds from convertible notes payable -- --
--------- ---------
Net cash provided by financing activities (21,094) 27,310
--------- ---------
NET INCREASE IN CASH $ 19,132 $ --
CASH AND CASH EQUIVALENTS, Beginning 16,084 --
--------- ---------
CASH AND CASH EQUIVALENTS, End $ 35,216 $ --
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH PAYMENTS
Interest $ 21,876 $ --
========= =========
Taxes $ -- $ --
========= =========
F-5
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and disclosures required
by accounting principles generally accepted in the United States of America.
However, in the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial position of Humana Trans
Services Holding Corp. & Subsidiaries. (the Company) at December 31, 2003 and,
statements of operations, changes in stockholders' deficit and cash flows for
the three months ended December 31, 2003. For further information, refer to the
financial statements and disclosures that were filed by the Company with the
Securities and Exchange Commission on Form 10-KSB (Annual Report Pursuant to
Section 13 or 15(d) of the Securities Act of 1934) (File No. 000-30734).
NOTE 2 -- ORGANIZATION, NATURE OF BUSINESS AND PURCHASE OF OPERATIONS
Organization
On August 16, 2002, (new) Steam Cleaning USA Inc., a Delaware corporation was
organized (and formerly known as TTI Holdings of America Corp. (TTI)), issued
90,000,000 of its shares of common stock in exchange for 100% of the common
stock of Steam Cleaning USA, Inc., the Wisconsin corporation organized in August
2002. The stockholdings of the original stockholders of Steam Cleaning USA, Inc.
(the Wisconsin corporation) will represent approximately 90% of the stock
outstanding of TTI on a post exchange basis. Simultaneously with the exchange,
Steam Cleaning USA, Inc. (the Wisconsin corporation) merged into TTI with TTI
changing its name to Steam Cleaning USA, inc. (a Delaware corporation) Such
exchange diluted the ownership percentage of the prior Steam Cleaning USA, Inc.
stockholders to approximately 10 percent and resulted in the prior stockholders
of Steam Cleaning USA, Inc. owning approximately 90 percent of outstanding
shares. As a legal effect of the merger, TTI acquired all of the assets and
assumed all the liabilities of Steam Cleaning USA, Inc. For reporting purposes,
however, the foregoing stock-exchange transaction has been accounted for as a
reverse acquisition in which Steam Cleaning USA, Inc.(Wisconsin) acquired all
the assets and liabilities of Steam Cleaning USA, Inc. (Delaware)(TTI) and
recorded them at their fair value and as if Steam Clean USA, Inc. (Wisconsin)
remained the reporting entity. Because Steam Cleaning USA, Inc. is the surviving
entity for legal purposes, all equity transactions have been restated in terms
of this corporation's capital structure.
Concurrent with the consummation of the above described transaction the company
affect a reverse split of 1 new share for every 5 shares outstanding.
F-6
Acquisitions:
On July 1, 2003 the company acquired Humana Trans Services Holding Corp. and its
subsidiaries (as described below). The entity was incorporated in Delaware on
April 25, 2003 issuing 100 shares of common stock. (On July 1, 2003 the Company
merged into Steam Cleaning USA, Inc. (Steam Cleaning) leaving Steam Cleaning as
the surviving corporation. On August 4, 2003 Steam Cleaning filed a Certificate
of Amendment to its Certificate of Incorporation changing its name to "Humana
Trans Services Holding Corp.) The Company's certificate of incorporation
authorized it to issue 20,000,000 shares of Common Stock with a par value of $
..0001 per share and 5,000,000 shares of preferred stock, par value $.0001. Prior
to the company's acquisition of Humana Trans Services Group, Ltd. and Bio
Solutions LLC (see below) it had no operations.
Humana Trans Services Group, Ltd.
On April 30, 2003 the HTSG entered into a Stock Purchase Agreement wherein the
it purchased from National Management Consulting Inc. (NMC)(a publicly traded
company and sole stockholder of Humana Trans Services Group, Ltd. (HTSG)), all
the outstanding shares of HTSG. The majority of shareholders of HTSG were also
shareholders of NMC. The purchase price was $255,000 for the stock of which
$25,000 was paid at closing and the balance in the form of a promissory note
that bears interest at the rate of five percent (10%), with interest and
principle payable over a two year period. The Note is secured by stock owned by
the majority shareholder of the company (and a former director/officer) in the
following companies: NMC, Dominix, Inc., and CDKnet.com (all publicly traded
companies). Also this stockholder gave a waiver to any right to receive any
shares or proceeds of any shares of NMC. Humana has commenced operations in the
employee leasing business whereby Humana contracts with various businesses to
provide employees to the business. The recipient business then pays a fee to
Humana out of which the employee is paid and Humana retains a portion for its
administrative efforts.
Bio Solutions, LLC
In conjunction with the acquisition of HTSG the company assumed the operations
of Bio Solutions LLC owned by the president of the company and who is also a
significant stockholder of the company. No consideration was paid, however the
transaction resulted in acquiring $143,622 of goodwill that the company
considered impaired and has also been written down. Goodwill is expected to be
fully deductible for tax purposes.
Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
The Company has reorganized as a management and holding company with a focus on
acquiring and managing small enterprises that have potential growth prospects in
similar lines of business as HTSG. The primary criteria for acquisition
candidates are that they must be at or near profitability and exhibit potential
for growth with a minimal amount of financing. Financing recently has been from
stockholder advances and factoring accounts receivable.
F-7
The Company anticipates that in order to fulfill its plan of operation including
payment of certain past liabilities of the company, it will need to seek
financing from outside sources. The company is currently pursuing a private
placement of debt. Also, the Company is actively in discussion with one or more
potential acquisition or merger candidates. There is no assurance that the
company will be successful in raising the necessary funds nor there a guarantee
that the Company can successfully execute any acquisition or merger transaction
with any company or individual or if such transaction is effected, that the
Company will be able to operate such company profitably or successfully.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustment that
might result from the outcome of this uncertainty.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation-- The consolidated financial statements include the
accounts of Humana Trans Services Group, Ltd. and Bio Solutions, LLC a wholly
owned subsidiary acquired in April 2003 (see note 1). Two new corporate
subsidiaries, Skilled Tradesman, Inc. and Waste Remediation, Inc. were formed
and have remained inactive. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Revenue Recognition -- HTSG recognizes revenue based upon services performed and
by employees and billed to customers.
Cash and Cash Equivalents -- For purposes of reporting cash flows, the Company
considers all cash accounts, which are not subject to withdrawal restrictions or
penalties, as cash and cash equivalents in the accompanying balance sheets. The
Company maintains their cash in a financial institution, which insures its
deposits with the FDIC up to $100,000 per depositor.
Allowance For Doubtful Accounts -- Trade accounts receivable are stated net of
any allowance for doubtful accounts. The Company estimates the allowance based
on an analysis of specific customers, taking into consideration the age of past
due accounts and an assessment of the customer's ability to pay. At September
30, 2003 management of the Company had determined no further reserve was
required after writing off any potential bad debts.
Client List - Client list is being amortized on a straight line basis over five
years
Property and Equipment -- Depreciation is computed on the straight-line method
over the estimated useful lives of the respective assets, which range from three
to five years. Maintenance and repairs are charged to expense as incurred; major
renewals and improvements are capitalized.
F-8
Fair Value of Financial Instruments -- The fair value of financial instruments
classified as current assets or liabilities, including cash and cash
equivalents, accounts receivable, related party receivables and accounts
payable, accrued expenses, and stockholder advance approximate carrying value,
principally because of the short maturity of those items. Note Payable-CDK.Net
also approximates it fair based upon its maturity and the interest rate.
Income Tax -- federal income tax and to the extent that all the corporations
have state income taxes they are accounted under an asset and liability method,
which recognizes deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the tax and financial reporting
bases of certain assets and liabilities of each entity of the combined group. As
of September 30, 2003 the Company had no taxable income. As of June 30, 2003 a
valuation allowance to offset any future benefit from net operating loss carry
forwards has been established because management believes it is more likely than
not that the deferred asset will not be recovered. The Company has tax net
operating losses to offset future taxable income if such taxable income
materializes and subject to certain limitations under the Internal Revenue Code.
Goodwill - Cost of investments in purchased companies in excess of the
underlying fair value of net assets at dates of acquisition are recorded as
goodwill and assessed annually for impairment. If considered impaired, goodwill
will be written down to fair value and a corresponding impairment loss
recognized.
Use of Estimates -- The preparation of financial statements in conformity with
accounting principles generally accepted in the United State 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 reported period. Actual results could differ from those
estimates.
Note 3 - ACCOUNTS RECEIVABLE FACTORING ARRANGMENT
On October 21, 2003 HTSG entered into a factoring arrangement whereby certain
identified accounts receivable would be sold to AmeriFund Capital Group, LLC
(AFCG) up to a maximum of $500,000. AFCG will advance up to 80% of the face
value of the accounts receivable. At the time of collection the factor will
remit the remaining 20% of the face value of the receivable less a "discount
fee" ranging from 2.50% (if 15 days elapsed) to 10.11% (91 days after elapsed).
The arrangement is non-recourse to the company in the event of non-payment of an
account by reason of bankruptcy and the factor maintains a security interest in
all accounts receivable. The term of the arrangement is twelve months.
F-9
Note 4 - PAYROLL TAXES PAYABLE
In conjunction with the acquisition of Humana Trans Service Group (see Note 2)
the company assumed delinquent past due state and federal payroll taxes. The
balance of these liabilities is shown in the balance sheet of December 31, 2003.
The company has also accrued estimated interest and penalties on these unpaid
taxes. Additionally, several states have filed liens on the company. The company
is currently paying all payroll taxes and intends to pay and settle with state
and federal jurisdictions at time of receiving additional working capital.
NOTE 5-- LOANS PAYABLE
Loans payable at September 30, 2003 are as follows:
Due Humana Force Systems $103,758
Due Stockholder/owner 95,793
Note Payable - James W. Zimbler 230,000
Convertible Notes Payable 35,000
--------
$464,551
========
DUE HUMANA FORCE SYSTEMS - represents unsecured advances made to Bio Solutions
for working capital. Humana Force Systems is a company that had operated in the
same business as HTSG, whose owner became president of Human Trans Service
Group, Inc., but who died before assuming control. There are no terms of
repayment and it non-interest bearing.
DUE STOCKHOLDER / OFFICER - This represents funds advances to Bio Solutions for
working capital. There are no terms for repayment and is non-interest bearing.
Also the advance is unsecured.
NOTE PAYABLE -JAMES ZIMBLER - This is the note issuance in conjunction with the
acquisition of Humana Trans Service Group Ltd (see Note 1). The note is
currently in default in that only the first few monthly payments were made, and
therefore the entire amount has been classified current. On July 10, 2003 a
settlement agreement was entered into by the company, National Management and
the major shareholder of the company whereby the majority stockholder gave
holdings in National Management Consulting and other companies that was being
held as collateral in order to satisfy the obligation. A new obligation was
created to this stockholder for an amount equal to the settlement.
In addition, included in accounts payable is an advance of $36,000 from a
partnership owned by three stockholders and an officer of the Company. The
proceeds of this advance were used to partially pay workman's compensation
insurance for the Company.
F-10
NOTE 6 - Lease Commitment
In August 2002, the company entered into lease for use of its headquarters in
Maryland. The lease calls for payments of $1,770/month. Rent expense for period
was $21,240 Additionally, the lease is guaranteed by the president of the
company.
Noncancellable payments over the term of the lease are as follows:
Twelve months ending:
December 31, 2004 $21,240
December 31, 2005 $14,160
-------
$35,400
=======
NOTE 7 - SUBSEQUENT EVENTS
Corporate Program Administrators, Inc.
On November 10, 2003, the company entered into an asset purchase agreement to
purchase certain assets of "Corporate Program Administrators, Inc." for the
issuance of 385,000 shares of common stock and $25,000 cash. No liabilities are
being assumed and certain assets such as accounts receivable and "prepaids" are
being excluded from the purchase.
The Parties have executed an Amendment to the Asset Purchase Agreement, amending
the effective date of the asset purchase to January 1, 2004, and amending the
purchase price to be 306,000 shares of common stock of the registrant, including
all previous cash and excluded assets being purchased.
The transaction will be effective within the second fiscal quarter ended March
31, 2004.
Personnel Management Solutions LLP
The company and "Personnel Management Solutions, LLP (PMS) have entered into a
"memorandum of understanding on December 10, 2003" and "term left December 29,
2003" to pursue a "definitive purchase agreement." It is anticipated that the
purchase price will be based upon three times adjusted net earnings of PMS
payable 25% in cash plus the issuance of common stock of the company for the
remaining 75% of the purchase price, which is to be determined. Completion of
any purchase is contingent upon performance of adequate due diligence by the
company.
Prior to the execution of a definitive agreement for the purchase of PMS by the
company will manage all operations and accounts of PMS effective January 1,
2004. All operations are to continue to be processed by PMS, but will be in the
name of the company. PMS will retain ownership of all accounts and
responsibility for all liabilities. The company will receive a fee of 0.05% of
total gross payroll processed during this period.
It is anticipated that the Registrant will complete the transaction with PMS
will close in the second fiscal quarter, ended March 31, 2004
F-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward-looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or our behalf. We disclaim any obligation to update
forward-looking statements.
OVERVIEW
Humana Trans Services Holding Corp., formerly Steam Cleaning USA, Inc., formerly
TTI Holdings of America Corp was incorporated in November 1994 under the laws of
the State of Delaware under the name Thermaltec International, Corp. On May 18,
2001, Thermaltec changed its name to TTI Holdings of America Corp. ("TTI" or the
"Company"). From its inception until July 2001, TTI was primarily engaged in the
thermal spray coating industry in the U.S. and Costa Rica. In July 2001, TTI
divested the operations of its thermal spraying business, formerly consolidated
in its wholly-owned subsidiary Panama Industries, Ltd, to its shareholders of
record as of June 22, 2001 in the form of a stock dividend on the basis of one
(1) share of Panama for every three (3) shares of TTI owned (the "Panama
Spin-off"). Accordingly, as of July 2, 2001, TTI was no longer in the thermal
spraying business and has been operating as a holding company focused on
developing new business opportunities.
PRIOR TRANSACTIONS:
In June 2001, TTI acquired 300,000 shares of Cobex Technology Inc. for $50,000
and the issuance of 100,000 shares of its Common Stock. These shares represented
approximately 18% of Cobex's total outstanding shares. Cobex is a New York based
communications interconnect provider and installer serving small to middle sized
companies and institutions. On December 12, 2001, TTI agreed to sell all of its
shares back to Cobex for a total of $35,000, payable $7,000 on closing and the
balance payable over a 12-month period. This transaction closed in January 2002.
On October 10, 2001, TTI entered into an agreement to merge Transventures into
Cyberedge Enterprises, Inc, a Delaware corporation company that had recently
filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. TTI was
to receive 20% of the total outstanding shares of
11
Cyberedge at the closing. The purpose of the transaction was to allow
Cyberedge's management, primarily its President, James W Zimbler, to develop the
transportation and logistics business utilizing their in-house network of
industry contacts. This transaction was never completed however.
On November 2, 2001, Mr. Zimbler was named TTI's interim President in addition
to being named to the TTI Board of Directors. Mr. Zimbler replaced TTI's then
current Chief Executive Officer and President Andrew B. Mazzone who resigned
both positions effective November 1, 2001. On December 14, 2001, TTI and
Cyberedge mutually agreed to terminate the merger of Transventures into
Cyberedge as it was determined by both companies that TTI and its management
were better suited to exploit the Transventure business model and create value.
Pursuant to a Stock Purchase Agreement, dated August 15, 2002, entered into by
the Registrant, the shareholders of the issued and outstanding shares of Steam
Cleaning USA, Inc., have sold their shares to the Registrant to the issuance of
a total of 90,000,000 shares of common stock. Steam Cleaning USA, Inc., a
Wisconsin corporation, was set up by a group of outside individuals for the
purpose of effectuating a transaction organized specifically to potentially
acquire and expand the operations of Steam Cleaning and Sterilization, Inc.
Steam Cleaning and Sterilization began its existence as an unincorporated
proprietorship over forty-five years ago when the present owners began providing
steam cleaning and cart maintenance services to local grocery stores in
Wisconsin. The proprietorship was incorporated in 1962 under its present name as
a Wisconsin corporation. The company continued to primarily service grocery
stores, even after the stores were acquired or merged into larger regional
entities. The shares were issued after the effectiveness of the five (5) for one
(1) reverse split, to be effective on September 3, 2002. At that time the
shareholders will receive an aggregate total amount of 18,000,000 shares. The
owners of Steam Cleaning and Sterilization were slow to enter into serious
meaningful discussions about a business combination, and on December 27, 2002,
the Stock Purchase Agreement, dated August 15, 2002, was amended in that the
90,000,000 shares issued were returned to the treasury and in their place a
total of 5,000,000 shares were issued. On August 19, 2002 the company changed
its name to Steam Cleaning USA, Inc.
As of July 1, 2003, we entered into a Stock Purchase Agreement to purchase 100%
of the stock of Humana Trans Services Holding Corp., a Delaware corporation
("Holding"). Holding is the owner of Humana Trans Services Group, Ltd., Skilled
Tradesman, Inc., Waste Remediation Systems, Inc., and Bio Solutions of Maryland,
LLC. Holding was previously wholly-owned by our former Director, James W.
Zimber, and other shareholders, as was set forthonthe filing of July 10, 2004.
The purchase price for the 100% issued and outstanding shares of Holding is the
issuance of 6,000,000 shares of common stock of the Company, to be issued after
the effective date of the reverse 8 for 1 split of the common stock of the
Company.
RECENT TRANSACTIONS:
Corporate Program Administrators, Inc.
On November 10, 2003, the company entered into an asset purchase agreement to
purchase certain assets of "Corporate Program Administrators, Inc." for the
issuance of 385,000 shares of common stock and $25,000 cash. No liabilities are
being assumed and certain assets such as accounts receivable and "prepaids" are
being excluded from the purchase.
12
The Parties have executed an Amendment to the Asset Purchase Agreement, amending
the effective date of the asset purchase to January 1, 2004, and amending the
purchase price to be 306,000 shares of common stock of the registrant, including
all previous cash and excluded assets being purchased.
The transaction will be effective within the second fiscal quarter ended March
31, 2004.
Personnel Management Solutions LLP
The company and "Personnel Management Solutions, LLP (PMS) have entered into a
"memorandum of understanding on December 10, 2003" and "term left December 29,
2003" to pursue a "definitive purchase agreement." It is anticipated that the
purchase price will be based upon three times adjusted net earnings of PMS
payable 25% in cash plus the issuance of common stock of the company for the
remaining 75% of the purchase price, which is to be determined. Completion of
any purchase is contingent upon performance of adequate due diligence by the
company.
Prior to the execution of a definitive agreement for the purchase of PMS by the
company will manage all operations and accounts of PMS effective January 1,
2004. All operations are to continue to be processed by PMS, but will be in the
name of the company. PMS will retain ownership of all accounts and
responsibility for all liabilities. The company will receive a fee of 0.05% of
total gross payroll processed during this period.
It is anticipated that the Registrant will complete the transaction with PMS
will close in the second fiscal quarter, ended March 31, 2004
RESULTS OF OPERATIONS
Until July 1, 2003, the last quarter of the Registrant's fiscal year, ending
September 30, 2003, the Registrant did not have an operating unit. Therefore a
comparison of sales to the previous year is not an accurate representation of
the increase or decrease of the revenues, costs and sales of the Registrant.
Subsequent to July 1, 2004, the Registrant had $797,682 in sales, with the cost
of revenues of $507,718 and other expenses, including interest expense of
$33,368 and impairment of Goodwill of $469,005 for total expenses of $1,016,937.
For the quarter ended December 31, 2003, the Registrant had Revenues of
$955,639, compared to no revenues for the quarter ended December 31, 2002, with
Cost of revenues of $631,721 compared to no cost in the comparison quarter.
Gross profit for the fiscal quarter was $323,918, compared to no gross profit in
the fiscal quarter ended December 31, 2002. Administrative expenses were
$462,216 for the recent fiscal quarter resulting in a loss from operations of
$138,298. It is anticipated by the Registrant that General and Administrative
costs will remain relatively the same, while Revenues and Gross profit will
increase.
Humana's business is referred to as Employee Leasing. Humana has contracts with
various businesses to provide employees to the business. The business then pays
a fee to Humana. Out of this fee, the employee is paid, they receive benefits
and Humana retains a portion for its administrative efforts. Examples of the
types of services that Humana provides to its clients, include; Driver
recruitment, including the placement of ads, interviewing, all testing and
background checks, Driver leasing and Leased labor. Currently Humana operates in
5 states and
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has current annual revenues of approximately $2,000,000. Some of Humana's
clients are Cardinal Healthcare, Giant Foods and Royal Ahold.
FOR THE QUARTER ENDED ENDING DECEMBER 31, 2002 VS. DECEMBER31, 2002
For the quarter ended December 31, 2003, the Registrant had Revenues of
$955,639, compared to no revenues for the quarter ended December 31, 2002, with
Cost of revenues of $631,721 compared to no cost in the comparison quarter.
Gross profit for the fiscal quarter was $323,918, compared to no gross profit in
the fiscal quarter ended December 31, 2002. Administrative expenses were
$462,216 for the recent fiscal quarter resulting in a loss from operations of
$138,298. It is anticipated by the Registrant that General and Administrative
costs will remain relatively the same, while Revenues and Gross profit will
increase. Cash and cash equivalents rose from $100 to $35,216, Accounts
receivable were $88,157 from none and Employee Advances and Other Current Assets
rose to $27,985 from none. Liabilities in the quarter ended December 31, 2003
rose to $1,262,882, including Accounts payable of $207,959, Accrued expenses of
$335,447 and payroll taxes payables of $254,925, from the quarter ended December
31, 2002 which were $204,101.
It is anticipated that the addition of the operations from Corporate Program
Administrators, Inc. and Personnel Management Solutions LLP will increase the
Revenues and Current Assets substantially over the increase in Cost of Revenues
and the increase in liabilities.
LIQUIDITY AND FINANCIAL RESOURCES
The Company incurred a net loss of $712,628 during the year ended September 30,
2003 and for the period ended December 31, 2003 incurred a net loss of $160,714
and has incurred substantial net losses for each of the past two years. At
September 30, 2003, current liabilities exceed current assets by $790,974, and
for the period ended December 31, 2003, the current liabilities exceed current
assets by $1,111,524. These factors raise substantial doubt about the Company's
ability to continue as a going concern. It is the intention of the Company's
management to improve profitability by significantly reducing operating expenses
and to increase revenues significantly, through growth and acquisitions. The
ultimate success of these measures is not reasonably determinable at this time.
RISK FACTORS
Much of the information included in this statement includes or is based upon
estimates, projections or other "forward looking statements". Such forward
looking statements include any projections or estimates made by us and our
management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other "forward
looking statements".
14
Key Personnel
All of our present officers or directors are key to our continuing operations,
we rely upon the continued service and performance of these officers and
directors, and our future success depends on the retention of these people,
whose knowledge of our business and whose technical expertise would be difficult
to replace. At this time, some of our officers or directors are bound by
employment agreements, and as a result, any of them could leave with little or
no prior notice.
If we are unable to hire and retain sales and marketing and operational
personnel, any business we acquire could be materially adversely affected.
Competition for qualified individuals is likely to be intense, and we may not be
able to attract, assimilate, or retain additional highly qualified personnel in
the future. The failure to attract, integrate, motivate and retain these
employees could harm our business.
Uncertain Ability to Manage Growth
Our ability to achieve any planned growth upon the acquisition of a suitable
business opportunity or business combination will be dependent upon a number of
factors including, but not limited to, our ability to hire, train and assimilate
management and other employees and the adequacy of our financial resources. In
addition, there can be no assurance that we will be able to manage successfully
any business opportunity or business combination. Failure to manage anticipated
growth effectively and efficiently could have a materially adverse effect on our
business.
"Penny Stock" Rules May Restrict the Market for the Company's Shares
Our common shares are subject to rules promulgated by the Securities and
Exchange Commission relating to "penny stocks," which apply to companies whose
shares are not traded on a national stock exchange or on the NASDAQ system,
trade at less than $5.00 per share, or who do not meet certain other financial
requirements specified by the Securities and Exchange Commission. These rules
require brokers who sell "penny stocks" to persons other than established
customers and "accredited investors" to complete certain documentation, make
suitability inquiries of investors, and provide investors with certain
information concerning the risks of trading in the such penny stocks. These
rules may discourage or restrict the ability of brokers to sell our common
shares and may affect the secondary market for our common shares. These rules
could also hamper our ability to raise funds in the primary market for our
common shares.
Possible Volatility of Share Prices
Our common shares are currently publicly traded on the Over-the-Counter Bulletin
Board service of the National Association of Securities Dealers, Inc. The
trading price of our common shares has been subject to wide fluctuations.
Trading prices of our common shares may fluctuate in response to a number of
factors, many of which will be beyond our control. The stock market has
generally experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of companies with no
current business operation. There can be no assurance that trading prices and
price earnings ratios previously experienced by our common shares will be
matched or maintained. These broad market and industry factors may adversely
affect the market price of our common shares, regardless of our operating
performance.
In the past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management's attention and resources.
15
Indemnification of Directors, Officers and Others
Our Certificate of Incorporation and By-laws contain provisions with respect to
the indemnification of our officers and directors against all expenses
(including, without limitation, attorneys' fees, judgments, fines, settlements,
and other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of the fact that the person is one of our officers
or directors) incurred by an officer or director in defending any such
proceeding to the maximum extent permitted by Delaware law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of our company under Delaware law or otherwise, we have been advised
that the opinion of the Securities and Exchange Commission is that such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable.
Anti-Takeover Provisions
We do not currently have a shareholder rights plan or any anti-takeover
provisions in our By-laws. Without any anti-takeover provisions, there is no
deterrent for a take-over of our company, which may result in a change in our
management and directors.
Reports to Security Holders
Under the securities laws of Delaware, we are not required to deliver an annual
report to our shareholders but we intend to send an annual report to our
shareholders.
ITEM 3. CONTROLS AND PROCEDURES
The Registrant's principal executive officers and principal financial officer,
based on their evaluation of the registrant's disclosure controls and procedures
(as defined in Rules 13a-14 (c) of the Securities Exchange Act of 1934) as of
January 2, 2004, have concluded that the Registrants' disclosure controls and
procedures are adequate and effective to ensure that material information
relating to the registrants and their consolidated subsidiaries is recorded,
processed, summarized and reported within the time periods specified by the
SEC's rules and forms, particularly during the period in which this quarterly
report has been prepared.
The Registrants' principal executive officers and principal financial officer
have concluded that there were no significant changes in the registrants'
internal controls or in other factors that could significantly affect these
controls subsequent to January 2, 2004, the date of their most recent evaluation
of such controls, and that there was no significant deficiencies or material
weaknesses in the registrant's internal controls.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Other than described below, there are no past, pending or, to our knowledge,
threatened litigation or administrative action which has or is expected by our
management to have a material effect upon our business, financial condition or
operations, including any litigation or action involving our officer, director
or other key personnel. There have been no changes in the company's accountants,
or disagreements with its accountants since its inception.
In May and June 2001, TTI entered into several letter agreements to acquire up
to eleven separately owned comprehensive outpatient rehabilitation facilities
("CORF's") that were managed by a Florida based company named Total Health Care
Consulting, Inc ("Total"). The Company was essentially acquiring the licenses to
operate these CORF's with Total providing the back-office management functions.
The acquisition of these CORF's was to have been executed by the distribution of
shares of TTI to the CORF owners based upon certain financial criteria. On
August 24, 2001 the Company terminated the agreements with the CORF owners and
did not consummate the acquisitions upon being informed that certain
representations regarding the financial condition of the CORFs and Total and
other material matters were found to be not true. Although approximately
3,500,000 shares of TTI had been issued to the owners of the CORFs, the Shares
have been cancelled on the books of the Company and are not recognized as issued
and outstanding. Other than the legal, accounting and due diligence expenses
incurred in the pursuit of this acquisition, no other costs were incurred. The
Company does not anticipate any legal actions from either side as a result of
these cancelled transactions.
Subsequent Events.
On February 13, 2004, we received a letter from the Counsel for Willow Cove
Investment Group, Inc. ("Willow"), regarding the termination of an agreement
between Willow and the Registrant for investment banking services, dated
November 12, 2003. On November 20, 2003, the Registrant notified Willow that it
was canceling the Agreement due to significant material misrepresentations and
information that was not provided to the Registrant about the principals of
Willow. The Letter from the Counsel for Willow is seeking the continuation of
the services to be provided for in the Agreement and the payment of all fees, or
they will commence Arbitration as set forth in the Agreement. At this point the
Registrant is unable to make an accurate assessment about the claim, but feels
that the misrepresentations and failure to provide the information is
significant and makes the agreement void. The claim would not be material in any
case.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Registrant*
3.2 By-laws of the Registrant*
31.1 Section 302 Certification
32.1 Section 906 Certification
--------
* Previously filed as an exhibit to the Company's Form 10-SB filed on November
10, 2001, and as amended thereafter
(b) Reports on Form 8-K filed during the three months ended June 30, 2003.
A Current Report on Form 8-K-A, amending the Form 8-K filing of July 10, 2003,
under Item 5. Other Events and Regulation FD Disclosure and Item 7, Financial
Statements and Exhibits of Registrant was filed on January 16, 2004.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: February 16, 2004
Humana Trans Services Holding Corp.
/s/ John P. Daly
-----------------------------------
John P. Daly, President
/s/ George L. Riggs, III
-----------------------------------
George L. Riggs, III, Chief Financial
Officer
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