U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________________ to ______________
Commission file number: 1-14219
Transnational Financial Network, Inc
--------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
California 94-2964195
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
401 Taraval Street, San Francisco, CA 94116
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(415) 242-7800
--------------------------------------------------------------------------------
(Registrant's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of July 15, 2000: 4,279,310
<PAGE>
TRANSNATIONAL FINANCIAL NETWORK, INC.
JUNE 30, 2000
UNAUDITED
TABLE OF CONTENTS PAGE NUMBER
PART 1 ITEM 1 FINANCIAL INFORMATION
Condensed Balance Sheets as of June 30, 2000
And December 31, 1999 2
Condensed Statements of Operations
For the Three and Six Months
Ended June 30, 2000 and 1999 3
Condensed Statements of Cash Flows for the
Three Months Ended June 30, 2000 and 1999 4
Notes to Condensed Financial Statements 5
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II ITEM 4 SUBMISSION OF MATTERS OF VOTE TO 13
SECURITY HOLDERS
SIGNATURES
<PAGE>
TRANSNATIONAL FINANCIAL NETWORK, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------------ ---------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 837,897 $ 862,257
Mortgage loans held for sale 19,593,912 2,009,092
Accrued interest receivable 60,799 40,126
Investment in Loan Link, LLC 0 300,000
Receivable from Loan Link, LLC 300,000 200,000
Notes receivable 100,000 135,819
Investment in real estate 0 190,671
Goodwill 3,618,467 3,758,827
Property and equipment, net 412,871 577,079
Other assets 815,001 988,930
------------------ ---------------
TOTAL ASSETS $ 25,738,947 $ 9,062,801
================== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Warehouse notes payable $ 19,116,796 $ 0
Accrued interest payable 111,084 164,278
Real estate mortgage 0 140,283
Due to shareholders 0 22,043
Accounts payable and accrued liabilities 16,567 80,392
------------------ ---------------
TOTAL LIABILITIES 19,244,447 406,996
------------------ ---------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value: 2,000,000 shares
authorized, no shares issued or outstanding 0 0
Common stock, no par value: 10,000,000 shares
authorized: 4,279,310 shares issued and outstanding,
as of June 30, 2000 and December 31, 1999 10,558,709 10,558,709
Accumulated deficit (4,064,209) (1,902,904)
------------------ ---------------
TOTAL SHAREHOLDERS' EQUITY 6,494,500 8,655,805
------------------ ---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 25,738,947 $ 9,062,801
================== ===============
</TABLE>
See accompanying notes to condensed financial statements.
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<PAGE>
TRANSNATIONAL FINANCIAL NETWORK, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------------------- ------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME
Net gain on sale of mortgage loans $ 476,442 $ 861,655 $ 873,606 $ 2,335,105
Production income 1,339,405 567,703 2,641,893 1,503,971
Interest Income 421,785 476,971 876,817 1,500,371
Other 157,504 4,127 206,154 20,118
-------------- -------------- --------------- --------------
2,395,136 1,910,456 4,598,470 5,359,565
-------------- -------------- --------------- --------------
EXPENSES
Interest expense 437,812 346,560 929,066 1,344,406
Salaries and benefits 1,912,574 1,370,348 3,988,729 2,792,917
General and administrative 670,050 566,085 1,473,004 999,793
Occupancy 189,506 94,424 368,975 186,028
-------------- -------------- --------------- --------------
3,209,942 2,377,417 6,759,774 5,323,144
-------------- -------------- --------------- --------------
INCOME (LOSS) BEFORE INCOME TAXES ( 814,806) ( 466,961) (2,161,304) 36,421
INCOME TAX (BENEFIT) EXPENSE 0 (196,433) 0 14,987
-------------- -------------- --------------- --------------
NET (LOSS) INCOME $( 814,806) $ (270,528) $ (2,161,304) $ 21,434
============== =============== ============== ==============
NET (LOSS) INCOME PER SHARE
Basic and diluted $ ( 0.19) $ ( 0.07) $ ( 0.51) $ 0.01
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic and diluted 4,279,310 3,700,000 4,279,310 3,700,000
</TABLE>
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<PAGE>
TRANSNATIONAL FINANCIAL NETWORK, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six
Months Ended
June 30,
2000 1999
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $(2,161,304) $ 21,434
Adjustments to reconcile net income to net cash provided By (used in)
operating activities:
Gain on sale mortgage loans (788,595) (2,755,973)
Provision for early payoffs (85,011) (42,500)
Depreciation and amortization 314,599 54,943
Mortgage loans originated for sale (281,773,567) (455,000,613)
Proceeds from sales of mortgage loans 265,062,354 506,091,109
Net gain on sale of investment property (65,297) 0
Changes in assets and liabilities:
Accrued interest receivable (20,673) (2,989)
Notes receivable 35,819 0
Other assets (286,333) (370,499)
Accrued interest payable (53,194) (303,328)
Accounts payable and accrued liabilities (63,825) (697,416)
----------------- -----------------
Net cash provided by (used in) operating activities (19,312,363) 46,994,168
----------------- -----------------
Cash flows from investing activities:
Purchases of property and equipment (12,391) (261,481)
Repayment of advances by Loan Link, LLC 200,000 0
Additional cost to acquire LRS (15,246) 0
----------------- -----------------
Net cash provided by (used in) investing activities 172,363 (261,481)
----------------- -----------------
Cash flows from financing activities:
Borrowings on warehouse notes payable 316,490,191 444,939,897
Payments on warehouse notes payable (297,373,395) (492,094,714)
Payments on distribution payable to "S" corporation stockholders 0 (65,742)
Payments on real estate mortgage (1,156) (1,934)
----------------- -----------------
Net cash provided by (used in) financing activities 19,115,640 (47,222,493)
----------------- -----------------
DECREASE IN CASH AND CASH EQUIVALENTS (24,360) (489,806)
----------------- -----------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 862,257 990,115
----------------- -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 837,897 $ 500,309
================= =================
CASH PAID DURING THE PERIOD FOR
Interest paid $ 887,654 $ 1,652,559
================= =================
Income taxes paid $ 0 $ 515,016
================= =================
</TABLE>
See accompanying notes to condensed financial statements
- 4 -
<PAGE>
TRANSNATIONAL FINANCIAL NETWORK, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
NOTE 1 The accompanying financial statements of Transnational
Financial Network, Inc. (the "Company") are unaudited and
have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission.
Certain information and financial disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and
regulations. Accordingly, these unaudited condensed
financial statements should be read in conjunction with the
audited financial statements included in the Company's Form
10-KSB for the year ended December 31, 1999. These
statements include all adjustments consisting only of
normal recurring accruals, which are, in the opinion of
management considered necessary for a fair presentation of
financial position and results of operations.
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Reclassifications - Certain amounts in the June 30, 1999
financial statements have been reclassified to conform to
the June 30, 2000 presentation.
NOTE 2 The results of operations of the Company for the six-month
periods ended June 30, 2000 and 1999 are not necessarily
indicative of the results to be expected for the full year.
NOTE 3 Net (Loss) Income Per Share
Basic net (loss) income per share is computed by dividing
net (loss) income by the weighted average common shares
outstanding during the period. Diluted net (loss) income
per share is computed based on the weighted average number
of common shares outstanding adjusted for potentially
dilutive securites. For the six months ended June 30, 2000
and 1999, the effect of including potentially dilutive
securities in the calculation of diluted net (loss) income
per share would be antidilutive. As a result, the effect of
those outstanding options has not been included in the
calculations.
- 5 -
<PAGE>
NOTE 4 Acquisition
On July 30, 1999, the Company acquired all of the issued
and outstanding stocks of LRS, Inc., a Silicon Valley based
mortgage banking company. Under the terms of the agreement,
the Company paid $1.5 million in cash and issued 579,310
shares of Common Stock at a closing share price of $3.625
per share as of July 30, 1999. In addition, the Company
must pay certain earn-out amounts based on pretax income,
as defined, to the former stockholders of LRS, Inc. up to a
total of $3.2 million over a four-year period beginning
August 1, 1999 and ending July 31, 2003. In connection with
the acquisition, goodwill was recorded and is being
amortized using the straight-line method over 10 years. As
of June 30, 2000, goodwill including ongoing accrual for
earn out of former shareholders of LRS, Inc. was
$3,984,639.
The following Unaudited Pro Forma Combined Summary of
Operations presents a pro forma combined summary of
operations of the Company and LRS, Inc. for the six-month
period ended June 30, 1999 and it is presented as if the
acquisition had been effective on January 1, 1999. This pro
forma combined historical summary of operations was
adjusted for the amortization of purchase accounting
adjustments.
The Unaudited Pro Forma Combined Summary of Operations data
is intended for information purposes only and is not
necessarily indicative of the future results of operations
of the Company that would have actually occurred had the
merger been in effect for the periods presented.
Unaudited Pro Forma Combined Summary of Operations (the
Company and LRS, Inc.)
For the six-month period ending June 30, 1999
GROSS REVENUE $11,225,887
NET (LOSS) INCOME $ 317,329
NET (LOSS) INCOME PER SHARE
Basic $ 0.07
Diluted $ 0.07
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 4,279,310
Diluted 4,279,310
- 6 -
<PAGE>
NOTE 5 During the first quarter of 2000, Transnational Financial
Network, Inc. entered into an agreement with 4ADREAM LOAN LINK
LLC to convert its $300,000 cash investment to a receivable to
be repaid in three years. The Company will continue to
maintain a 19.9% ownership interest. The $200,000 receivable
at December 31, 1999 was repaid in February 2000.
NOTE 6 On June 30, 2000, the Company sold its investment property in
Sta. Rosa, California at a net gain of $65,297. The receivable
for the sale is included in Other Assets.
NOTE 7 In February 2000, the Company's Board of Directors approved
the 2000 Stock Incentive Plan ("2000 Plan") effective March 1,
2000. All options presently issued and outstanding under the
1998 Stock Compensation Plan ("1998 Plan") will continue to be
honored but no more options may be issued under the 1998 Plan.
Under the 2000 Plan, the maximum number of shares that can be
granted in any one year to any single individual either
directly or via option grants will be 150,000. Among other
features of the plan is an initial outside directors' option
grant of 15,000 shares to each director at the date the plan
was adopted or upon the director first becoming such. Each
outside director also receives an option for 5,000 shares upon
election at the annual meeting of stockholders provided the
director has served at least six months. The option price is
the market price of the stock on the date of grant. The 2000
Plan also contains an incentive stock option plan which allows
options to be granted to eligible employees. The 2000 Plan
also permits directors and certain employees to receive
options in lieu of compensation as well as directly granting
stock to certain employees as a bonus. As of July 25, 2000,
there have been no options granted under the 2000 Plan other
than automatic grants to outside directors. The 2000 Plan was
ratified by the shareholders at the annual shareholders
meeting held on May 11, 2000.
NOTE 8 The agreement with RFC requires that the Company maintain a
tangible net worth of at least $3,000,000. At June 30, 2000,
the Company's tangible net worth was approximately $2,900,000.
The Company anticipates adding $1,000,000 in subordinated debt
which will allow the Company to comply with the tangible net
worth requirement of the RFC agreement.
- 7 -
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the condensed financial statements and the notes
thereto included as Item 1 of this Report. The discussion of
results and trends does not necessarily imply that these results
and trends will continue.
Forward-Looking Information
The Management's Discussion and Analysis of Financial Condition
and Results of Operations and other sections of the Form 10-QSB
contain forward-looking information. The forward-looking
information involves risks and uncertainties that are based on
current expectations, estimates, and projections about the
Company's business, management's beliefs and assumptions made by
management. Words such as "expects", "anticipates", "intends",
"plans", "believes", "seeks", "estimates", and variations of such
words and similar expressions are intended to identify such
forward-looking information. Therefore, actual outcomes and
results may differ materially from what is expressed or
forecasted in such forward-looking information due to numerous
factors, including, but not limited to, availability of financing
for operations, successful performance of internal operations,
impact of competition and other risks detailed below as well as
those discussed elsewhere in this Form 10-QSB and from time to
time in the Company's Securities and Exchange Commission filings
and reports. In addition, general economic and market conditions
and growth rates could affect such statements.
GENERAL
Transnational Financial Network, Inc. ("TFN" or the "Company") is
a wholesale and retail mortgage banker which originates, funds
and sells mortgage loans secured by one to four family
residential properties in the San Francisco Bay area and Southern
California. During the second quarter of 1999, the Company opened
additional loan production offices in Houston, Texas, Phoenix,
Arizona and Reno, Nevada. The Nevada and Texas offices were
subsequently closed.
The Company's results of operations are strongly affected by
mortgage interest rates. Increasing interest rates result in
diminished demand for mortgage loans especially those for
refinancing. Throughout 1999 Federal Home Loan Mortgage
Corporation's 30-year fixed rates for home mortgages increased
and have continued to rise this year. In January 1999, these
rates were 6.74%, reaching 7.55% at the end of the second quarter
and 7.91% at year-end. During the first quarter of 2000 the
30-year mortgage rate went up to 8.24%, then peaked at 8.54% in
the middle of June and dropped sharply to 8.14% by the end of the
month. This development came late in June and did affect loan
production for June and for the quarter.
- 8 -
<PAGE>
The volume of mortgage loans declined beginning in the third
quarter of 1999 and continued through the second quarter of 2000.
The following table sets forth the wholesale and retail
production for the periods indicated:
Mortgage Loan Volume
For 1999 Through the Second Quarter 2000
<TABLE>
<CAPTION>
1st Qtr.-99 2nd Qtr.-99 3rd Qtr.-99 4th Qtr.-99 1st Qtr.-00 2nd Qtr.-00
<S> <C> <C> <C> <C> <C> <C>
Wholesale $269,810,903 $185,189,710 $165,426,612 $159,819,500 $144,043,724 $130,878,546
Retail 27,053,889 21,097,932 75,457,636 69,371,902 77,405,856 82,928,025
------------- ------------- ---------- ------------- ------------- -------------
TOTAL $296,864,792 $206,287,642 $240,884,248 $229,191,402 $221,449,580 $213,806,571
</TABLE>
Overall, the Company's mortgage loan volume decreased by
$67,896,283 or 13.5% for the first six months of 2000 when
compared to the first six months of 1999 with wholesale mortgage
loan production declining by $180,078,343 or 39.6% while retail
mortgage loan production jumped by $112,182,060 or 233.0%.
Similar to industry experience, the Company's loan production
slowed down as a result of increasing mortgage interest rates.
The office in Arizona, which was opened mid-year 1999 contributed
to overall wholesale production but could not fully compensate
for the reduction in loan production at other offices. Retail
loan production, on the other hand, was much higher this year
because of the large retail operations of LRS, Inc. which was
acquired on July 30, 1999.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
For the six-month period ended June 30, 2000, the Company
incurred a net loss of $2,161,304 compared to net income after
tax of $21,434 during the same period in 1999. Gross revenue
declined by $761,095 or 14.2% attributable to reduced wholesale
loan originations. Expenses increased by $1,436,630 or 27.0% .. A
significant portion of this increase was due to the acquisition
of LRS, Inc. on July 30, 1999 and the opening of the new branch
in Arizona.in mid-1999.
Beginning in April of this year, the Company also discontinued
the wholesale sub-prime loan operations of the acquired LRS, Inc.
However, transactions initiated before the closure still affect
the Company's results of operations up to the present time.
- 9 -
<PAGE>
Net gain on sale of mortgage loans decreased by $1,461,499 or
62.6% during the first six months of 2000 compared to the same
period last year. This was the combined effect of lower wholesale
production and the narrower profit margin on loans sold because
of greater competition. Over 70% of this decrease in gain on sale
of loans occurred in the first three months of year 2000 compared
to the same period last year. Wholesale production was $ 126
million less for the first three months of 2000 compared with the
first quarter of 1999 and was only $54 million less during the
second quarter of 2000 compared to the same period last year.
Production income is derived from wholesale loan fees and retail
loan origination fees. Production income went up by $1,137,922 or
75.7% for the six months ended June 30, 2000 compared to the same
period last year because of increased retail loan production as
previously described.
Interest income is derived from borrowers' payments on mortgage
loans prior to the loan being sold by the Company. Interest
expense is incurred on draw downs made by the Company on its
warehouse line of credit at the time of funding the mortgage
loans until the loans are sold. As in first quarter of this year,
interest expenses for the warehouse line in the second quarter
exceeded interest income received by the Company from loans
funded but not yet sold. This resulted in net interest expense of
$52,249 for the first six months of 2000 in contrast to a net
interest income of $155,965 during the first half of 1999.
The Company lowered interest costs by changing to another
warehouse lender at the beginning of this year. However, the
Company funded more and more adjustable rate mortgages (ARMs) in
the first six months of 2000 which start at rates lower than what
the Company pays for its warehouse line. Certain economists
further predict that ARMs will represent about twice the amount
of closed mortgages in 2000 as they did in 1999. Accordingly, the
Company anticipates having to contend with a negative interest
spread for the rest of the year.
Salaries and benefits, general and administrative, and occupancy
expenses were all higher during the first six months of 2000
compared to the same period in 1999 due to expenses of the new
offices which opened mid-year 1999; and most significant due to
the addition of general overhead for the acquired LRS, Inc.
starting August 1999.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
The Company incurred a loss of $814,806 for the three months
ended June 30, 2000 compared to a net loss after income tax
benefit of $270,528 during the comparable period last year.
Net gain on sale of mortgage loans decreased $385,213 or 44.7%,
production income increased by $771,702 or 135.9% and other
income was higher by $153,378 or 3.716.5% for the second quarter
of 2000 compared to the totals for the same period last year.
- 10 -
<PAGE>
Net gain on sale declined because of lower pricing dictated by
competition and wholesale loan production. Total wholesale loans
produced were $54,353,934 or 29.3% less than in the same period
last year. Production income was pushed up by retail origination
fees contributed by the acquired LRS, Inc. Retail production
during the second quarter of 2000 was $82,928,025, $61,830,093 or
293.1% higher than in the same period in 1999 before the LRS,
Inc. acquisition. Other income also rose because of rent for
desks paid by retail loan agents of the former LRS, Inc. and due
to the gain on the sale of investment in real estate in June
2000.
In the second quarter of 2000, the Company incurred a net
interest expense of $16,028 compared to net interest income in
the second quarter of 1999 of $130,411. The unfavorable result in
2000 reflects the negative gap between the rates on mortgage
loans funded and the interest rate on the warehouse line.
The same expense trends previously discussed in the analysis of
the six-month period ended June 30, 2000 are reflected in the
results of operations for the three-month period ending June 30,
2000 as compared to 1999. Excluding interest expense, total
expenses were 36.5% higher during the second quarter of 2000
compared to the same period in 1999 with office occupancy
increasing by 100.3%, salaries, commissions and benefits
increasing by 39.6% and general and administrative expense
increasing 18.4%. The Company paid a higher combined rent when it
consolidated its retail and wholesale offices in San Francisco
and its Accounting Department in the same building in July 1999.
Occupancy costs as well as general and administrative expenses
went up with the new office in Arizona. In addition, operating
expenses of the acquired LRS, Inc. and the monthly amortization
of goodwill paid for the acquisition added significant amounts to
general overhead.
The Company has taken steps to reduce general overhead and has
succeeded in substantially reducing controllable expenses since
the beginning of the year to the end of the second quarter. Among
others, the Company reduced the number of support staff, placed
account executives on straight commission so that compensation
will vary with loan production, renegotiated vendor contracts to
bring down monthly costs, prioritized and limited technology
projects to the most important, and managed down delivery and fax
expenses by limiting distribution of rate sheets to only active
brokers. The Company will continue to implement an action plan to
rationalize operations and return to profitability.
- 11 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's main funding source is a $40 million revolving
warehouse line of credit provided by Residential Funding
Corporation (RFC) to fund mortgage loan originations. Interest on
warehoused loans are at LIBOR + 1.5% (8.165% at June 30, 2000).
The RFC line of credit expires on August 31, 2000 and is
currently being processed for renewal.
The Company maintains a $20 Million Quick Sale Master Loan
Participation and Custodian Agreement with Gateway Bank. The line
terminates only upon written notice from either party. Interest
on the line is at Prime Rate less 1% (8.5% at June 30, 2000). The
Company also has a whole loan Purchase and Sales Agreement
(Gestation Repurchase Line) with Greenwich Capital for $30
Million, which terminates only upon written notice from either
party. Interest on gestation loans is at LIBOR + 1% (7.665% at
June 30, 2000).
The Company believes that funds provided through these
facilities, combined with cash flows from daily transactions, are
sufficient to support its operations in accordance with the Year
2000 budget.
The acquisition of LRS, Inc. on July 30, 1999 increased capital
stock to $10,558,709, or by $2,105,650 and improved the Company's
leveraged borrowing capacity.
- 12 -
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS OF VOTE TO SECURITY HOLDERS
On May 11, 2000, the registrant held its annual meeting of
shareholders. At that meeting, directors were elected and the
Company's 2000 Stock Incentive Plan was ratified. The results of
the voting was as follows:
a. Directors:
Name FOR AGAINST
Joseph Kristul 3,078,025 7,450
Maria Kristul 3,078,025 7,450
William Russell 3,078,025 7,450
Robert A. Shuey 3,078,025 7,450
Robert A. Forrester 3,078,025 7,450
Alex Rotzang 3,078,025 7,450
J. Peter Gaskins 3,078,025 7,450
b. Adoption of the 2000 Stock Incentive Plan:
FOR AGAINST ABSTAIN
2,986,175 94,700 4,600
- 13 -
<PAGE>
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.
Transnational Financial Corporation
August 14, 2000 /s/ Joseph Kristul
--------------------------------------------
Joseph Kristul, Chief Executive Officer
And Principal Financial Officer
- 14 -
