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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended **February 29, 2008**

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:000-33149

TRANSNATIONAL AUTOMOTIVE GROUP,
INC.(formerly Apache Motor Corporation)(Name of Small Business Issuer in Its Charter)

|Nevada                                                               |                                               
|-------------------------------------------------------------------- | ----------------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | 76-0603927                                    
|                                                                     | (I.R.S. Employer Identification Number)       
|21800 Burbank Blvd., Suite #200                                      |                                               
|Woodland Hills, CA 91367                                             | (818) 961-2727                                
|(Address of Principal Executive Offices)                             | (Registrant's phone number)                   
|                                                                     |                                               
|Securities registered under Section 12(b) of the Act:                | None                                          
|Securities registered under Section 12(g) of the Act:                | Common Stock, par value $0.001 per
      share
|                                                                     | (Title of class)                              

Indicate by check mark if the registrant is a well-known seasoned
  issuer, as defined in Rule 405 of the Securities Act. [    ]
  Indicate by check mark if the registrant is not required to file reports pursuant
  to Section 13 or Section 15(d) of the Act. [    ]

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 if disclosure of delinquent filers pursuant
  to Item 405 of Regulation S-K is not contained herein, and will not be contained,
  to the best of registrant’s knowledge, in definitive proxy or information
  statements incorporated by reference in Part III of this Form 10-K or any amendment
  to this Form 10-K. Yes[ x ] No [    ]

Indicate by check mark whether the registrant is a large accelerated
  filer, an accelerated filer, or a non-accelerated filer or a smaller reporting
  company. See definition of “large accelerated filer”, “accelerated
  filer” and “smaller reporting company” in Rule 12b-2 of the
  Exchange Act. (Check one):

|Large accelerated filer [ ]                   |  | Accelerated filer [ ]          
|--------------------------------------------- |  | -------------------------------
|Non-accelerated filer [ ]                     |  | Smaller reporting company [ X ]
|(Do not check if a smaller reporting company) |  |                                

Registrant's revenues for its most recent fiscal year: $8,165,139

As of June 12, 2008, the aggregate market value of the voting
  and non-voting common stock held by non-affiliates of the 
  issuer was approximately $25,372,128 based on the closing trade reported on
  the NASD Over-the-Counter Bulletin Board
  National Quotation System. Shares of common stock held by each officer and director
  and by each person who owns five percent or more of the outstanding common stock
  have been excluded from this calculation as such persons may be considered to
  be affiliated with the Company.

As of June 12, 2008, the Registrant had 51,679,036 shares of
  common stock outstanding.

Transitional Small Business Disclosure Format: Yes [ x ]
  No  [    ]

**Documents Incorporated by Reference:** None



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TABLE OF CONTENTS

|Part I                                                                                      |                                                                                                                  
|------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------
|                                                                                            |                                                                                                                  
|ITEM 1                                                                                      | Description of Business                                                                                          
|ITEM 2                                                                                      | Description of Property                                                                                          
|ITEM 3                                                                                      | Legal Proceedings                                                                                                
|ITEM 4                                                                                      | Submission of Matters to a
      Vote of Security Holders                                                        
|                                                                                            |                                                                                                                  
|Part II                                                                                     |                                                                                                                  
|ITEM 5                                                                                      | Market for Common Equity and Related Stockholder Matters                                                         
|ITEM 6                                                                                      | Management's Discussion and Analysis of Financial Condition
      or Plan of Operation                           
|ITEM 7                                                                                      | Financial Statements                                                                                             
|ITEM 8                                                                                      | Changes In and Disagreements With Accountants on Accounting
      and Financial Disclosure                       
|ITEM 8A                                                                                     | Controls and Procedures                                                                                          
|ITEM 8B                                                                                     | Other Information                                                                                                
|                                                                                            |                                                                                                                  
|Part III                                                                                    |                                                                                                                  
|ITEM 9                                                                                      | Directors, Executive Officers, Promoters and Control Persons;
      Compliance With Section 16(a) of the Exchange
|ITEM 10                                                                                     | Executive Compensation                                                                                           
|ITEM 11                                                                                     | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters             
|ITEM 12                                                                                     | Certain Relationships and Related Transactions, and Director
      Independence                                  
|ITEM 13                                                                                     | Exhibits and Reports on Form 8-K                                                                                 
|ITEM 14                                                                                     | Principal Accountants Fees and Services                                                                          
|                                                                                            |                                                                                                                  
|SIGNATURES                                                                                 
|                                                                                            |                                                                                                                  
|EX-31.1 (Certifications
      required under Section 302 of the Sarbanes-Oxley Act of 2002)
|                                                                                            |                                                                                                                  
|EX-31.2 (Certifications
      required under Section 302 of the Sarbanes-Oxley Act of 2002)
|                                                                                            |                                                                                                                  
|EX-32.1 (Certifications
      required under Section 906 of the Sarbanes-Oxley Act of 2002)

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FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K (this Report) contains
certain forward-looking statements and information relating to Transnational
Automotive Group, Inc. and its wholly-owned and majority-owned subsidiaries
(TAUG) that are based on the beliefs and assumptions made by TAUGs
management, as well as on information currently available to the management.
Words such as may, will, expects, anticipates, intends, plans,
believes, seeks, estimates, and should, and variations of these words
and similar expressions, are intended to identify these forward-looking
statements. These forward-looking statements in this Report reflect the current
views of TAUG with respect to possible future events and financial performance.
Such forward-looking statements involve risks and uncertainties. We wish to
caution you that our actual results may differ significantly from the results we
discuss in our forward-looking statements. We discuss some of the risks and
uncertainties under the caption Risk Factors in Item 1 in this Report and in
our various other filings with the Securities and Exchange Commission. Our
forward-looking statements speak only as of the date of this document and the
Company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements to reflect events or circumstances
that occur after that date. You are advised, however, to consult any further
disclosures the Company makes on related subjects as may be detailed in the
Companys other filings made from time to time with the Securities and Exchange
Commission. The safe harbor provisions of the Private Securities Reform Act of
1995 are not available to the Company.

---

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Business Development

Transnational Automotive Group, Inc. ("The Company" or TAUG)
was incorporated April 2, 1999 in the State of Nevada as Vitaminoverrun.com
Corp. and in August 2001 changed its name to Apache Motor Corporation Inc. In
November 2005, the Company changed its name to Transnational Automotive Group,
Inc.

On October 28, 2005 the Company issued 24,000,000 shares of
common stock to acquire 100% of the issued share capital of Parker Automotive
Group International, Inc. (PAGI). On September 18, 2006, 18,000,000 shares of
the 24,000,000 shares originally issued were returned to the Company and
cancelled. PAGI is in the business of developing a public bus transportation
system in Cameroon through its 66% owned subsidiary, Parker Transportation Inc.,
Cameroon.

The Company has used the purchase method to account for its
acquisition of PAGI, the assets and liabilities of which were as follows on
acquisition: On December 22, 2005, the Government of Cameroon contributed
$1,000,000 of their $1,800,000 cash commitment under the terms of the agreement
with the Company, and transferred the remaining $800,000 cash commitments in
increments of $200,000 on September 1, 2006 and $600,000 on November 1,
2006.

On December 11, 2005, the Board of Directors of the Company
approved amendments to the Articles of Incorporation of Apache Motor Corporation
to (1) change the name to Transnational Automotive Group Inc., and (2) to
increase the number of authorized shares of common stock from 100,000,000 to
200,000,000 and to increase the number of authorized shares of preferred stock
from 20,000,000 to 100,000,000.

On January 12, 2006, the Company changed its name from Apache
Motor Corporation to Transnational Automotive Group, Inc. The new stock symbol
is TAMG.

Business Overview

Transnational Automotive Group, Inc. is a holding company,
whose primary business is focused on acquiring, developing and providing urban
and rural mass transit systems in leading sub-Saharan countries through
partnerships established with the central governments of the respective
sponsoring nations. The Companys vision is to become a leading transportation
company on the African continent by establishing key infrastructure and
workforce development that will help facilitate the economic development and
quality of life of each respective host country. Our bus fleets provide an
efficient way for communities in need to travel and prosper. Through the
development of formidable partnerships with sponsoring governments and
integrating our managements best practices and expertise into their countries
infrastructure, our aim is to provide the citizenry of our host nations with
lower cost transportation options that will stimulate economic development by
providing more efficient and affordable transportation options.

Our current operations involve providing mass bus transit
systems operated by our subsidiaries in Cameroon, Africa. Unless the context
otherwise requires, references to the Company, Transnational Automotive
Group, Inc., we, our, or us mean Transnational Automotive Group, Inc. and
its wholly-owned and majority-owned subsidiaries.

On October 12, 2005, we signed an agreement with the Government
of Cameroon for TAUG to establish and exclusively manage the urban bus systems
in Cameroon, starting with the countrys two major cities: the capital city of
Yaoundé and the leading population and commercial center, Douala. Since the
signing of the October 2005 agreement, we have created a wholly owned
subsidiary, Transnational Automotive Group  Cameroon, SA (TAUG-C),
headquartered in Yaoundé. TAUG-C, through its 66%-owned intra-city
transportation operational company, Transnational Industries  Cameroon, S.A.,
known as LeBus, officially commenced urban bus operations in Yaoundé on
September 25, 2006. LeBus started its first-phase operations with an initial
fleet of 17 buses for the Yaoundé metropolis, on two operational routes of the
25 approved bus routes. In May 2007, we acquired an additional 30 city buses,
which created four additional bus routes. LeBus is currently transporting
approximately 900,000 to 1,000,000 passengers per month.

On December 18, 2006, TAUG-C launched its 100%-owned inter-city
transportation-operating subsidiary, LeCar Transportation Corporation (SARL),
known as LeCar. Our inter-city operations are presently comprised of a fleet
of 15 coach buses and is presently currently transporting 28,000 to 30,000
passengers monthly and generating approximately $380,000 per month in aggregate
revenue from ticket revenue, food and drink sales and ancillary revenue. Like
LeBus, LeCar has received excellent support from the media and from Cameroons
citizens, as indicated in the noteworthy success of the launch of operations.
LeCar has also impressed Cameroon government leaders for its reliability and
quality of service, and enjoys the support of the nations highest
officials.

---

On March 7, 2008, Ralph Thomson stepped down as our chief
executive officer and resigned from his position as a director of the company.
Seid Sadat, our current chief financial officer, became our acting chief
executive officer effective March 7, 2008. We are currently in the process of
finding a replacement for Mr. Thomson.

Our principal executive offices are located at 21800 Burbank
Blvd. Suite 200, Woodland Hills, CA 91367, and our telephone number is (818)
961-2727. We were incorporated in Nevada in April 1999. We maintain a website at
www.transauto-group.com. The reference to our
worldwide web address does not constitute incorporation by reference into this
report of any of the information contained on our website.

Operations

We generate revenue principally as follows:

Bus Fares  Urban City Transporation System(LeBus): The majority of our revenues from our urban bus
transportation company, LeBus, are derived from ticket fares charged to
customers. Ticket fares for our urban bus operations approximate .30 USD per
rider.

Cash Subsidies: Our urban bus operation, LeBus,
currently receives cash subsidies from the government of Cameroon. These
subsidies are provided under a non-formal commitment by the Cameroonian
government. We are presently in negotiation with the government to formalize the
terms of our subsidy arrangement.

Bus Fares  Inter-City Transportation System (LeCar):
The majority of our revenues from our inter-city bus transportation company,
LeCar, are derived from the sale of one-way and round-trip bus fares between the
cities of Yaoundé and Douala. One-way and round-trip ticket fares currently
approximate $12.50 ($US) and $23.00 ($US), respectively, per passenger aboard
our inter-city bus routes.

Food and beverage: As an accommodation to our
passengers, we sell food and non-alcoholic beverages on our inter-city bus route
between the cities of Yaoundé and Douala. Sales of food and beverages represent
less than 5% of our aggregate revenue.

Postage and mail: Cameroon does not maintain any formal
or well-organized postal services. To address the needs of courier services, we
have collaborated with several leading express delivery companies for the
transport of mail and small freight aboard our inter-city bus line, LeCar. These
courier services compliment our existing bus operations and provide an
additional revenue stream at minimal additional cost to our operations. Revenue
generated from our courier services represents less than 1% of our total
revenue.

Other ancillary revenue: We are working on various
programs to accelerate our revenue growth. These programs include providing bus
transportation services to corporate clients and universities. In addition, we
are working with various agencies to utilize our buses in marketing and
advertising campaigns. Revenue from these other ancillary sources comprised less
than 5% of our aggregate revenue.

Market

Within Cameroon 
  The current weekday market for public transportation in the city of Yaoundé
  is estimated at $185 million annually. The current annual inter-city transportation
  market between Yaoundé and Douala (not including routes to other cities
  in the country) is estimated at $33 million. Although there are no official
  numbers, these markets can be expected to expand substantially, given the increased
  overall economic growth Cameroon is experiencing and projecting.

Across Sub-Saharan Africa 
  A number of Sub-Saharan African countries have approached TAUG for discussions
  pursuant to investigating, planning and  in some cases  beginning
  transportation-related operations with central or regional/state/provincial
  governments and private sector partner entities. These initial indications of
  interest (mainly derived from public and private sector observation of the Companys
  successful 2006 launches of urban and inter-city bus transportation systems
  in Cameroon) come from a variety of African geographies and language groups
  representing West, Central and East African locations and French, English and
  Portuguese-speaking areas. Although we have had communications with several
  governments from other African nations, we have not entered into any formal
  or otherwise binding agreements with these respective host countries.

Other Opportunities

Concurrent with establishing and operating mass transit systems
in leading African commercial and population centers, we are also

---

positioning the Company for expansion into additional African
markets and industry sectors. The Companys vision is to exploit opportunities
in other markets, including but not limited to bio-diesel fuels and other
alternative energy sources to generate new sources of revenue and profits. To
date, we have had preliminary discussions with investors and government
officials from several African nations on establishing various energy related
projects.

Business Strategy and Market Opportunity

Emerging countries that pursue political stability and a
dynamic, growth-oriented economy require a reliable, sustainable source of food,
adequate housing, readily available medical treatment, an expanding job market,
and an open system for educating children and the work force. Progress in these
vital areas requires a sustainable, affordable, and reliable transportation
infrastructure.

Establishing a sustainable mass transportation system is
capital-intensive and requires systemic technical and management expertise. The
acute need for affordable transportation infrastructure in developing countries,
coupled with the lack of financial resources and management expertise within
these countries, has created a unique opportunity for the Company.

We have developed a strategy that combines our management
knowledge of transportation and business systems with our ability to create an
infrastructure network essential to these developing countries.

Establishing and operating a sustainable transportation
infrastructure that is affordable to a population that is largely characterized
by joblessness and poverty requires:

| | 1. | Minimizing capital expenditures; and
| | -- | ------------------------------------
| | 2. | Minimizing operating costs          

Minimizing capital expenditures: There are three main
components to keeping the capital expenditures at a minimum, thereby reducing
the amount of required financing and associated costs.

| | 1. | Partnering with the Government: As part of the
      October, 2005 agreement, the Cameroon Government (Government) is
      responsible for supplying TAUG with adequate depot facilities for the
      urban bus system as well as improving the road network. This has enabled
      TAUG to reduce its capital needs that would have been required to purchase
      and then develop these facilities and this infrastructure. Additionally,
      we are in negotiations with the Government to allow TAUG to import the
      city buses into the country tax and duty-free. This reduces the landed
      value of these vehicles significantly, as duty fees in Cameroon can be up
      to 60% of the underlying cost of the buses.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 2. | Sourcing high quality, less expensive buses from
      China: The Company has sourced quality buses from China that are
      significantly less expensive than comparable US or European
    vehicles.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 3. | Seeking competitive financing: TAUG is seeking to
      keep its cost of capital at a minimum to enable the Company to use cash
      flow to help fund its growth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Minimizing operating costs:There are three main
components to keeping operational costs as low as possible to enable TAUG to
offer competitive fares.

| | 1. | Negotiated tax abatements from the Government: The
      Government of Cameroon has requested that we offer a socially acceptable
      fare of 150 CFA (currently $0.30 - $0.35 $US) for our urban bus
      operations. To enable such a low fare, we are currently in negotiations
      with the Government to offer TAUG negotiated tax abatements and and/or
      subsidies, including but not limited to a 30 percent reduction in the cost
      of fuel as well as a waiver from Value Added Tax (VAT) on the ticket
      price.                                                                                                                                                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 2. | Implementing technology: The Company will be
      implementing several business automation technologies such as accounting,
      payroll, and HR software tools to reduce administrative costs. In
      addition, we anticipate implementing a smart fare card technology to
      eliminate the handling of enormous volumes of cash and coin, thus reducing
      the need for a large cashier staff and for ticket sellers on board the
      buses.                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 3. | Negotiate access to natural resources such as oil and
      gas concessions: We have proposed to the Cameroon Government that TAUG
      could keep fares low or even lower  as well as being able to offer other
      special transport services to the elderly and handicapped and supplying
      dedicated school buses  if TAUG could find ways to finance these services
      with cash flow from other sources. We are currently in discussions with
      senior Cameroon Government officials to obtain marginal producing oil
      concessions whereby the Company would split the profits with the
      Government. TAUG would invest 50 percent of its share into urban bus
      systems to maintain or even lower the fares as well as offering special
      services such as school buses, which are high-demand needs of Cameroons
      economy and society.

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Funding Our Business Plan

As discussed more fully in the Management's Discussion and
Analysis - Liquidity and Capital Resources section, the expenses of implementing
the Company's business plan will exceed the Company's current resources. The
Company will have to obtain additional funding through an offering of its
securities or through capital contributions from its stockholders. Presently, no
formal commitments to provide additional funds have been made by management or
stockholders. Accordingly, there can be no assurance that any additional funds
will be available on terms acceptable to the Company, if at all.

Intellectual Property

The nature of patent and trademark registration is very complex
and requires legal expertise. To date, no applications have been prepared to
patent any of the companys assets or concepts.

Government Regulation

There are no specific government regulations known to us, other
than standard business practice, law and conduct, which might effect us in
following our business plan. The manufacture and use of the Company's products
may be subject to regulation by one or more U.S. federal agencies, including the
Federal Trade Commission and the Environmental Protection Agency. These
activities also may be regulated by various agencies of the states, localities
and foreign countries in which consumers reside.

Numerous U.S. federal and state government agencies have
demonstrated significant activity in promoting environmental and consumer
protection and enforcing other regulatory and disclosure statutes. Additionally,
it is possible that new laws and regulations may be enacted with respect to
internal combustion engines. The adoption of such laws or regulations and the
applicability of existing laws and regulations may impair the growth of the
Company and result in a decline in the Companys prospects.

In Cameroon, the Company has incorporated three subsidiaries.
These subsidiary companies are subject to the laws and regulations of the
Republic of Cameroon. Additionally, Cameroon is a signatory to the Organization
for the Harmonization of Business Law in Africa or the OHADA treaty.
International business disputes or arbitration are conducted in the OHADA courts
located in the Ivory Coast.

Competition

In connection with our partnership with the government of
Cameroon, LeBus is the exclusive provider of intra-city bus operations in
Yaoundé. We anticipate having exclusive rights to all intra-city bus lines we
operate throughout Cameroons major metropolitan regions.

Our inter-city bus operation, LeCar, is not government
subsidized and operates in the free market. There are other inter-city bus
providers within Cameroon with whom we compete.

Employees

As of February 29, 2008, the Company had approximately 750
employees, with over 85% of these employees involved directly in operations,
primarily as drivers, cashiers, mechanics, and bus monitors. The Company
utilizes part-time and full-time outside consultants and contractors for
operational purposes.

Risk Factors

An investment in TAUG securities is highly speculative and
extremely risky. You should carefully consider the following risks, in addition
to the other information contained in this report, before deciding to invest in
TAUG securities.

We have a history of losses and negative cash flows from
operations.

We have experienced significant operating losses since our inception
  including losses of $7,304,540 in our fiscal year ended February 29, 2008 and
  $8,510,719 in our fiscal year ended February 28, 2007. Our cash flow may not
  be sufficient to satisfy our operations. These losses, among other things, have
  had and will have an adverse effect on our stockholders equity and working
  capital. Furthermore, we cannot predict whether our current or prospective activities
  will ever generate enough revenue to be profitable. To be able to service our
  debt obligations and purchase commitments, we must generate significant cash
  flow and obtain additional debt and equity financing. If we are unable to do
  so or are otherwise unable to obtain funds necessary to make required payments
  on our trade debt and other indebtedness, it is likely that we will not be able
  to continue our operations. In this event, our investors would be susceptible
  to losing most if not all of their investment in TAUG.

---

Our independent auditors have included a going concern paragraph in their audit opinion on our consolidated financial statements for the fiscal year ended February 29, 2008, which states The Company has incurred a significant loss and has a
working capital deficit which together raise substantial doubt as to its ability to continue as a going concern.

We cannot predict our future capital needs and may not be able to secure additional financing.

We have an accumulated deficit of $18,376,186 at February
  29, 2008 and have been continually dependent on the funding of our working capital
  requirements through the issuance of convertible debentures, unsecured promissory
  note obligations and common stock and warrants. Additionally, we have relied
  on cash infusions from related parties to fund our capital expenditures as well
  as working capital requirements.

To implement our business strategy, we will need to obtain additional financing. Our future capital requirements will depend on numerous factors. The pace of expansion of our operations will affect our capital requirements. We may also have
increased capital requirements in order to respond to competitive pressures. In addition, we may need additional capital to fund acquisitions of complementary businesses. As we require additional capital resources, we may seek to sell debt
securities or additional equity securities or obtain funding through long-term secured promissory note obligations. We are currently seeking additional financing to meet our short-term and long-term liquidity requirements, although there can be no
assurances that such financing will be available, or if available, that it will be on terms acceptable to us. In addition, any additional financing will likely result in significant dilution to our existing stockholders.

Our business is difficult to evaluate because we have a limited operating history in an emerging and rapidly evolving market.

Our limited operating history and unproven track record makes it difficult to accurately assess our general prospects in the urban and rural mass transit transportation industry in Cameroon and the effectiveness of our business strategy. In
addition, we have limited meaningful historical financial data upon which to forecast future revenue, cost of revenue and operating expenses. Our future performance will also be subject to obtaining favorable subsidies and tax exonerations from the
government of Cameroon to help defray our operating expenditures. Accordingly, we cannot assure you that we will successfully implement our business strategy or that our actual future cash flows from operations will be sufficient to satisfy our debt
obligations and working capital needs. An investor should consider the likelihood of our future success to be speculative in light of our limited operating history, as well as the problems, limited resources, expenses, risks and complications
frequently encountered by similarly situated companies in emerging geographic markets.

Our success is dependent on achieving certain economies of scale.

The successful implementation of our business model requires the acquisition of a significantly larger bus fleet and expansion of our bus lines, which will require significant capital expenditures. In the event we are unsuccessful in obtaining the
required capital necessary to finance our expansion, it would have a material and adverse affect on our revenue growth and future profitability.

Our business model is predicated upon obtaining favorable tax concessions and subsidies, which are not guaranteed.

The success of our intra-city bus operations known as LeBus is predicated upon obtaining favorable tax abatements and subsidies from the government of Cameroon in exchange for providing our city mass transit system in the city of
Yaoundé. To date, we have not entered into a formal agreement with the government that ensures these tax abatements and subsidies will be provided. In the event we are unable to negotiate successfully for these subsidies and tax abatements,
there is a great likelihood that our business model may not be able to achieve profitability.

Changes in interpretations of existing, or the adoption of new legislation, regulations or other laws could adversely affect our operations.

Our business is subject to numerous laws regulating safety procedures, equipment specifications, employment requirements, environmental procedures, insurance coverage, and other operating issues. These laws are constantly subject to change. The
costs associated with complying with the adoption of new legislation, regulations or other laws could adversely affect our results of operations.

We may in the future incur impairment charges that materially adversely affect our earnings and our operating results.

Our total assets include substantial capital expenditures for our fleet of buses used in operations. In accordance with FASB Statement

---

No. 144, on an annual basis, and more frequently as required, we assess whether indicators of impairment are present and perform the necessary analysis to ensure the carrying value of our capitalized fleet of buses exceeds its fair value. These
events or circumstances would include a significant change in business climate, including a significant, sustained decline in an entitys market value, legal factors, operating performance indicators, competition, sale, or disposition of
significant assets or other factors. If future operating performance at our business does not meet expectations, we may be required to reflect, under current applicable accounting rules, a non-cash charge to operating results for impairment of
buses. The recognition of an impairment of a significant portion of our net book value would adversely affect our results of operations and total capitalization, the effect of which could be material and could cause our stock price to decline.

Supplier Concentrations

We are dependent on a limited number of qualified suppliers of manufactured buses and spare parts. This dependence could lead to delays, lost revenue or increased costs. Because we depend on a limited number of suppliers for the buses and spare
parts used in our operations, our future operating results may be impacted negatively by any number of factors including, but not limited to: an increase in the price of buses and spare parts acquired in the future, the financial viability of our
suppliers, the failure of our suppliers to remain in business, or their failure to meet our quality requirements.

One oil company, Texaco, supplies substantially all of our fuel used in our operations. The results of our operations would be negatively impacted in the event of any fuel supply disruptions.

Dependence on Key Management Personnel

We lack the goodwill of an established business and therefore rely on individual members of current management to create business strategies, relationships, and developing operating efficacies necessary for growth. Our success is substantially
dependent on the performance of our senior management and key personnel. There are presently no management or key employees bound by agreements that could prevent them from terminating their employment at any time. In addition, we do not currently
hold key personnel life insurance policies on any of our key employees. We believe that the loss of the services of any our executive officers or other key employees and personnel could have a material adverse effect on our business, financial
condition and results of operations.

We may have difficulty attracting and retaining qualified, highly skilled personnel, including accounting and finance personnel.

We expect the expansion of our business to place a significant strain on our managerial, operational, and financial resources. We will be required to expand our operational and financial systems significantly and train and manage our work force in
order to manage the expansion of our operations. We will need to attract and retain highly qualified, technical, and other personnel to maintain and update our products and services and meet our business objectives. Competition for such personnel is
intense. We may not be successful in attracting and retaining such qualified personnel on a timely basis, on competitive terms, or at all. Our inability to attract and retain the necessary technical and other personnel would have a material adverse
effect on our business, financial condition, and results of operations.

In anticipation of the expected growth of our operations, we will be required to improve existing or implement new operational and financial systems, procedures and controls. To manage this growth, we will need to expand, train, and manage our
employee base. We will also need to expand our accounting, administrative and operations staff. There can be no assurance that our current and planned personnel, systems, procedures, and controls will be adequate to support our future operations or
that management will be able to hire, train, retain, motivate, and manage required personnel.

We are a new company with limited operating history and no assurances can be provided that we will be able to successfully manage our growth.

Given our brief period in operations and anticipated future growth, there are uncertainties concerning our ability to successfully manage the growth of our operations that is necessary to achieve profitability. Our ability to manage our planned
growth effectively will require us to enhance our operational, financial, and management systems, expand our facilities and equipment, and retain a skilled management team with proven skills in overseas operations. Failure to manage our growth
effectively could adversely affect our operations.

There are inherent risks with operating internationally and, in particular, in third world countries.

Our efforts to sell into the African markets create a number of logistical and communications challenges. Additionally, we purchase certain materials from international sources, and in the future, we may decide to move certain manufacturing
functions

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to, or establish additional manufacturing operations,
international locations. Purchasing, manufacturing, and selling products
internationally expose us to various economic, political, and other risks,
including the following:

- Management of a multi-national
organization; - Compliance with local laws/regulatory requirements as well
as changes in those laws and requirements; - Imposition of restrictions on
currency conversion or the transfer of funds; - Transportation delays or
interruptions and other effects of less developed infrastructures; -
Employment and severance issues; - Tariffs and duties; - Possible
employee turnover or labor unrest, including concerns over the unionization of
our labor force; - The threat of repatriation of our operating assets and
business operations; - The burdens and costs of compliance with a variety of
foreign laws, and - Political or economic instability in certain parts of
the world

Terrorism

Terrorist attacks may adversely affect our business and
operating results. The continued threat of terrorist activity and other acts of
war or hostility have created uncertainty for westerners and foreign companies
operating in Africa, which has significantly increased the political, economic,
and social instability in the geographic region in which we operate. Acts of
terrorism, either domestically or abroad, could create further uncertainties and
instability. To the extent this results in disruption of our business operations
or our ability to obtain additional financing for our current and future working
capital requirements, our business, operating results and financial condition
could be adversely affected.

Impairment of Fixed Assets

The transportation network in the cities of Yaoundé and Douala
are terribly inadequate, with roads and highways requiring significant upgrades.
The inadequacy of these roads could result in the acceleration of wear and tear
of our city and inter-city buses, the reduction in their useful lives, and
significant operating expenditures necessary to maintain and upkeep the buses,
which would negatively impact our financial condition and the results of our
operations.

Significant Estimates

We have made and continue to make a number of estimates and
assumptions relating to our consolidated financial reporting. By their nature,
estimates are subject to an inherent degree of uncertainty and, as such, actual
results may differ, and the difference may be material, from our estimates. Key
estimates and assumptions for us include reserves for depreciation, accruals for
custom duty, VAT taxes, and other contingencies, and provisions for fuel
subsidies.

Competition

The inter-city bus transportation market is competitive and the
market is very sensitive to the ticket fares charged on our bus routes between
the cities of Yaoundé and Douala. Additionally, there can be no assurance that
the government of Cameroon will not elect to partner with other companies to
provide mass transit systems for its intra-city/metro transportation
requirements.

Internal Controls and Procedures

Through the end of our fiscal year ended February 29, 2008, our
internal controls and procedures have not been audited for compliance with
Section 302 of the Sarbanes-Oxley Act of 2002. If our internal controls are
found to be ineffective, our financial results or our stock price may be
adversely affected.

Risks Relating To Our Securities

Our common stock is quoted on the OTC Bulleting Board,
making it difficult to sell when desired.

Our OTC Bulleting Board listing negatively affects the
liquidity of our common stock. The market liquidity of our stock is relatively
low. There has only been a limited public market for our securities, and there
can be no assurance that an active trading market will be maintained. Although a
more active trading market may develop in the future, the limited market
liquidity for our stock may affect an investors ability to sell at a price that
is satisfactory to him or her. Therefore, no assurances can be given that a
liquid trading market will exist at the time any stockholder desires to dispose
of any shares of our common stock.

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The market price for our common stock has been and may continue to be subject to a significant degree of volatility.

The market price of our common stock has in the past and may in the future experience significant volatility as a result of a number of factors, many of which are outside of our control. The following is a list of the risk factors that may affect
the market price for our common stock:

- Our quarterly and annuals results of operations and ability to meet analysts and our own published expectations
- The amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our businesses, operations, and infrastructure
- General economic and sociopolitical conditions both domestically and in Cameroon and sub-Saharan Africa
- Geopolitical events domestically or abroad such as war, threat of war or terrorist actions
- Recruitment or departure of key personnel
- An increase in the underlying costs of our operations including fuel and labor costs
- The repatriation of some or all of our assets under operation
- The cancellation of our agreements with the government of Cameroon
- The sale of substantial amounts of our common stock or other potentially dilutive capital transactions such as shares issued upon the exercise of outstanding common stock warrants

The OTCBB is a relatively unorganized, inter-dealer, over-the-counter market that provides significantly less liquidity than NASDAQ and the other national securities markets. The trading price of our common stock may fluctuate significantly and, as
is the case for OTCBB securities generally, is not published in newspapers. Because we may experience a high level of volatility in our common stock, investors should not invest in our stock unless they are prepared to absorb a significant loss of
their capital. At any given time, investors may not be able to sell their shares at a price that they think is acceptable.

Penny stock abuse

The market price for our stock may suffer as a result of patterns of fraud and abuse that are prevalent for penny stocks, which are defined as any equity security having a market price (as defined) of less than $5.00 per share, or an exercise
price of less than $5.00 per share, subject to certain exceptions. These patterns of abuse include, but are not limited to the following:

- Control of the market for our common stock by one or a few broker-dealers that are often related to the promoter or issuer
- Manipulation in the trading price of our common stock through the prearranged matching of purchases and sales
- Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers
- Dumping of securities after prices have been artificially manipulated to higher levels, resulting in investor losses.

The trading value of our common stock is vulnerable to market fraud.

Securities traded on the OTCBB are generally more susceptible to market manipulation and/or fraud because of their low prices and because securities traded on the OTCBB have less stringent reporting requirements than securities traded under other
national exchanges.

We have not paid any cash dividends and do not anticipate paying any cash dividends in the foreseeable future.

The growth of our operations will require a significant amount of working capital and capital expenditures necessary to increase our fleet of buses and related infrastructure costs. Because of limitations in the availability of capital to fund our
operations, we do not anticipate paying cash dividends on our common shares in the foreseeable future.

A large number of common shares are issuable upon exercise of outstanding warrants, which, upon exercise, would result in the substantial dilution of our common shares.

In connection with private placement offerings, as of February 29, 2008, we had outstanding warrants to purchase 15,692,273 common shares at a weighted average exercise price of $1.50 per share. To the extent that the warrants for our common
stock are exercised or we issue additional convertible debentures, common stock or warrants, the increase in the number of our outstanding shares of common stock may adversely affect the price for our common stock. This could hurt our ability to
raise capital through the sale of equity securities, convertible instruments or other long-term sources of borrowing. In the event of the exercise of these warrants, you could suffer substantial dilution of your investment in terms of your
percentage ownership in us as well as the book value of your common shares. Exercise of the 15,692,273 existing warrants issued in connection with our private placement

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transactions would result in approximately 23% net dilution in existing shareholders percentage ownership as well as in the book value of our common shares as of February 29, 2008.

Substantial future sales of our common stock by us or our existing shareholders could cause the trading price of our common stock to fall.

Sales by existing stockholders of a large number of shares of our common stock in the public market or the perception that additional sales could occur could cause the trading price of our common stock to drop. Likewise, the issuance of shares of
common stock upon the issuance of additional convertible debt or equity financings or other share issuances by us could adversely affect the trading price of our common stock.

The concentration of ownership of our common stock gives a few individuals significant control over important policy and operating decisions.

As of February 29, 2008, certain members of our officers and directors as a group collectively owned and control approximately 15% of the common stock of TAUG. Although senior management does not control a majority of all outstanding shares,
their collective ownership would give them a strong advantage in regards to electing board members and other matters requiring shareholder approval.  In addition, through control of the board of directors and voting power, they may be able to
control certain decisions, including decisions regarding the qualification and appointment of officers, dividend policy, access to capital (including borrowing from third-party lenders and the issuance of additional equity securities), and the
acquisition or disposition of our assets. In addition, the concentration of voting power in the hands of those individuals could have the effect of delaying or preventing a change in control of our company, even if the change in control would
benefit our stockholders.

ITEM 2. DESCRIPTION OF PROPERTY

Our corporate offices are located at 21800 Burbank Blvd., #200, Woodland Hills, California, 91367 and are leased by the Company on a month-to-month basis.

Our intra-city bus operating facilities in Yaoundé, Cameroon consist of a bus depot facility, which also houses our administrative, sales and maintenance departments. This bus depot facility is used by our majority-owned intra-city
transportation company, Transnational Industries  Cameroon, S.A., known as LeBus, and has been provided to us by the Yaoundé Urban Council, a governmental agency of Cameroon, which is also a minority shareholder in LeBus.
This facility comprises approximately 232,000 square feet of space. Through February 29, 2008, we have invested approximately $138,000 in building improvements on this bus depot. This facility is not owned by us, but is being provided for our
use by the Yaoundé Urban Council rent-free. We are currently working with the government to have title to this property deeded to our subsidiary in Cameroon.

Our operating facilities for our wholly-owned inter-city bus company, LeCar Transportation Agency (LeCar), are comprised of two sales agency facilities and an office building used by LeCars corporate, sales and administrative
staff. One of LeCars agency facilities is situated on the grounds of a large hotel in Douala, Cameroon and has been leased to LeCar under an agreement expiring December 2008. The second agency facility is located in Yaoundé and
comprises approximately 86,000 square feet. This agency facility is leased under a 20-year non-cancelable operating lease agreement, expiring in 2027. LeCars Yaoundé-based corporate and administrative office is comprised of
approximately 5,000 square feet and is leased under an operating lease agreement expiring in October 2008. Through the end of our fiscal year ended February 29, 2008, we have invested approximately $280,000 in construction costs related to
upgrading and refurbishing LeCars facilities under lease.

In addition to our operating facilities in Cameroon, we also lease, on a month-to-month basis, a personal residence in Yaoundé used by certain members of our senior management and Ex-pats.

ITEM 3. LEGAL PROCEEDINGS

On March 19, 2007, one of our inter-city coach buses was involved in a collision en route between Yaoundé and Douala that resulted in the deaths of two passengers and injuries sustained to the surviving passengers. In accordance with
Cameroonian law, our subsidiary, LeCar, was cited with responsibility for the collision. We maintain insurance coverage for damage claims arising from collisions. However, we cannot determine the amount of monetary damages in excess of amounts
covered under insurance, if any, that may be awarded to passengers involved in this collision.

On September 12, 2007, our subsidiary, Transnational Automotive Group, Cameroon S.A (LeBus), was named a defendant in a breach of contract claim brought forth by our former ad agency, Nelson Cameroun (Nelson). The complaint
alleges the Company wrongfully terminated its contract with Nelson prior to its expiration. The plaintiff was seeking damages of $300,000, representing

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amounts owed by the Company pursuant to the terms of the ad
agency contract. LeBus filed a counter-suit against Nelson alleging breach of
good faith, breach of contract, fraud, misrepresentation, and negligence and
breach of fiduciary duty. We are seeking unspecified amounts as compensatory
damages pursuant to its cross-complaint. We have reserved $64,651, representing
the entire accounts receivable balance due from Nelson as of February 29, 2008
pursuant to the terms of the ad agency agreement prior to its termination. We
have not provided for any loss contingencies, in the event of an unfavorable
outcome.

On November 8, 2007, our subsidiary, LeCar Transportation
Corporation, S.A. (LeCar), was named a defendant in a wrongful termination
complaint involving several disgruntled former employees of LeCar who were
terminated by the Company during 2007. The plaintiffs, which include LeCars
former general manager, are seeking unspecified amounts in compensatory damages,
including deferred compensation, and punitive damages. We believe the complaints
are without merit and intend to vigorously defend against the allegations
brought forth by these complaints and to pursue all available legal remedies.
The complaints are currently under review by the Labor board in Cameroon. Under
Cameroonian law, the cases are first investigated by the Labor Board Division
and subsequently referred to the higher courts based on the merits of the
respective complaints. Discovery is still being completed and therefore
management is unable to determine or predict the outcome of these claims or
their respective impact, if any, on the Companys financial condition or results
of operations. Accordingly, we have not recorded a provision for these matters
in our financial statements.

In the ordinary course of business, we may become a party to
legal or regulatory proceedings resulting from litigation, claims or other
disputes. There can be no assurance that one or more future actions, if they
occur, would not have a material adverse effect on the business. No accruals for
potential losses for litigation are recorded as of February 29, 2008, in
accordance with SFAS No. 5, but if circumstances develop that necessitate a loss
contingency being recorded, we will do so. We expense all legal fees for
litigation as incurred.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during
the fourth quarter of the fiscal year covered by this report.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Market Information

The price of our common stock is quoted on the Over-the-Counter
Bulletin Board (OTCBB) under the symbol TAMG.

The table set forth below reflects the reported high and low
bid prices of our common stock for each quarter for the periods indicated as
reported by the OTCBB. Such prices are inter dealer prices without retail mark
ups, markdowns, or commissions and may not represent actual transactions.

Closing BidHigh
      
      
      LowYear
      
      Quarter2008
      
      March 1, 2007 - May 31, 2007
      
      $
      1.33
      
      $
      0.76Jun 1, 2007 - August 31, 2007
      
      
      1.74
      
      
      1.12September 1, 2007 - November
        30, 2007
      
      
      1.31
      
      
      0.40December 1, 2007 - February 29, 2008
      
      
      0.75
      
      
      0.252007
      
      March 1, 2006 - May 31, 2006
      
      $
      5.45
      
      $
      2.08Jun 1, 2006 - August 31, 2006
      
      
      2.32
      
      
      1.36September 1, 2006 - November 30, 2006
      
      
      1.45
      
      
      0.55December 1, 2007 - February 28,
        2007
      
      
      1.35
      
      
      0.70


Stockholders

As of June 12, 2008, there were 51,679,036 shares of our common
stock outstanding, owned by approximately 505 holders of record.

Transfer Agent

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Our transfer agent is Holladay Stock Transfer, Inc., 2939 N
67th Place, Suite C, Scottsdale, Arizona 85251. Our transfer agents
telephone number is (480) 481-3940.

Dividend Policy

We have never declared or paid any cash dividends, and we do
not expect to pay any cash dividends in the foreseeable future. We intend to
retain and reinvest any earnings, if any are achieved, in the continued
development and operation of our business. Any payment of dividends would depend
upon the Company's pattern of growth, profitability, financial condition, and
such other factors as the Board of Directors may deem relevant.

Equity Compensation Plans

None.

Recent Sales of Unregistered Securities

In connection with a stock purchase agreement dated November
30, 2005, we completed a private placement of 857,145 shares of our common stock
at a purchase price of .35 per share, for gross proceeds of $300,000, which were
received in irregular installments during our fiscal year ended February 28,
2007. These shares were issued pursuant to Regulation S of the Securities and
Exchange Commission (SEC).

In a secondary Regulation S stock issuance, we sold 1,344,142
shares of our common stock at a purchase price of .50 per share for gross
proceeds of $672,071 pursuant to a stock purchase agreement dated December 3,
2005. The proceeds under this stock purchase agreement were received on various
dates during our fiscal year ended February 28, 2007.

During the years ended February 29, 2008 and February 28, 2007,
investors converted $2,498,500 and $262,500, respectively, of convertible
debentures and $118,731 (2008) and $10,184 (2007) of related accrued interest
into 5,596,998 (2008) and 588,036 (2007) shares of our common stock. These
shares were not registered pursuant to exemptions provided under Regulation S
(Reg. S) and Rule 506 of Regulation D (Reg. D) of the Securities and
Exchange Commission.

On November 21, 2006, we issued 332,000 shares of our common
stock in exchange for the extinguishment of $83,000 of debt owed to a creditor.
These shares were not registered pursuant to exemptions provided under
Regulation S (Reg. S) of the Securities and Exchange Commission.

During the years ended February 29, 2008 and February 28, 2007,
we sold 8,755,000 (2008) and 750,000 (2007) shares of our common stock at a
purchase price of 0.50 per share for aggregate proceeds of $4,377,500 (2008) and
$375,000 (2007). These shares were sold pursuant to a Private Placement
Memorandum (PPM) to accredited investors dated January 17, 2007. As part of the
private placement, the investors were issued five-year warrants to purchase up
to an aggregate of 8,755,000 (2008) and 750,000 (2007) shares of our common
stock, at a fixed exercise price of $1.50 per share. The warrants are not on a
cash-less basis and holders will be required to pay us $1.50 to exercise each
warrant. Offering costs associated with the sale of common stock and warrants
issued in connection with our PPM were $183,125 during the year ended February
29, 2008.

During the year ended February 29, 2008, the Company recognized
an aggregate of $292,000 (including $232,900 to a related party) of deferred
finance costs in connection with the issuance of 270,000 (including 170,000 to a
related party) shares of the Companys common stock to various holders of
unsecured promissory note obligations.

In aggregate, we issued 14,621,998 and 3,871,323 shares of our
common to accredited investors, a limited number of non-accredited investors and
non-U.S. persons during the years ended February 29, 2008 and February 28, 2007,
respectively. These shares were not registered pursuant to exemptions provided
under Regulation S (Reg. S) and Rule 506 of Regulation D (Reg. D) of the
Securities and Exchange Commission.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATION

The following discussion and analysis about our financial
condition and results of operations should be read in conjunction with the
consolidated financial statements and the related notes. This managements
discussion and analysis of financial condition and results of operations
contains forward-looking statements, the accuracy of which is subject to risks
and uncertainties. Words such as may, will, expects, anticipates,
intends, plans, believes, seeks, estimates, and should, and
variations of these words and similar expressions, are intended to identify
these forward-looking statements. These forward-looking statements reflect our
current views with respect to possible future events and financial performance.
All of these forward-looking statements involve risks and uncertainties. We wish
to caution you that our actual results may differ significantly from the results
we discuss in our forward-

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looking statements. We discuss some of the risks that could cause such differences in Item 1. Risk Factors in this Annual Report on Form 10-K. You should not unduly rely on these forward-looking statements. Our forward-looking statements speak only
as of the date of this document and the Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements to reflect events or circumstances that occur after that date.

Overview

We are a public transportation company headquartered in Los Angeles, California with operating entities in Cameroon. Our current business efforts focus on establishing and operating mass bus transit systems in the two major cities in Cameroon:
Yaoundé, the capital city of Cameroon, and Douala, the largest city and economic capital of Cameroon. We have partnered with the government of Cameroon to establish these mass transit systems. Our mission is to become a leading transportation
provider in Cameroon and other sub-Saharan African countries through the operations of our urban and rural transportation systems. Our current operations are comprised of providing inter-city bus transportation services between the cities of
Yaoundé and Douala and city bus services in Yaoundé.

Urban bus operations (LeBus)

On October 12, 2005, we signed an agreement with the Government of Cameroon for TAUG to establish and exclusively manage the urban bus systems in Cameroon, starting with the countrys two major cities: the capital city of Yaoundé and the
leading population and commercial center, Douala. Since the signing of the October 2005 agreement, we established a wholly-owned subsidiary, Transnational Automotive Group  Cameroon, SA (TAUG-C), headquartered in Yaoundé.
TAUG-C, through its majority owned intra-city transportation operational company, Transnational Industries  Cameroon, S.A., known as LeBus officially commenced urban bus operations in Yaoundé on September 25, 2006. Our urban
transportation system is currently comprised of 47 city buses, which serve six bus lines in Yaoundé.

Inter-city bus operations (LeCar)

LeCar is the brand name given to the Companys inter-city coach bus operations in Cameroon. On December 8, 2006, we formed a wholly-owned subsidiary, LeCar Transportation Corporation, S.A. (LeCar).

On December 18, 2006, LeCar officially launched its inter-city operations, transporting passengers between the capital city of Yaoundé and Douala. LeCar has experienced a significant increase in ridership and ticket revenue since the launch
of its operations. With a current fleet of 15 coach buses, LeCar is currently transporting approximately 30,000 passengers monthly and generating approximately $380,000 in monthly revenues from its inter-city bus operations.

Like LeBus, LeCar has received excellent support from the media and from Cameroons citizens, as indicated in the noteworthy success of the launch of operations. LeCar has also impressed Cameroon government leaders for its reliability and
quality of service, and enjoys the support of the nations highest officials. Once LeCar firmly establishes its Yaoundé-Douala service, we plan to expand our inter-city lines to other population centers throughout the rest of the country
and sub-region.

Application of Critical Accounting Policies

Critical accounting policies are those that are most important to the portrayal of the financial condition and results of operations, and require our managements significant judgments and estimates. The application of such critical accounting
policies fairly depicts the financial condition and results of operations for all periods presented.

Use of estimates

The consolidated financial statements the include accounts of our Company and all of our wholly-owned and majority-owned subsidiaries in Cameroon. The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect amounts reported in the accompanying consolidated financial statements and related footnotes. On an ongoing basis, we evaluate our estimates and judgments, which are based
on historical and anticipated results and trends and on various other assumptions that we believe to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may
differ from our estimates, and the difference could be material from these estimates.

Revenue and expense recognition

The majority of our revenues are derived from the sale of tickets for our inter-city and city bus operations. We recognize revenue

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from the sale of bus tickets when the transportation services are provided. We also derive revenue for our city bus operations from cash subsidies provided by the government of Cameroon. Revenue from government subsidies is recognized as revenue
when earned and when collection is reasonably assured. Selling, general, and administrative costs are charged to operations as incurred.

Depreciation and amortization expense

Property, buses and equipment are stated at cost and depreciated or amortized using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 5 years. Costs for capital assets not yet available for commercial use, if
any, have been capitalized as construction in progress and will be depreciated in accordance with our depreciation policies governing the underlying asset class. Assets classified as held for future use, if any, are not depreciated until
they are placed in productive service.

Impairment of long-lived assets

We review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less
than the carrying value of the long-lived assets, the carrying value is reduced to the estimated fair value as measured by the discounted cash flows.

Income taxes

We follow the asset and liability method of accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax bases of assets and liabilities and their
reported amounts in the financial statements, and (ii) operating loss and tax credit carry forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon managements estimates, it is more likely than not
that a portion of the deferred tax assets will not be realized in a future period. Income tax expense or benefit is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

Income taxes for our operations in Cameroon are provided for at rates applicable under Cameroonian law. In addition to income taxes on earnings, our subsidiaries operations in Cameroon are also subject to value-added taxes based on revenue
plus various other taxes that are not predicated on income. We recognize these tax obligations in the period incurred.

Financing, warrants and amortization of warrants and fair value determination

We have traditionally financed our operations through the issuance of secured capital lease obligations and unsecured promissory notes payable. Additionally, we have issued debt instruments that are convertible into our common stock, at conversion
rates at or below the fair market value of our common stock at the time of conversion, and typically include the issuance of warrants. We have recorded debt discounts in connection with these financing transactions in accordance with Emerging Issues
Task Force No. 98-5 and 00-27. Accordingly, we recognize the beneficial conversion feature embedded in the financing instruments and the fair value of the related warrants on the balance sheet as debt discount. The debt discount associated with the
warrants is amortized over the life of the underlying security. The debt discount associated with the beneficial conversion feature of the convertible debt instruments is charged to operations at the date the respective convertible debt instrument
is issued.

Stock purchase agreements

The funding of operations has also included the issuance and subscriptions of common stock. Proceeds received from the issuance of our common stock are reflected as additions to common stock and additional paid-in capital. Proceeds received from the
subscription of common stock are reflected as additions to subscribed capital.

Recent accounting pronouncements

In September 2006, FASB issued SFAS No. 157 Fair Value Measurements. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement
attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Management believes that this Statement will not have a significant impact on the consolidated financial statements.

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In September 2006, FASB issued SFAS No. 158 Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans - an
amendment of FASB Statements No. 87, 88, 106, and 132(R). This Statement
improves financial reporting by requiring an employer to recognize the over
funded or under funded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit organization. This
Statement also improves financial reporting by requiring an employer to measure
the funded status of a plan as of the date of its year-end statement of
financial position, with limited exceptions. An employer with publicly traded
equity securities is required to initially recognize the funded status of a
defined benefit postretirement plan and to provide the required disclosures as
of the end of the fiscal year ending after December 15, 2006. An employer
without publicly traded equity securities is required to recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after June 15, 2007.
However, an employer without publicly traded equity securities is required to
disclose the following information in the notes to financial statements for a
fiscal year ending after December 15, 2006, but before June 16, 2007, unless it
has applied the recognition provisions of this Statement in preparing those
financial statements:

| | a) | A brief description of the provisions of this
      Statement;                                      
| | -- | ----------------------------------------------------------------------------------------------------
| | b) | The date that adoption is required; and                                                             
| | c) | The date the employer plans to adopt the recognition
      provisions of this Statement, if earlier.

The requirement to measure plan assets and benefit obligations
as of the date of the employers fiscal year-end statement of financial position
is effective for fiscal years ending after December 15, 2008. We are currently
evaluating the effect of this pronouncement on our consolidated financial
statements.

In February 2007, FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. This Statement
allows entities to choose, at specified election dates, to measure eligible
financial assets and liabilities at fair value that are not otherwise required
to be measured at fair value. If a company elects the fair value option for an
eligible item, changes in that item's fair value in subsequent reporting periods
must be recognized in current earnings. SFAS No. 159 also establishes
presentation and disclosure requirements designed to draw comparison between
entities that elect different measurement attributes for similar assets and
liabilities. Management does not believe SFAS No. 159 will have a material
impact on our consolidated financial position, results of operations or cash
flows, as the Company has elected not to apply the fair value option for any of
its eligible financial instruments and other items.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements. This Statement amends ARB 51 to
establish accounting and reporting standards for the noncontrolling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
consolidated financial statements. SFAS No. 160 is effective for the fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. Based on current conditions, management does not expect the
adoption of SFAS No. 160 to have a significant impact on the Companys results
of operations or financial position.

In December 2007, the FASB issued SFAS No. 141(R), Business
Combinations. This Statement replaces SFAS No. 141, Business Combinations.
This Statement retains the fundamental requirements in SFAS No. 141 that the
acquisition method of accounting (which Statement 141 called the purchase
method) be used for all business combinations and for an acquirer to be
identified for each business combination. This Statement also establishes
principles and requirements for how the acquirer: a) recognizes and measures in
its financial statements the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree; b) recognizes and
measures the goodwill acquired in the business combination or a gain from a
bargain purchase and c) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the
business combination. SFAS No. 141(R) will apply prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Management does not expect the adoption of SFAS No. 141(R) to have a significant
impact on its financial position or results of operations.

In March 2008, FASB issued SFAS No. 161, Disclosures about
  Derivative Instruments and Hedging Activities. The new standard is intended
  to improve financial reporting about derivative instruments and hedging activities
  by requiring enhanced disclosures to enable investors to better understand their
  effects on an entitys financial position, financial performance, and cash
  flows. This Statement is effective for financial statements issued for fiscal
  years and interim periods beginning after November 15, 2008, with early application
  encouraged. The Standard also improves transparency about the location and amounts
  of derivative instruments in an entitys financial statements; how derivative
  instruments and related hedged items are accounted for under SFAS No. 133; and
  how derivative instruments and related hedged items affect its financial position,
  financial performance, and cash flows. SFAS No. 161 achieves these improvements
  by requiring disclosure of the fair values of derivative instruments and their
  gains and losses in a tabular format. It also provides more information about
  an entitys liquidity by requiring disclosure of derivative features that
  are credit risk-related. Management does not expect this Statement to have an
  impact on its financial condition or results of operations.

In May of 2008, FSAB issued SFASB No.162, The Hierarchy
  of Generally Accepted Accounting Principles. The pronouncement mandates
  the GAAP hierarchy reside in the accounting literature as opposed to the audit
  literature. This has the practical impact of elevating FASB Statements of Financial
  Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective
  60 days following SEC approval. We do not believe this pronouncement will impact
  our financial statements.

In May of 2008, FASB issued SFASB No. 163, Accounting for
  Financial Guarantee Insurance Contracts-an interpretation of FASB Statement
  No. 60. The scope of the statement is limited to financial guarantee insurance
  (and reinsurance) contracts. The pronouncement is effective for fiscal years
  beginning after December 31, 2008. We do not believe this pronouncement will
  impact our financial statements.

---

RESULTS OF OPERATIONS

For the fiscal years ended February 29, 2008 and February
28, 2007

Revenue

The following table presents revenue by category:

|                     |   | For the years ended |  |   | Percentage   | 
|-------------------- | - | ------------------- |  | - | ------------ | 
|                     |   | February 29,        |  |   | February 28, | 
|                     |   | 2008                |  |   | 2007         | 
|Ticket sales         | $ | 6,125,171           |  | $ | 946,395      | 
|Government subsidies |   | 1,648,438           |  |   | -            | 
|Ancillary revenue    |   | 391,530             |  |   | 76,191       | 
|Total revenue        | $ | 8,165,139           |  | $ | 1,022,586    | 

Total revenue increased $7,142,553 or 698 % for the year ended
February 29, 2008 as compared to the year ended February 28, 2007. The increase
in revenue over the prior year was attributed to the commencement of our
intra-city bus operations, LeBus, on September 25, 2006, and our inter-city bus
operations on December 18, 2006. The increase in revenue during the current year
was also attributed to the addition of 30 city buses during the current year and
$1,648,438 of government subsidies received in the current year compared to no
government subsidies received in the prior year. Ancillary revenue is primarily
comprised of food and beverage sales and postage and mail services provided on
our inter-city bus lines. We had 47 city buses and 15 coach buses, respectively,
in operations during the year ended February 29, 2008.

During the year ended February 29, 2008, we received cash
subsidies from the government of Cameroon for our city bus operations, LeBus.
The government of Cameroon is a 34% shareholder in LeBus. Revenue from
government subsidies are comprised of cash received from the government of
Cameroon to help fund the operating costs of our city bus operations. We
recognize revenue from government subsidies when the services have been
performed and when collection is reasonably assured. While we have not
negotiated a formalized subsidy program with the Cameroonian government, the
amount of cash subsidies received during the current year was based on specified
subsidies requested by management. We anticipate that future cash subsidies to
be provided by the government of Cameroon will increase based on the expansion
of our city bus operations in Yaoundé and other major cities within Cameroon. We
are actively working with high-ranking government officials to formalize subsidy
and tax exoneration agreements with the government for our city bus operations.

Although we anticipate that revenue from ticket sales and
government subsidies will continue to grow, our future revenue growth is subject
to fluctuations and is dependent to a significant degree upon the following
factors: (i) the expansion of our bus fleet to expand our current bus lines and
the development of new mass transit systems both, within and outside of
Cameroon; (ii) seasonal factors in the demand for inter-city and intra-city bus
transportation within the cities of Yaoundé and Douala; and (iii) our success in
negotiating with the government of Cameroon for increases in government
subsidies to fund our city bus operations.

Cost of revenue

Details of our cost of revenue for the years ended February 29,
2008 and February 28, 2007 are as follows:

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|                                  |   | For the years ended |  |   | Percentage   | 
|--------------------------------- | - | ------------------- |  | - | ------------ | 
|                                  |   | February 29,        |  |   | February 28, | 
|                                  |   | 2008                |  |   | 2007         | 
|Compensation expenses             | $ | 1,361,811           |  | $ | 146,514      | 
|Cost of food and beverage sales   |   | 171,370             |  |   | -            | 
|Fuel expense                      |   | 2,228,362           |  |   | 459,335      | 
|Insurance                         |   | 245,579             |  |   | 44,431       | 
|Maintenance and repairs           |   | 248,242             |  |   | 156,619      | 
|Depreciation and amortization     |   | 1,890,872           |  |   | 240,381      | 
|Value added taxes on ticket sales |   |                     |  |   |              | 
|included in revenue               |   | 1,090,740           |  |   | 160,557      | 
|Other                             |   | 178,506             |  |   | -            | 
|Total cost of revenue             | $ | 7,415,482           |  | $ | 1,207,837    | 

|                                  |  | % of Revenue |  |  |              |  |  | Increase/Decrease   | 
|--------------------------------- |  | ------------ |  |  | ------------ |  |  | ------------------- | 
|                                  |  | February 29, |  |  | February 28, |  |  | in % of Revenue     | 
|                                  |  | 2008         |  |  | 2007         |  |  | 2008
      vs. 2007 | 
|Compensation expenses             |  | 17%          |  |  | 14%          |  |  | 3%                  | 
|Cost of food and beverage sales   |  | 2%           |  |  | -            |  |  | 2%                  | 
|Fuel expense                      |  | 27%          |  |  | 45%          |  |  | -18%                | 
|Insurance                         |  | 3%           |  |  | 4%           |  |  | -1%                 | 
|Maintenance and repairs           |  | 4%           |  |  | 15%          |  |  | -14%                | 
|Depreciation and amortization     |  | 23%          |  |  | 24%          |  |  | -1%                 | 
|Value added taxes on ticket sales |  |              |  |  |              |  |  |                     | 
|included in revenue               |  | 13%          |  |  | 16%          |  |  | -3%                 | 
|Other                             |  | 2%           |  |  | -            |  |  | 2%                  | 
|Total cost of revenue             |  | 91%          |  |  | 118%         |  |  | -30%                | 

Cost of revenue is comprised primarily of fuel costs, cost of
food and beverage sales, direct payroll, value-added taxes on ticket sales,
insurance, repairs and maintenance of buses, depreciation expense on buses, and
other ancillary costs. Cost of revenue for the year ended February 29, 2008 was
$7,415,482 or approximately 91% of revenue compared to $1,207,837, or
approximately 118% of revenue for the year ended February 28, 2007. The decrease
in cost of revenue as a percentage of total revenue in the current year is
primarily attributed to lower fuel expense as a percentage of total revenue in
the current year compared to prior year. The decrease in fuel as a percentage of
total revenue is primarily due to the start up of our operations in the prior
year, which resulted in higher fuel costs as a percentage of revenue due to fuel
used in the training of our drivers prior to the commencement of our operations
and for the development of our bus lines. We anticipate fuel costs would
approximate between 25  30% of total revenue as we expand our operations.

Operating expenses

Operating expenses were as follows:

---

|                                         |   | For the years ended |  |   | Percentage   | 
|---------------------------------------- | - | ------------------- |  | - | ------------ | 
|                                         |   | February 29,        |  |   | February 28, | 
|                                         |   | 2008                |  |   | 2007         | 
|Sales and marketing                      | $ | 167,134             |  | $ | 211,594      | 
|General and administrative               |   | 4,825,370           |  |   | 5,330,174    | 
|Depreciation and amortization            |   | 98,074              |  |   | 28,010       | 
|Impairment on buses                      |   | 315,000             |  |   | -            | 
|Foreign currency translation loss (gain) |   | -                   |  |   | 22,745       | 
|                                         | $ | 5,405,578           |  | $ | 5,592,523    | 

Sales and marketing expense consist primarily of
advertising expenditures, promotional expenditures and fees to marketing and
public relations firms. Sales and marketing expense decreased by $44,460 for the
year ended February 29, 2008 as compared to the prior year. The decline in sales
and marketing costs over the prior year is primarily attributed to: 1) the
termination of our contract with our former ad agency during the current fiscal
year; and 2) certain non-recurring marketing and advertising expenditures
incurred in the prior year for the pre-launch and start of our inter-city and
city bus operations, which commenced in 2007.

General and administrative expenses are comprised of
office and administration expenditures, professional and consulting fees,
corporate and administrative payroll and related payroll taxes, rent and travel
costs. General and administrative expenses decreased by $504,804, or 9% over the
previous year. The decrease in our general and administrative expenses during
our current fiscal year is attributed primarily to the following activities:

- A significant decline in legal and professional fees compared to the prior
  year. Legal and professional costs in the prior year were primarily related to
  the establishment of our operations and the legal formation of our Cameroonian
  subsidiaries.
- A decline in travel costs compared to the prior year. Travel costs in the
  prior year were related to the procurement and start up of our operations in
  Cameroon.

The reduction in legal, professional and travel costs were
partially offset by an increase in other operating costs related to the
operating expenses of our subsidiaries in Cameroon, which included an increase
in general and administrative payroll, rent and general office expenses. The
increase in these costs was driven by the commencement of operations in October
2006 and expansion of our bus lines in the current year, resulting in a
significant increase in our administrative employee count and our administrative
infrastructure costs. The increase in these expenses was partially offset by a
decrease in our U.S. corporate overhead expenses in the current year including
lower corporate legal, professional, travel and administrative payroll costs. In
an effort to minimize our corporate overhead, we also downsized our U.S.
corporate headquarters and facilities beginning in November 2006, resulting in a
significant decrease in corporate rent expense and ancillary costs.

Depreciation and amortization expense increased by 250%
over the prior year. The increase in depreciation and amortization expense
charged to operations is attributed to an increase in depreciable assets,
including office furniture and equipment, computer equipment and software,
automotive equipment and building improvements that were purchased in connection
with the commencement of operations and build out of the Companys operating
facilities in Cameroon.

The impairment loss on fixed assets for the year ended
February 29, 2008 was $315,000. We recognized an impairment loss on our city
buses. We concluded that the carrying amount of these buses exceeded their
disposition value based on an analysis of current market prices.

Prior to March 1, 2007, we considered the U.S. dollar to be our
functional currency given that, in the prior year, the majority of all funds
used in operations were funded in U.S. dollar. In determining the Companys
functional currency in the prior year, management considered various factors and
economic indicators including: 1) The majority of the Companys operating
expenses during the fiscal year-ended February 29, 2008 were denominated in U.S.
currency, 2) the Companys acquisition financing of the buses used in operations
were denominated in U.S. currency; and 3) the cash flows generated by the
Cameroonian subsidiaries operations were not sufficient to service the
Companys existing debt obligations without cash infusions from the U.S. Parent
Company. Accordingly, through February 28, 2007, accumulated exchange rate
adjustments resulting from the process of translating the Companys financial
statements expressed in foreign currencies into U.S. dollars are reflected as
income or loss in the accompanying consolidated statements of operations.

During the year ended February 29, 2008, we determined that our
functional currency was no longer the U.S. dollar, but instead the

---

local currency, the Cameroonian Franc (CFA). In making this
determination, we considered that the majority of funds used in operations for
the current year were stated and transacted in CFA. As such, based on the
guidance provided in SFAS No. 152, Foreign Currency Translation, effective
March 1, 2007, translation adjustments resulting from the process of translating
the local currency financial statements into U.S. dollars are included in
determining comprehensive income. As of February 29, 2008, the cumulative
translation adjustment of $450,997 generated in 2008 was classified as an item
of other comprehensive income in the stockholders equity section of the
consolidated balance sheet. For the year ended February 29, 2008, accumulated
other comprehensive income was $450,997.

Other income (expense)

|                                         |   | For the years ended |   |   | Percentage   |  
|---------------------------------------- | - | ------------------- | - | - | ------------ | -
|                                         |   | February 29,        |   |   | February 28, |  
|                                         |   | 2008                |   |   | 2007         |  
|Finance costs from beneficial conversion | $ | 34,000              |   | $ | 1,003,050    |  
|Finance costs from issuance of shares    |   | 292,000             |   |   | -            |  
|Finance costs from issuance of warrants  |   | 1,316,654           |   |   | 1,461,296    |  
|Loss on accident of buses                |   | 76,847              |   |   | -            |  
|Loss on extinguishment of debt           |   | -                   |   |   | 355,240      |  
|Interest expense                         |   | 971,215             |   |   | 445,922      |  
|Interest income                          |   | (32,664             | ) |   | -            |  
|Other income                             |   | (9,433              | ) |   | (1,662       | )
|Total other expense                      | $ | 2,648,619           |   | $ | 3,263,846    |  

Other income and expenses are comprised primarily of finance
  costs associated with funding our operating activities. In connection with private
  placement offerings to accredited investors, we raised an aggregate of $3,638,500
  from the issuance of 7% convertible debentures with attached warrants. The debentures
  were convertible into shares of our common stock at an exercise price of .4464
  per share. Finance costs from the amortization of deferred financing costs from
  the issuance of warrants were $1,316,654 and $1,461,296 for the years ended
  February 29, 2008 and February 28, 2007, respectively. The warrants were amortized
  over a period of one year from the date of issue, representing the term of the
  underlying debt instrument. The decrease in finance costs from the issuance
  of warrants is primarily due to a decrease in the unamortized deferred finance
  costs during the current year compared to the prior year.

Finance costs associated with the issuance of common shares
attached to other debt instruments was $292,000 during the current year compared
to $0 in 2007. Finance costs in connection with the beneficial conversion
feature of convertible debentures was $34,000 in 2008 and $1,003,050 in 2007.
During the current year, the majority of our capital was raised through our
private placement memorandum dated January 17, 2007, which is fully described in
note 8 to the consolidated financial statements.

During the current year, other interest expense was $971,215
and was comprised of interest on outstanding unsecured promissory note
obligations, $445,326 of interest costs associated with additional shares
granted to debenture holders related to a repricing of the underlying debenture
units, and interest costs accrued on outstanding debentures. During the prior
year, total other interest expense was $445,922 and was comprised of interest on
outstanding unsecured promissory notes and convertible debentures.

Minority interest in loss of subsidiary

Several Cameroonian governmental agencies collectively own 34%
of our majority-owned subsidiary, Transnational Industries, Cameroon, S.A.,
which operates our city bus transportation system, LeBus. Minority interest in
loss of subsidiary represents these shareholders proportionate share of the loss
from LeBus. We did not recognize the minority shareholders proportionate share
in the loss of LeBus for the year ended February 29, 2008 because LeBus had an
aggregate stockholders deficit balance at February 29, 2008, and the minority
shareholders are not obligated to fund losses in excess of their original
investments in LeBus.

|                                        |   | For the years ended |  |   | Percentage   | 
|--------------------------------------- | - | ------------------- |  | - | ------------ | 
|                                        |   | February 29,        |  |   | February 28, | 
|                                        |   | 2008                |  |   | 2007         | 
|                                        |   |                     |  |   |              | 
|Minority interest in loss of subsidiary | $ | -                   |  | $ | 530,901      | 

Net loss

---

Our net loss for the year ended February 29, 2008 decreased to
$7,304,540 or $(.16) per share, from $8,510,719 or ($.20) per share for the year
ended February 28, 2007. The decrease in our net loss for the year ended
February 29, 2008 was attributed to the following:

- The commencement of our mass transit operations for LeBus (commencing in
  September 2006) and LeCar (commencing in December 2006). Our net loss was
  offset by the gross profit generated from operations, which totaled $749,657
  for the year ended February 29, 2008. This compared to a negative gross profit
  margin of $185,251 for the year ended February 28, 2007.
- The reduction in our corporate overhead costs compared to the previous
  year, resulting in a decline in our overall general and administrative costs
  during the current year.
- Overall financing costs beginning in the third quarter were lower than in
  the prior year. The reduction in our financing costs was primarily attributed
  to the issuance of equity securities in connection with our private placement
  during the current year, resulting in lower finance costs in comparison to
  securities issued in connection with our convertible debentures in the prior
  year.

Assets

Assets increased by $2,953,815 to $8,164,324 as of February 29,
2008, or approximately 57%, from $5,210,509 as of February 28, 2007. This
increase was due primarily to an increase in property, buses and equipment and
other receivables, which increased $3,066,659 and $511,945, respectively, over
February 28, 2007. The increase in our capital expenditures was primarily
related to our acquisition of an additional 30 city buses and six coach buses
used in our mass transit operations. The increase in capital expenditures was
also attributed to our acquisition of land during the current year for the
establishment of a new bus depot/agency to provide intercity bus services in the
cities of Bamenda and Bafoussam. As of February 29, 2008, current assets
decreased by $112,844 over the prior year. The decrease in current assets is
primarily attributed to a decline of $1,680,957 in advance deposits on buses,
which were used for the acquisition of the 30 city buses during the current
year.

Liabilities

Total liabilities increased by $2,220,001 to $10,300,548 as of
February 29, 2008 or approximately 27%, from $8,080,547 as of February 28, 2007.
This increase was due primarily to: 1) an increase in accounts payable, accrued
expenses and VAT and custom duty taxes payable, and deferred revenue by
$2,994,837; and 2) a $2,335,632 increase in related party debt. The increase in
total liabilities was partially offset by: 1) a decrease of $1,523,789 in
convertible debentures due to third parties, which were converted to common
stock during the current year; 2) a decrease in third party notes payable of
$400,000, which was repaid during the current year; and 3) a decrease of
$765,622 in obligations under capital lease  related party, which were repaid
in the current year.

Minority interest

The government of Cameroon owns 34% of our subsidiary in
Cameroon, Transnational Industries  Cameroon, S.A. (LeBus). Minority interest
represents the governments ownership interest in LeBus. As of February 29, 2008
and February 28, 2007, minority interest was $0, reflecting a stockholders
deficit balance in LeBus, which was attributed to cumulative losses in excess of
capital contributions for the subsidiary. The government of Cameroon is not
obligated to fund losses in excess of their capital contributions to LeBus.

Stockholders deficit

Stockholders deficit decreased by $733,814 to $2,136,224 as of
February 29, 2008, from a deficit of $2,870,038 as of February 28, 2007. The
decrease in stockholders deficit was primarily attributed to $4,377,500 of
additional capital raised during the current year and the conversion of
approximately $2,500,000 of convertible debentures into common stock during the
current year, offset by the current year loss of $7,304,540.

LIQUIDITY AND CAPITAL RESOURCES

As of February 29, 2008, we had cash and cash equivalents of
$578,105 compared to $0 cash and cash equivalents as of February 28, 2007,
representing an increase in our cash and cash equivalents of $578,105. The
increase in our cash balances compared to the prior year was primarily
attributed to our ability to raise capital from the issuance of common stock and
warrants and offset by our net loss from operations and capital expenditures for
the acquisition of buses.

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|                          |   | February 29, |   |   | February 28, |   |   | Increase/  |  
|------------------------- | - | ------------ | - | - | ------------ | - | - | ---------- | -
|                          |   | 2008         |   |   | 2007         |   |   | Decrease   |  
|Working capital           |   |              |   |   |              |   |   |            |  
|Current assets            | $ | 1,863,909    |   | $ | 1,976,753    |   | $ | (112,844   | )
|Current
      liabilities |   | 10,300,548   |   |   | 8,080,547    |   |   | 2,220,001  |  
|                          |   |              |   |   |              |   |   |            |  
|                          |   |              |   |   |              |   |   |            |  
|Working capital deficit   | $ | (8,436,639   | ) | $ | (6,103,794   | ) | $ | (2,332,845 | )

Our working capital deficit at February 29, 2008 was $8,436,639
compared to $6,103,794 as of February 28, 2007, representing an increase of
$2,332,845. The increase in our working capital deficit was primarily related to
an increase in accounts payable and accrued expenses, an increase in VAT and
custom duty taxes payable to governmental agencies of Cameroon, and an increase
in unsecured borrowings from related parties. The increase in our liabilities
was primarily attributable to securing borrowed funds to finance our capital
expenditures for the acquisition of buses and for working capital purposes to
fund our operating results.

|                                                           |   | For the years ended |   |   |              |  
|---------------------------------------------------------- | - | ------------------- | - | - | ------------ | -
|                                                           |   | February 29,        |   |   | February 28, |  
|                                                           |   | 2008                |   |   | 2007         |  
|Cash flows used in operating activities                    | $ | (1,987,259          | ) | $ | (4,198,610   | )
|Cash flows used in investing activities                    |   | (2,303,765          | ) |   | (2,374,896   | )
|Cash flows provided by financing activities                |   | 4,418,132           |   |   | 5,975,866    |  
|Effect of exchange rate on cash                            |   | 450,997             |   |   | -            |  
|                                                           |   |                     |   |   |              |  
|Net increase (decrease) in cash
      and cash equivalents | $ | 578,105             |   | $ | (597,640     | )

Cash flows from operating activities

During the year ended February 29, 2008, cash flows used in
operating activities decreased by $2,211,351 to $1,987,259 compared to
$4,198,610 in the prior year. The decrease in cash flows used in operating
activities for the year ended February 29, 2008 is primarily due to a reduction
in our net loss by $1,206,179 and non-cash charges to our net loss including a
$1,720,555 increase in depreciation and amortization expense.

Cash flows from investing activities

Cash flows used in investing activities were primarily
attributed to $2,303,765 of cash used for the acquisition of buses used in
operations and capital expenditures for the purchase of property and equipment
to build out our instrastructure and operating facilities in Cameroon.

Cash flows from financing activities

Net cash provided by financing activities for the year ended
February 29, 2008 decreased by $1,557,734 compared to the previous year. The
decrease in net cash provided by financing activities during the current year
was primarily attributed to a $3,638,500 reduction in proceeds from the issuance
of convertible debentures and warrants from the previous year. During the
current year, we did not issue any convertible debentures and raised capital
through the issuance of common stock and warrants to accredited investors
pursuant to our private placement memorandum offering (PPM). In the current
year, we raised $4,377,500 from the issuance of common stock and warrants
pursuant to our PPM compared to $1,347,071 of cash raised from the issuance of
common stock and warrants in the prior year.

Cash flows provided by financing activities for the year ended
February 29, 2008 were reduced by $800,000 of aggregate principal repayments on
a capital lease obligation made to a related party and the repayment of $660,000
of unsecured promissory notes during the current year.

Effect of Exchange Rate on Cash

Our functional currency is the Cameroonian Franc (CFA). During
the year ended February 29, 2008, net cash increased by $450,997 as a result of
translating our consolidated financials from our functional currency into our
reporting currency, the US dollar.

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Going Concern

The consolidated financial statements included in this Annual Report on Form 10-K have been prepared assuming that we will continue as a going concern, however, there can be no assurance that we will be able to do so. Our recurring losses and
difficulty in generating sufficient cash flow to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern, and our consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

We have an accumulated deficit of approximately $18,376,186 as of February 29, 2008 as well as a significant working capital deficit. Our future operating success is dependent on our ability to generate positive cash flows from our bus
operations in Cameroon. Our ability to generate positive cash flows is predicated on achieving certain economies of scale in our business, which will involve the acquisition of additional buses for our operations and additional capital investment in
infrastructure, employee training and other resources for our growth. In order to achieve this goal, we will need to raise a significant amount of capital for the acquisition of additional buses and related costs. Funding of our working capital
deficit, current and future operating losses, and growth of the Companys transportation operations in Cameroon and other countries will require continuing capital investment. Historically, we have received funding through the issuance of
convertible debentures and warrants to acquire common stock issued in connection with private placement offerings, the issuance of common stock and subscriptions to acquire common stock, advances received under unsecured promissory note obligations,
and the financing of the acquisition of our buses through a capital lease obligation due to a related party trust. Our strategy is to fund our current and anticipated future cash requirements through the issuance of additional convertible debt
instruments, common stock warrants, unsecured borrowing arrangements and equity financing.

The Company has been able to arrange debt facilities and equity financing to date, there can be no assurance that sufficient debt or equity financing will continue to be available in the future or that it will be available on terms acceptable to the
Company. Failure to obtain sufficient capital to fund current working capital requirements and future capital expenditures necessary to grow the business would materially affect the Company's operations in the short term and expansion strategies.
The Company will continue to explore external financing opportunities. Currently, the Company is in negotiations with multiple parties to obtain additional financing, and the Company will continue to explore financing opportunities with additional
parties.

As a result of the aforementioned factors and related uncertainties, there is substantial doubt of the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments to reflect the possible
effects of recoverability and classification of assets or classification of liabilities, which may result from the inability of the Company to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as defined in Item 303(C) of Regulation S-B.

ITEM 7. FINANCIAL STATEMENTS

Our audited financial statements for the years ended February 29, 2008 and February 28, 2007 are included in a separate section of this Annual Report beginning on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
  ON ACCOUNTING AND FINANCIALDISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our acting Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this
report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the Exchange Act). Based on the evaluation, our acting Chief Executive Officer and Chief Financial Officer have concluded that, as of February 29, 2008, our
disclosure controls and procedures are not effective.

Managements Report on Internal Control Over Financial Reporting

(a) Evaluation of Disclosure Controls and Procedures

---

The Companys management is responsible for establishing and
maintaining adequate internal control over financial reporting for the Company.
Internal control over financial reporting includes maintaining records that
accurately and fairly reflect the Companys transactions; providing reasonable
assurance that transactions are recorded as necessary for the preparation of the
Companys financial statements; providing reasonable assurance that receipts and
expenditures are made in accordance with company policy; and providing
reasonable assurance that unauthorized acquisition, use or disposition of
company assets that could have a material effect on the Companys financial
statements would be prevented or detected on a timely basis. Because of its
inherent limitations, internal control over financial reporting is not intended
to provide absolute assurance that a misstatement of our financial statements
would be prevented or detected.

The Companys management has assessed the effectiveness of our
internal control over financial reporting as of February 29, 2008 based on
criteria established under the COSO framework, an integrated framework for
evaluation of internal controls issued to identify the risks and control
objectives related to the evaluation of the control environment by the Committee
of Sponsoring Organizations of the Treadway Commission.

Based on our evaluation described above, the Companys
management has concluded that our internal control over financial reporting was
not effective as of February 29, 2008. Management has determined that (i) our
inadequate staffing and supervision and (ii) the significant amount of manual
intervention required in our accounting and financial reporting process are
material weaknesses in our internal control over financial reporting.

This annual report does not include an attestation report of
the Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation
requirements by the Companys registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only managements report in this annual report.

(b) Limitations on Controls

Management does not expect that our disclosure controls and
procedures or our internal control over financial reporting will prevent or
detect all error and fraud. Any control system, no matter how well designed and
operated, is based upon certain assumptions and can provide only reasonable, not
absolute, assurance that its objectives will be met. Further, no evaluation of
controls can provide absolute assurance that misstatements due to error or fraud
will not occur or that all control issues and instances of fraud, if any, within
the Company have been detected.

There has not been any change in our internal control over
financial reporting during the quarter ended February 29, 2008 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 8B. OTHER INFORMATION

None.

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS; CONTROL
PERSONS AND CORPORATEGOVERNANCE; COMPLIANCE WITH SECTION
16(a) OF THE EXCHANGE ACT

Executive Officers, Significant Employees and Directors

Set forth below is certain information as of June 12, 2008
concerning each of our directors and executive officers and certain significant
employees. Each of the individuals listed below as a director shall serve as a
director until the next annual meeting of our stockholders and until their
successors have been elected and qualified, or until their resignation, death or
removal.

---

|                  |  |                                                                                   |  | Has Served as Director          
|----------------- |  | --------------------------------------------------------------------------------- |  | --------------------------------
|Name              |  | Position and Age                                                                  |  | or Executive
      Officer since
|                  |  |                                                                                   |  |                                 
|Seid Sadat        |  | Acting Chief Executive Officer
      and Chief Financial Officer and Director; 48 |  | August 29, 2006                 
|                  |  |                                                                                   |  |                                 
|David Browne      |  | In-house Corporate Counsel and
      Secretary; 52                                |  | January 2, 2007                 
|                  |  |                                                                                   |  |                                 
|William Jacobson  |  | Director; 61                                                                      |  | February 15, 2006               
|                  |  |                                                                                   |  |                                 
|Henry Huber       |  | Director; 66                                                                      |  | July 17, 2006                   
|                  |  |                                                                                   |  |                                 
|S. Lal Karsanbhai |  | President, Africa Operations; 68                                                  |  | May 6, 2007                     

Seid Sadat - Mr. Sadat has been a professional in public
accounting for over nineteen years. He has performed a wide range of accounting
services for a diversified client base consisting of estate, manufacturing,
non-profit, retail, construction, and service organizations. He has acted as the
CFO for several companies, has extensive audit and regulatory expertise and has
been called upon to act as an expert witness. He is currently a member of the
Report Quality Monitoring Committee for the California Board of Accountancy.

David Browne  Mr. Browne, J.D., 51: Corporate Secretary
and in-house counsel since April 2007. Mr. Browne has practiced law in
California for 27 years with an emphasis on business law and business
litigation.

William Jacobson- Mr. Jacobson has been president and
CEO of Atlas Mining Company since August of 1997. He has worked directly in the
mining industry for over 12 years. Mr. Jacobson also spent 15 years in the
banking industry. He graduated with a B. S. in Business Administration from the
University of Idaho in 1971 and is a member of the Northwest Mining
Association.

Henry Huber- Mr. Huber has a Masters of Education
degree, and has spent the last five years as President of his company, Uptrend
Investment Services, providing investment services to private clients.

S. Lal Karsanbhai  Mr. Karsanbhai has advanced degrees
from Portugals Graduate Institute of Commerce and the London School of
Economics. He held various positions at Unilever and General Motors Corporation
including Treasurer of GM Portugal, GMs Eastern European Operations, Director
of Finance for GM Yugoslavia, Treasurer of GM Zaire (now Democratic Republic of
Congo), and Executive Director for Africa/Middle East. In this capacity, Mr.
Karsanbhai developed countertrade activities in Kenya for General Motors CKD
operation and in Angola for sale of Bedford trucks and later in Congo by
exporting minerals (zing, copper and cobalt) worth hundreds of millions of
dollars. Mr. Karsanbhai established GMs Marketing Unit & After Sales in
Luanda, Angola and its SKD facility for truck assembly followed by founding of
Angola Holdings as CEO. Mr. Karsanbhai developed trading activity for Motors
Trading Corporation (GM subsidiary) to generate forex required by African
countries for purchasing GM-related components. Mr. Karsanbhai appointed a
member of GMs Franchise Board based in Cairo for all African countries. Mr.
Karsanbhai was born in Mozambique and has worked in a managerial/supervisory
capacity for nearly 40 years in various countries in Africa.

ITEM 10. EXECUTIVE COMPENSATION

The following summary compensation tables set forth information
concerning the annual and long-term compensation for services in all capacities
for the most recent fiscal year, of those persons who were, at February 29, 2008
TAUGs executive officers. The following information includes the dollar value
of base salaries, bonus awards, stock options granted and certain other
compensation, if any, whether paid or deferred.

For the Fiscal Year Ended February 29, 2008All OtherSalary
      
      
      Bonus
      
      
      Compensation
      
      
      
      
      TotalName and Principal
        Position
      
      
      ($)
      
      
      ($)
      
      
      ($)
      
      
      
      
      ($)Seid Sadat
      
      $
      -
      
      $
      -
      
      $
      496,000
      
      (1
      )
      $
      496,000David Browne
      
      $
      -
      
      $
      -
      
      $
      80,000
      
      (2
      )
      $
      80,000S. Lal Karsanbhai
      
      $
      60,000
      
      $
      -
      
      $
      36,000
      
      (3
      )
      $
      96,000


---

(1) Includes $461,000 payable to Magidoff, Sadat & Gilmore,
LLP (MSG), a professional services firm, majority owned and controlled by Mr.
Sadat.

(2) Include $8,000 of compensation accrued as of February 29,
2008.

(3) Includes $36,000 of deferred compensation to be awarded to
Mr. Karsanbhai in common stock.

Compensation of Directors

None

Code of Ethics

The Company has not yet adopted a code of ethics applicable to
its chief executive officer and chief accounting officer, or persons performing
those functions, because of the small number of persons presently involved in
the management of the Company.

Option Grants

None

Outstanding Equity Awards

None

Employment Agreements, Termination of Employment, and
Change-in-Control Arrangements

There are no employment agreements between us and Messrs. Sadat
and Browne. On July 31, 2007, the Company entered into an employment agreement
with the president of the Companys African operations, S. Lal Karsanbhai. Under
the terms of the agreement, the Company agreed to remunerate the president cash
compensation of $6,000 per month plus deferred compensation of $4,000 per month
payable in stock through the duration of his employment. The Company has accrued
$36,000 of deferred compensation owed to Mr. Karsanbhai as of February 29, 2008,
representing deferred compensation payable under this employment agreement
through the end of February 29, 2008.

We currently have no compensatory plans or arrangements
resulting from the resignation, retirement or any other termination of any of
our executive officers, from a change-in-control, or from a change in any
executive officers responsibilities following a change-incontrol.

Committees of the Board of Directors

We presently have not appointed an audit committee or a
compensation committee among our board of directors.

Change in Control

None

Family Relationships

There are no family relationships among our officers or
directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
  AND MANAGEMENT

The following table sets forth, as of June 12, 2008: (a) the
names of each beneficial owner of more than five percent (5%) of our common
stock known to us, the number of shares beneficially owned by each such person,
and the percent of our common stock so owned; and (b) the names of each director
and executive officer, the number of shares of common stock beneficially owned
and the percentage of our common stock so owned, by each such person, and by all
directors and executive officers as a group. The Companys management believes
that the benefical owners of the common stock listed below, based on information
furnished by such owners, have sole investment and voting power with respect to
such shares, subject to community property laws where applicable.

---

As of June 12, 2008, we had a total of 51,679,036 shares of
common stock issued and outstanding, which is the only issued and outstanding
voting equity security of the Company.

|                                                                  |  | Number of |  | Percentage of
|----------------------------------------------------------------- |  | --------- |  | -------------
|Name and Address
      of Beneficial Owner                        |  | Shares    |  | Class        
|                                                                  |  |           |  |              
|Seid Sadat (2)(3)                                                 |  | 9,628,178 |  | 18.6%        
|David Browne (4)                                                  |  | 100,000   |  | *            
|All directors and executive officers as a
      group (2 persons) |  | 9,728,178 |  | 18.8%        

________________________________________________Pursuant to
Rules 13-d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any
shares as to which a stockholder has sole or shared voting power or investment
power, and also any shares which the stockholder has the right to acquire within
60 days, including upon exercise of options or warrants or other convertible
securities.

* Less than 1% of outstanding shares.

|(1) | The determination of percentage ownerships is based on a
      total of 51,679,036 shares of common stock issued and outstanding, and
      does not include shares issuable upon the exercise of stock options and
      shares of restricted stock that have been or may be granted or shares that
      may be issued upon exercise of outstanding warrants.                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | Address is 21800 Burbank Blvd., Suite 200, Woodland
      Hills, CA 91367.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | Includes: (i) 1,600,000 shares held directly; (ii)
      336,022 shares held in the Sadat Kugel 401(k) Plan FBO Seid Sadat; (iii)
      336,022 shares of common stock which may be acquired through the exercise
      of warrants that are held in the Sadat Kugel 401(k) Plan FBO Seid Sadat;
      (iv) 2,750,000 shares of common stock held by Avalon Holdings, LLC, a
      company owned 50% by Mr. Sadat; (v) 2,936,134 shares of common stock held
      by Fusion Equity, LLC, a company partially owned and controlled by Mr.
      Sadat; and (vi) 1,670,000 shares of common stock owned by Tov Trust, a
      trust whose trustee is Mr. Sadat.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(4) | Address is 23901 Calabasas Road, Suite 1064, Calabasas,
      CA 91302.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Equity Compensation Plans

We presently do not maintain any equity compensation plans
under which shares of our common stock are authorized for issuance.

Director Independence

The Board of Directors currently consists of three directors,
two of whom, Messrs. Jacobson and Huber are independent as defined in the NASD's
rules for The NASDAQ Stock Market. Mr. Sadat is a non-independent management
director.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
  AND DIRECTOR INDEPENDENCE

On May 15, 2006, the Company entered into a capital lease
obligation with Tov Trust (Tov), a trust whose trustee is Seid Sadat, the
Chief Financial Officer and director of TAUG, for the acquisition of the first
shipment of 28 buses to be used in our urban transportation operations in
Cameroon. Under the terms of the lease agreement, TAUG was committed to lease
payments of $200,000 per month for nine months commencing in October 2006, with
total payments aggregating $1,500,000 of principal payments and $300,000 for
deferred finance charges. As of February 28, 2007, $765,622 was outstanding
under this lease obligation representing $800,000 of principal payments less
$34,378 of deferred interest. The lease expired in June 2007, when all remaining
principal and unpaid interest were repaid. The interest expense for the years
ended February 29, 2008 and February 28, 2007 under this related party
obligation was $34,378 and $265,622, respectively.

As of February 29, 2008, and February 28, 2007, an aggregate of
$2,595,000 was $825,000, respectively, was borrowed from Tov. These borrowings
were advanced in four separate installments. The first installment of $425,000
was advanced on November 6, 2006 and is unsecured, bearing interest at 10% and
is due on demand. The second installment of $400,000 was advanced on February
12, 2007. Borrowings under the second advance are unsecured, bearing interest at
40% per annum, and was due on October 31, 2007, including unpaid interest. The
third installment of $750,000 was borrowed on May 30, 2007 and is unsecured,
bearing interest at 10% per annum and was due on October 31, 2007. The Company
is currently negotiating renewal provisions for these obligations with the

---

Trustee of Tov.

The fourth installment of $1,020,000 was advanced in November 2006 and was initially classified as a convertible debenture under which Tov could convert these debentures into 2,240,143 shares of common stock and warrants to purchase 2,240,243
shares of common stock. The debenture expired in December 2007 and the trustee of Tov did not elect conversion. Borrowings under this $1,020,000 obligation are due on demand and bear interest at 7% per annum.

The interest expense for the years ended February 29, 2008 and February 28, 2007 under related party obligations due to Tov was $334,754 and $39,773, respectively. As of February 29, 2008 and February 28, 2007, accrued interest due to Tov
under these related party obligations was $374,527 and $39,773, respectively.

During the year ended February 29, 2008, an aggregate of 170,000 shares of the Companys common stock were issued to Tov in consideration for the Company being granted a deferred maturity date on $1,575,000 of outstanding promissory note
obligations advanced by Tov (note 6). During the year ended February 29, 2008, total deferred finance costs charged to operations in connection with the issuance of these shares was $232,900.

On March 24, 2006, the Company was advanced $150,000 from the plan assets of a pension plan for the benefit of the Companys chief financial officer, Seid Sadat (related party debenture) in connection with a private placement
offering of 7% convertible debentures and stock warrants to accredited investors (note 7). Under the terms of the subscription agreement, the related party debenture is convertible into 336,022 shares of common stock. In connection with the
subscription agreement for this related party debenture, the pension plan was also issued 5-year warrants to acquire an additional 336,022 shares of common stock at an exercise price of $1.50. On May 21, 2007, the related party debenture of
$150,000 and $10,120 of accrued interest on the debenture were converted into 336,022 shares of common stock. The interest expense for the years ended February 29, 2008 and February 28, 2007 under this related party obligation was $157
and $9,963, respectively.

In January 2008, an unsecured creditor assigned the Companys chief financial officer, Seid Sadat, $220,000 of outstanding borrowings owed to him by the Company (note 6). These amounts represented one-half of an unsecured promissory note
obligation owed to this creditor by the Company, which was repaid to this creditor by Mr. Sadat. Borrowings under this related party obligation are unsecured, due on demand and bear interest at 14% per annum. As of February 29, 2008, an aggregate of
$220,000 of principal and $10,939 of accrued interest was outstanding under this obligation. Total interest expense for the year ended February 29, 2008 under this related party obligation was $10,939.

The Company entered into a consulting agreement with Magidoff Sadat & Gilmore, LLP (MSG), a professional services firm, pursuant to which MSG agreed to provide services to TAUG including assistance in managerial oversight, internal
accounting and financial reporting, and advisory services. The agreement also obligates the Company to reimburse MSG $3,500 per month in shared rent costs. For the years ended February 29, 2008 and February 28, 2007, the Company was charged an
aggregate of $586,000 and $472,000, respectively, for these services including $42,000 of shared rent costs in 2008, by MSG under this consulting agreement. As of February 29, 2008 and February 28, 2007, $831,486 and $485,854 was
owed to MSG, which is included in due to related party in the accompanying consolidated balance sheets as of February 29, 2008 and February 28, 2007. Seid Sadat is the managing partner of MSG and the acting chief executive officer and chief
financial officer of the Company.

ITEM 13. EXHIBITS

The following exhibits are filed as part of this Annual Report.

|31.1 | Certification of C.E.O.
        Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002            
|---- | -----------------------------------------------------------------------------------------------------
|     |                                                                                                      
|31.2 | Certification of C.F.O.
        Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002            
|     |                                                                                                      
|32.1 | Certificate Pursuant to
        18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

For the years ended February 29, 2008 and February 28, 2007, aggregate fees billed by our auditors, Kabani & Company, for professional services rendered in connection with the audit of our annual consolidated financial statements were
$60,000 in each respective year.

Tax Fees

---

For the years ended February 29, 2008 and February 28, 2007, there were no fees billed by our current auditors.

Pre-Approval Policy and Procedures

We currently do not maintain a formal Audit Committee. However, all audit and non-audit services to be performed by the Companys independent accountant must be approved in advance by our Board of Directors. The Board of Directors may delegate
to an independent member of the Board the authority to grant pre-approvals with respect to non-audit services.

All of the engagements and fees for the year ended February 29, 2008 were approved by the Companys Board of Directors.

---

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

TRANSNATIONAL AUTOMOTIVE GROUP, INC.

In accordance with the Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|                    | TRANSNATIONAL AUTOMOTIVE GROUP, INC.
|------------------- | ------------------------------------
|                    |                                     
|                    |                                     
|                    |                                     
|Dated June 12, 2008 | By:                                 
|                    |                                     
|                    |                                     

In accordance with the Exchange Act, this Report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|Signatures           | Title                                | Date         
|-------------------- | ------------------------------------ | -------------
|                     |                                      |              
|/s/ Seid Sadat       | Acting Chief Executive Officer,      | June 12, 2008
|Seid Sadat           | Chief Executive Officer and Director |              
|                     |                                      |              
|/s/ David Browne     | Secretary and General Counsel        | June 12, 2008
|David Browne         |                                      |              
|                     |                                      |              
|/s/ William Jacobson | Director                             | June 12, 2008
|William Jacobson     |                                      |              
|                     |                                      |              
|/s/ Henry Huber      | Director                             | June 12, 2008
|Henry Huber          |                                      |              

26

---

ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                   | Page
|---------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                   |     
|Report of Independent Registered
      Public Accounting Firm                                                                      | F-2 
|                                                                                                                                   |     
|Consolidated Balance Sheets
      as of February 29, 2008 and February 28, 2007                                                    | F-3 
|                                                                                                                                   |     
|Consolidated Statements
      of Operations for the Years Ended February 29, 2008 and February 28, 2007                            | F-4 
|                                                                                                                                   |     
|Consolidated Statement
      of Changes in Stockholders' Deficit for the Years Ended February 29, 2008
      and February 28, 2007 | F-5 
|                                                                                                                                   |     
|Consolidated Statement
      of Cash Flows for the Years Ended February 29, 2008 and February 28, 2007                             | F-6 
|                                                                                                                                   |     
|Notes to Consolidated Financial
      Statements                                                                                   | F-7 

F-1

---

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of 
  Transnational Automotive Group, Inc. 
  Woodland Hills, California

We have audited the accompanying consolidated balance sheets
  of Transnational Automotive Group, Inc. as of February 29, 2008, and February
  28, 2007, and the consolidated statements of operations, stockholders' deficit,
  and cash flows for the years ended February 29, 2008, and February 28, 2007.
  These consolidated financial statements are the responsibility of the Company's
  management. Our responsibility is to express an opinion on these consolidated
  financial statements based on our audits.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the consolidated financial statements. An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Transnational Automotive Group, Inc. as of February 29, 2008 and February 28,
  2007, and the results of its operations and its cash flows for the years ended
  February 29, 2008 and February 28, 2007 in conformity with U.S. generally accepted
  accounting principles.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. As discussed in Note 2 to
  the consolidated financial statements, the Company has incurred a significant
  loss for the year ended February 29, 2008 and has a working capital deficit,
  which together raise substantial doubt of its ability to continue as a going
  concern. Management's plans in regard to these matters are also described in
  Note 2. The consolidated financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

/s/ Kabani & Company, Inc. 
  Certified Public Accountants

Los Angeles, California 
  May 23, 2008

F-2

---

TRANSNATIONAL AUTOMOTIVE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

|                                                                                       |   | February 29, |   |   | February 28, |  
|-------------------------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                                       |   | 2008         |   |   | 2007         |  
|                                                                                       |   |              |   |   |              |  
|ASSETS                                                                                 |  
|CURRENT ASSETS                                                                         |   |              |   |   |              |  
|Cash &
      cash equivalents                                                          | $ | 578,105      |   | $ | -            |  
|Accounts receivable, net                                                               |   | -            |   |   | 55,497       |  
|Other receivables,
      net                                                           |   | 665,693      |   |   | 153,748      |  
|Prepaid expenses, advances
      and deposits                                          |   | 315,133      |   |   | 54,135       |  
|Inventory,
      net of reserve for obsolesence                                        |   | 304,978      |   |   | 32,416       |  
|Advance deposits on buses                                                              |   | -            |   |   | 1,680,957    |  
|Total
      current assets                                                             |   | 1,863,909    |   |   | 1,976,753    |  
|                                                                                       |   |              |   |   |              |  
|PROPERTY, BUSES & EQUIPMENT, net                                                       |   | 6,300,415    |   |   | 3,233,756    |  
|                                                                                       |   |              |   |   |              |  
|TOTAL ASSETS                                                                           | $ | 8,164,324    |   | $ | 5,210,509    |  
|                                                                                       |   |              |   |   |              |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                  |  
|CURRENT LIABILITIES                                                                    |   |              |   |   |              |  
|Accounts payable
      and accrued expenses                                            | $ | 2,424,543    |   | $ | 2,123,063    |  
|Obligations under capital lease
      - related party                                  |   | -            |   |   | 765,622      |  
|Deferred revenue                                                                       |   | 338,440      |   |   | -            |  
|VAT and custom duty taxes payable
      to governmental agencies of Cameroon           |   | 3,377,287    |   |   | 1,022,370    |  
|Due to related parties                                                                 |   | 831,486      |   |   | 485,854      |  
|Notes payable, net of debt discount                                                    |   | 110,000      |   |   | 510,000      |  
|Notes payable to
      related party, net of debt discount                             |   | 2,815,000    |   |   | 825,000      |  
|Convertible debentures, net of debt
      discount                                     |   | -            |   |   | 1,523,789    |  
|Related party convertible
      debentures, net of debt discount                       |   | -            |   |   | 678,057      |  
|Accrued intererst (including $385,466
      and $49,736 to related to related parties) |   |              |   |   |              |  
|as of February
      29, 2008 and February 28, 2007, respectively)                     |   | 403,792      |   |   | 146,792      |  
|Total current liabilities                                                              |   | 10,300,548   |   |   | 8,080,547    |  
|                                                                                       |   |              |   |   |              |  
|COMMITMENTS AND CONTINGENCIES                                                          |   |              |   |   |              |  
|                                                                                       |   |              |   |   |              |  
|STOCKHOLDERS' DEFICIT                                                                  |   |              |   |   |              |  
|Common stock, $.001
      par value; 200,000,000 shares authorized;                    |   |              |   |   |              |  
|51,179,036 and 36,557,058
      shares issued and outstanding                          |   | 51,179       |   |   | 36,557       |  
|Treasury (400,000
      shares owned by subsidiary)                                    |   | (100,000     | ) |   | (100,000     | )
|Additional paid in capital                                                             |   | 15,837,786   |   |   | 8,265,051    |  
|Accumulated deficit                                                                    |   | (18,376,186  | ) |   | (11,071,646  | )
|Other comprehensive gain - foreign
      currency                                      |   | 450,997      |   |   | -            |  
|Total
      stockholders' deficit                                                      |   | (2,136,224   | ) |   | (2,870,038   | )
|                                                                                       |   |              |   |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                            | $ | 8,164,324    |   | $ | 5,210,509    |  

The accompanying notes are an integral part of these consolidated
  financial statements

F-3

---

TRANSNATIONAL AUTOMOTIVE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                       |   | For the Years Ended |  
|------------------------------------------------------ | - | ------------------- | -
|                                                       |   | February 29,        |  
|                                                       |   | 2008                |  
|NET REVENUE                                            |   |                     |  
|Transportation services                                | $ | 6,125,171           |  
|Government
      subsidy                               |   | 1,648,438           |  
|Other                                                  |   | 391,530             |  
|Total revenue                                          |   | 8,165,139           |  
|                                                       |   |                     |  
|COST OF REVENUE - Transportation services              |   | 7,415,482           |  
|                                                       |   |                     |  
|GROSS PROFIT
      (LOSS)                              |   | 749,657             |  
|                                                       |   |                     |  
|OPERATING EXPENSES                                     |   |                     |  
|Sales and marketing                                    |   | 167,134             |  
|General and
      administrative                       |   | 4,825,370           |  
|Depreciation and amortization                          |   | 98,074              |  
|Impairment
      loss on property                      |   | 315,000             |  
|Foreign currency exchange
      loss                   |   | -                   |  
|                                                       |   |                     |  
|TOTAL OPERATING EXPENSES                               |   | 5,405,578           |  
|                                                       |   |                     |  
|OPERATING LOSS                                         |   | (4,655,921          | )
|                                                       |   |                     |  
|OTHER (INCOME) EXPENSE                                 |   |                     |  
|Finance costs from
      beneficial conversion feature |   | 34,000              |  
|Finance costs from issuance of shares                  |   | 292,000             |  
|Finance costs from
      issuance of warrants          |   | 1,316,654           |  
|Loss on extinguishment of debt                         |   | -                   |  
|Loss on accident
      of buses                        |   | 76,847              |  
|Interest expense                                       |   | 971,215             |  
|Interest income                                        |   | (32,664             | )
|Other income                                           |   | (9,433              | )
|TOTAL OTHER EXPENSE                                    |   | 2,648,619           |  
|                                                       |   |                     |  
|Loss before Minority
      Interest                    |   | (7,304,540          | )
|                                                       |   |                     |  
|Minority interest in loss of subsidiary                |   | -                   |  
|                                                       |   |                     |  
|NET LOSS                                               |   | (7,304,540          | )
|                                                       |   |                     |  
|COMPREHENSIVE INCOME (LOSS)                            |   |                     |  
|Unrealized foreign currency translation
      gain     |   | 450,997             |  
|COMPREHENSIVE LOSS                                     | $ | (6,853,543          | )
|                                                       |   |                     |  
|LOSS PER COMMON SHARE: BASIC                           |   |                     |  
|& DILUTED                                              | $ | (0.16               | )
|                                                       |   |                     |  
|WEIGHTED AVERAGE NUMBER OF SHARES                      |   |                     |  
|OUTSTANDING: BASIC
      & DILUTED                     |   | 44,573,063          |  

The accompanying notes are an integral part of these consolidated
  financial statements

F-4

---

TRANSNATIONALAUTOMOTIVEGROUP,INC.

CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSDEFICIT

FOR THEYEARSENDEDFEBRUARY29, 2008 ANDFEBRUARY28, 2007

|                                                |  |              |   |   |          |   |   |          |   |   | Common     |   |   | Additional  |  |   |               |   |   | Other         |  |   | Total      |  
|----------------------------------------------- |  | ------------ | - | - | -------- | - | - | -------- | - | - | ---------- | - | - | ----------- |  | - | ------------- | - | - | ------------- |  | - | ---------- | -
|                                                |  | Common Stock |   |   | Treasury |   |   | Stock    |   |   | Paid-In    |   |   | Accumulated |  |   | Comprehensive |   |   | Stockholders' | 
|                                                |  | Shares       |   |   | Amount   |   |   | Stock    |   |   | Subscribed |   |   | Capital     |  |   | Deficit       |   |   | Income        |  |   | Deficit    |  
|Balance, February 28, 2006                      |  | 50,685,715   |   | $ | 50,686   |   | $ | (100,000 | ) | $ | 100,000    |   | $ | 1,883,409   |  | $ | (2,560,927    | ) | $ | -             |  | $ | (626,832   | )
|Cancellation of shares                          |  | (18,000,000  | ) |   | (18,000  | ) |   | -        |   |   | -          |   |   | 18,000      |  |   | -             |   |   | -             |  |   | -          |  
|Issuance of common stock subscribed             |  | 285,715      |   |   | 286      |   |   | -        |   |   | (100,000   | ) |   | 99,714      |  |   | -             |   |   | -             |  |   | -          |  
|Issuance of common stock for convertible        |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|convertible notes, including interest           |  | 588,036      |   |   | 588      |   |   | -        |   |   | -          |   |   | 272,096     |  |   | -             |   |   | -             |  |   | 272,684    |  
|Issuance of common stock for cash               |  | 1,915,572    |   |   | 1,915    |   |   | -        |   |   | -          |   |   | 870,156     |  |   | -             |   |   | -             |  |   | 872,071    |  
|Issuance of stock from private                  |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|placement offering                              |  | 750,000      |   |   | 750      |   |   | -        |   |   | -          |   |   | 374,250     |  |   | -             |   |   | -             |  |   | 375,000    |  
|Issuance of common stock in                     |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|exchange for extinguishment of debt             |  | 332,000      |   |   | 332      |   |   | -        |   |   | -          |   |   | 437,908     |  |   | -             |   |   | -             |  |   | 438,240    |  
|Beneficial conversion feature related           |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|to issuance of convertible notes                |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | 1,003,050   |  |   | -             |   |   | -             |  |   | 1,003,050  |  
|Issuance of warrants in connection              |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|with issuance of convertible notes              |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | 2,777,950   |  |   | -             |   |   | -             |  |   | 2,777,950  |  
|Capital contributions from minority             |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|shareholders, net of minority interest interest |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | 528,518     |  |   | -             |   |   | -             |  |   | 528,518    |  
|Net loss                                        |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | -           |  |   | (8,510,719    | ) |   |               |  |   | (8,510,719 | )
|Balance, February 28, 2007                      |  | 36,557,038   |   |   | 36,557   |   |   | (100,000 | ) |   | -          |   |   | 8,265,051   |  |   | (11,071,646   | ) |   | -             |  |   | (2,870,038 | )
|Issuance of private placement units             |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|(net of offering costs of $183,125)             |  | 8,755,000    |   |   | 8,755    |   |   | -        |   |   | -          |   |   | 4,190,045   |  |   | -             |   |   | -             |  |   | 4,198,800  |  
|Issuance of common stock for convertible        |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|convertible notes, including interest           |  | 5,596,998    |   |   | 5,597    |   |   | -        |   |   | -          |   |   | 2,611,634   |  |   | -             |   |   | -             |  |   | 2,617,231  |  
|Issuance of common stock to                     |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|unsecured creditors                             |  | 270,000      |   |   | 270      |   |   | -        |   |   | -          |   |   | 291,730     |  |   | -             |   |   | -             |  |   | 292,000    |  
|Beneficial conversion feature                   |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | 34,000      |  |   | -             |   |   | -             |  |   | 34,000     |  
|Finance costs on repricing of                   |  |              |   |   |          |   |   |          |   |   |            |   |   |             |  |   |               |   |   |               |  |   |            |  
|debenture units                                 |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | 445,326     |  |   | -             |   |   | -             |  |   | 445,326    |  
|Foreign currency translation adjustment         |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | -           |  |   | -             |   |   | 450,997       |  |   | 450,997    |  
|Net loss                                        |  | -            |   |   | -        |   |   | -        |   |   | -          |   |   | -           |  |   | (7,304,540    | ) |   | -             |  |   | (7,304,540 | )
|Balance, February 29, 2008                      |  | 51,179,036   |   | $ | 51,179   |   | $ | (100,000 | ) | $ | -          |   | $ | 15,837,786  |  | $ | (18,376,186   | ) | $ | 450,997       |  | $ | (2,136,224 | )

Theaccompanyingnotes are anintegralpart of theseconsolidatedfinancialstatements

F-5

---

TRANSNATIONAL AUTOMOTIVE GROUP, INC.CONSOLIDATED STATEMENTS OF CASH LOWS

|                                                                             |   | For the Years Ended |  
|---------------------------------------------------------------------------- | - | ------------------- | -
|                                                                             |   | February 29, 2008   |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                         |   |                     |  
|Net loss                                                                     | $ | (7,304,540          | )
|Adjustments to reconcile net loss to net cash
      used                     |   |                     |  
|in operating activities                                                      |   |                     |  
|Non-cash financing
      costs                                               |   | 445,326             |  
|Depreciation and amortization expense                                        |   | 1,988,946           |  
|Loss on impairment
      of buses                                            |   | 315,000             |  
|Loss on extinguishment of debt                                               |   | -                   |  
|Issuance of shares
      against finance expense                             |   | 292,000             |  
|Finance costs from beneficial conversion
      feature                       |   | 34,000              |  
|Finance costs from
      issuance of warrants                                |   | 1,316,654           |  
|Loss on accident of buses                                                    |   | 76,847              |  
|Minority
      interest in operations                                        |   | -                   |  
|Loss on abandonment of fixed assets                                          |   | -                   |  
|(Increase) decrease in:                                                      |   |                     |  
|Accounts receivable and other receivables                                    |   | (456,448            | )
|Prepaid expenses,
      advances and deposits                                |   | (260,998            | )
|Inventory, net of reserve for obsolescence                                   |   | (272,562            | )
|Increase (decrease) in:                                                      |   |                     |  
|Accounts payable and accrued expenses                                        |   | 1,500,076           |  
|Deferred revenue                                                             |   | 338,440             |  
|Net
      cash used in operating activities                                  |   | (1,987,259          | )
|                                                                             |   |                     |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                         |   |                     |  
|Advance deposit
      on buses                                               |   | -                   |  
|Purchase of property, buses and
      equipment                              |   | (2,303,765          | )
|Net
      cash used in investing activities                                  |   | (2,303,765          | )
|                                                                             |   |                     |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                         |   |                     |  
|Proceeds from related parties                                                |   | 350,632             |  
|Proceeds from issuance of convertible
      debentures and warrants          |   | -                   |  
|Proceeds from issuance of unsecured
      promissory notes                   |   | 1,150,000           |  
|Proceeds from issuance of common
      stock and warrants                    |   | 4,377,500           |  
|Repayment of obligations under capital
      lease                           |   | (800,000            | )
|Repayment of unsecured promissory
      notes                                |   | (660,000            | )
|Capital contributions from minority
      shareholder                        |   | -                   |  
|Net cash provided
      by financing activities                              |   | 4,418,132           |  
|                                                                             |   |                     |  
|EFFECT OF EXCHANGE RATE ON CASH                                              |   | 450,997             |  
|                                                                             |   |                     |  
|NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                           |   | 578,105             |  
|CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR                                 |   | -                   |  
|CASH & CASH EQUIVALENTS AT END OF YEAR                                       | $ | 578,105             |  
|                                                                             |   |                     |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                             |   |                     |  
|Cash paid for interest                                                       | $ | 70,157              |  
|Cash paid for taxes                                                          | $ | 800                 |  
|SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND                              |   |                     |  
|FINANCING ACTIVITIES                                                         |   |                     |  
|Reclassification of advance deposit
      on buses to property and equipment | $ | 1,680,957           |  
|Notes payable exchanged for common
      stock                               | $ | -                   |  
|Acquisition of buses through issuance
      of capital lease obligation      | $ | -                   |  
|Accrued custom duty/VAT taxes included
      in capital expenditures         | $ | 1,581,927           |  
|Conversion of convertible debentures
      and accrued interest to           |   |                     |  
|common stock                                                                 | $ | 2,909,216           |  

The accompanying notes are an integral part of these consolidated
  financial statements

F-6

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

Organization 
  Transnational Automotive Group, Inc. (the "Company") was incorporated April
  2, 1999 in the State of Nevada as Vitaminoverrun.com Corp., in August 2001 changed
  its name to Apache Motor Corporation Inc. and in November 2005 the Company changed
  its name to Transnational Automotive Group, Inc.

In 2001 the Company merged with Cambridge Creek Companies, Ltd.
  ("Cambridge"), a Nevada corporation. Cambridge was a reporting issuer and the
  Company assumed the reporting issuer status after the merger.

Effective September 12, 2001 the Company acquired all of the
  outstanding shares of common stock of The Apache Motor Corp. ("Apache"), an
  Alberta corporation, from the shareholders of Apache in exchange for an aggregate
  of 440,000 shares of its common stock. The exchange was effectively a reverse
  takeover of the Company by Apache in that the shareholders of Apache became
  the majority shareholders of the Company. On October 24, 2003 the principal
  of The Apache Motor Corp (Robert Wither) agreed to return 278,560 shares of
  common stock for cancellation that he had received from the Company and the
  Company disposed of its shares in its subsidiary company, The Apache Motor Corp.,
  to Robert Wither in conjunction with the cancellation of his shares in the Company.
  The Company retained the rights to the technology and returned the shares of
  the subsidiary to the original owners.

In 2002 the Company completed a 5:1 forward stock split.

On May 3, 2004 the Company terminated an agreement to acquire
  100% of the issued share capital of Manter Enterprises Inc. and cancelled the
  533,334 shares of common stock of the Company previously issued in trust for
  Manter subject to a performance agreement.

On June 7, 2004, the Company completed a 1:75 reverse stock split.
  On October 14, 2005 the Company completed a 2:1 forward stock split.

On October 28, 2005 the Company issued 24,000,000 shares of common
  stock to acquire 100% of the issued share capital of Parker Automotive Group
  International, Inc. (PAGI). PAGI was a development stage enterprise which endeavoured
  to develop a public bus transportation system in Cameroon through its 66% owned
  subsidiary, Parker Transportation, Inc., Cameroon. On September 18, 2006, 18,000,000
  shares of the 24,000,000 shares originally issued were returned to the Company
  and cancelled.

The Company has used the purchase method to account for its acquisition
  of PAGI, the assets and liabilities of which were as follows on acquisition:
  Fair value of net assets acquired:

|Cash                                              | $ | 48,647   |  
|------------------------------------------------- | - | -------- | -
|Loan receivable                                   |   | 113,100  |  
|Intercompany loan                                 |   | 11,700   |  
|Accounts payable                                  |   | (75,018  | )
|Notes payable                                     |   | (235,000 | )
|                                                  |   | (136,571 | )
|Purchase price                                    |   | (24,000  | )
|Excess of purchase price over net assets acquired | $ | (160,571 | )

The excess of the purchase price over the fair value of the net
  assets acquired ($160,571) was recorded as goodwill. In accordance with SFAS
  No. 142, goodwill is not amortized but is tested for impairment at least annually.
  As of February 28, 2007, the Company impaired the entire goodwill of $160,571.

Description of Business 
  Transnational Automotive Group, Inc. and its wholly-owned and majority-owned
  subsidiaries (collectively referred to hereinafter as the Company
  or Taug) are engaged in the development and operations of mass public
  transportation systems in Cameroon, Africa. Its current operations are
  comprised of an intra-city bus transit system in the capital city of Yaoundé
  under the brand name, LeBus, and an inter-city bus transit system between Yaoundé
  and Douala, known as LeCar. The Companys objective is to expand
  its existing transportation operations in Cameroon and establish, develop and
  operate mass transit systems in other sub-Saharan African nations.

F-7

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation 
  The consolidated financial statements include the accounts of the Company, LeCar
  Transportation Corporation, S.A. (LeCar), a wholly-owned subsidiary
  in Cameroon, and Transnational Automotive Group, Cameroon, S.A. (Taug-C),
  a wholly-owned Cameroonian subsidiary, which owns a 66% interest in Transnational
  Industries  Cameroon, S.A. (LeBus). Various Cameroon governmental
  bodies own the remaining 34% equity interest in LeBus. All material inter company
  balances and transactions have been eliminated in consolidation.

Use of Estimates 
  The preparation of consolidated financial statements in conformity with U.S
  generally accepted accounting principles requires management to make estimates
  and assumptions that affect the amounts reported in the Companys consolidated
  financial statements and accompanying notes and disclosure of contingent assets
  and liabilities at the date of these consolidated financial statements and reported
  amounts of revenues and expenses during the reporting period. On an ongoing
  basis, the Company evaluates its estimates and judgments, which are based on
  historical and anticipated results and trends and on various other assumptions
  that the Company believes to be reasonable under the circumstances. By their
  nature, estimates are subject to an inherent degree of uncertainty and, as such,
  actual results may differ, and the difference may be material, from the Companys
  estimates.

Development Stage Activities 
  Prior to September 25, 2006, the Company was a development state company in
  accordance with Statement of Financial Accounting Standards No. 7, Accounting
  and Reporting by Development State Enterprises. The Companys corporate
  efforts through this date have been organizational, directed at acquiring its
  principal asset, raising its initial capital, developing its business plan.
  Prior to the launch of operations, the Companys efforts in Cameroon were
  focused on the cleaning-up and restoration of the primary bus depot located
  in the capital city of Yaoundé, establishing urban routes, readying roadways
  and bus stops, preparing the maintenance facility, completing administrative
  matters such as opening bank accounts, securing operating licenses, recruiting,
  screening and training administrative staff, bus drivers, mechanics and security
  personnel.

Going Concern 
  The Company is subject to various risks in connection with the operation of
  its business including, among other things, (i) losses from operations, (ii)
  social and political instability in its region of operations, (iii) changes
  in the Company's business strategy, including the inability to execute its strategy
  due to unanticipated changes in the market, (iv) various competitive factors
  that may prevent the Company from competing successfully in the marketplace,
  (v) the Company's lack of liquidity and potential ability to raise additional
  capital, and (vi) the lack of historical operations necessary to demonstrate
  the eventual profitability of its business strategy. As of February 29, 2008,
  the Company has an accumulated deficit of $18,376,186 as well as a working capital
  deficiency of $8,436,639.

As a result of the aforementioned factors and related uncertainties,
  there is substantial doubt of the Company's ability to continue as a going concern.
  The consolidated financial statements do not include any adjustments to reflect
  the possible effects of recoverability and classification of assets or classification
  of liabilities, which may result from the inability of the Company to continue
  as a going concern.

Funding of the Company's working capital deficiency, its current
  and future anticipated operating losses, and growth of the Company's transportation
  operations in Cameroon will require continuing capital investment. Historically,
  the Company has received funding through the issuance of convertible debentures
  issued in connection with private placement offerings, the issuance of common
  stock and subscriptions to acquire common stock, advances received from unsecured
  promissory note arrangements, and the financing of its acquisition of buses
  through a capital lease obligation due to a related party trust. The Company's
  strategy is to fund its current and future cash requirements through the issuance
  of additional debt instruments, current and long-term borrowing arrangements
  and additional equity financing.

The Company has been able to arrange debt facilities and equity
  financing to date, there can be no assurance that sufficient debt or equity
  financing will continue to be available in the future or that it will be available
  on terms acceptable to the Company. Failure to obtain sufficient capital to
  fund current working capital requirements and future capital expenditures necessary
  to grow the business would materially affect the Company's operations in the
  short term and expansion strategies. The Company will continue to explore external
  financing opportunities. Currently, the Company is in negotiations with multiple
  parties to obtain additional financing, and the Company will continue to explore
  financing opportunities with additional parties.

F-8

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency Translation 
  All assets and liabilities of foreign operations included in the consolidated
  financial statements are translated at period-end exchange rates and all accounts
  in the consolidated statements of operations are translated at the average exchange
  rate for the reporting period. Stockholders equity accounts are translated
  at historical exchange rates. The reporting currency is the U.S. dollar.

Prior to March 1, 2007, the Company considered the U.S. dollar
  to be its functional currency given that, in the prior year, the majority of
  all funds used in operations were funded in U.S. dollar. In determining the
  Companys functional currency in the prior year, management considered
  various factors and economic indicators including: 1) The majority of the Companys
  operating expenses during the fiscal year-ended February 29, 2008 were denominated
  in U.S. currency, 2) the Companys acquisition financing of the buses used
  in operations were denominated in U.S. currency; and 3) the cash flows generated
  by the Cameroonian subsidiaries operations were not sufficient to service
  the Companys existing debt obligations without cash infusions from the
  U.S. Parent Company. Accordingly, through February 28, 2007, accumulated exchange
  rate adjustments resulting from the process of translating the Companys
  financial statements expressed in foreign currencies into U.S. dollars are reflected
  as income or loss in the accompanying consolidated statements of operations.

During the year ended February 29, 2008, the Companys management
  determined that the functional currency of the Company was no longer the U.S.
  dollar, but instead the local currency, the Cameroonian Franc (CFA). In making
  this determination, the Company considered that the majority of funds used in
  operations for the current year were stated and transacted in CFA. As such,
  based on the guidance provided in SFAS No. 152, Foreign Currency Translation,
  effective March 1, 2007, translation adjustments resulting from the process
  of translating the local currency financial statements into U.S. dollars are
  included in determining comprehensive income. As of February 29, 2008, the cumulative
  translation adjustment of $450,997 generated in 2008 is classified as an item
  of other comprehensive income in the stockholders equity section of the
  consolidated balance sheet. For the year ended February 29, 2008, accumulated
  other comprehensive income was $450,997.

Fair Market Value of Financial Instruments 
  Statement of Financial Accounting Standards No. 107, Disclosures about
  the Fair Value of Financial Instruments, requires that the Company disclose
  estimated fair values of financial instruments. The carrying amounts reported
  in the statement of financial position for current assets and current liabilities
  qualifying as financial instruments are a reasonable estimate of fair value.

The carrying amount for current assets and liabilities are not
  materially different than fair market value because of the short term maturity
  of these financial instruments.

Cash equivalents 
  The Company considers all highly liquid debt instruments with original maturities
  of three months or less to be cash equivalents. Accounts Receivable Accounts
  receivable consist of amounts due from the Companys former outside Ad
  Agency, Nelson Cameroun (Nelson), who was previously responsible
  for the billing and collection of fees from customers for the placement of advertisements
  on the Companys buses. Such amounts are billed when earned or due and
  when collection is reasonably assured. The Company does not accrue finance or
  interest charges on outstanding receivable balances. The carrying amount of
  accounts receivable is reduced by a valuation allowance that reflects managements
  best estimate of the amounts that will not be collected. Management periodically
  reviews all delinquent accounts receivable balances, if any, and based on an
  assessment of recoverability, estimates the portion, if any, of the balances
  that will not be collected.

During the current year, the Company terminated its contract
  with Nelson. The Company is currently in litigation with Nelson to settle past
  due receivables and payables between both parties. As a result of this contingency,
  the Company has reserved $64,651, representing the entire accounts receivable
  balance due from Nelson as of February 29, 2008.

Other receivables 
  Other receivables consist primarily of Value Added Taxes (VAT) receivable
  due from various agencies of the government of Cameroon. Accounts receivable
  also includes amounts due from the Companys outside Ad Agency, who is
  responsible for the billing and collection of fees from customers for the placement
  of advertisements on the Companys buses. Such amounts are billed when
  earned or due. The Company does not accrue finance or interest charges on outstanding
  receivable balances. The carrying amount of accounts receivable is reduced by
  a valuation allowance that reflects managements best estimate of the amounts
  that will not be collected. Management periodically reviews all delinquent other
  receivables balances, if any, and based on an assessment of recoverability,
  estimates the portion, if any, of the balance that will not be collected.

F-9

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other receivables as of February 29, 2008 and February 28, 2007
  are comprised of the following:

|                           |   | February 29, 2008 |  |   | February 28, 2007 | 
|-------------------------- | - | ----------------- |  | - | ----------------- | 
|VAT receivable             | $ | 475,757           |  | $ | 152,018           | 
|Insurance claim receivable |   | 168,180           |  |   | 1,730             | 
|Other                      |   | 21,756            |  |   | -                 | 
|                           | $ | 665,693           |  | $ | 153,748           | 

Credit risk 
  Financial instruments that potentially subject the Company to concentrations
  of credit risk consist principally of trade accounts, other receivables, and
  uninsured cash deposits. Concentrations of credit risk with respect to accounts
  receivable are present given that substantially all amounts included in accounts
  receivable are due from the government of Cameroon. Repayment of these receivables
  is dependent upon the financial stability and currency of the government of
  Cameroon. It is at least reasonably possible that managements assessment
  of credit risk and the collectibility of these accounts receivable will change
  during the next reporting period.

The Company places its cash deposits with what management believes
  are high-credit quality financial institutions. At times, balances with any
  one financial institution may exceed the Federal Deposit Insurance Corporation
  (FDIC) limit of $100,000. At February 29, 2008, and February 28, 2007, the Companys
  foreign subsidiaries reflected approximately $375,544 and $0, respectively,
  of cash on their financial statements. Cash held in foreign bank accounts is
  not insured by the FDIC.

Supplier concentration 
  The Company purchases substantially all of its fuel used in operations from
  Texaco. During the years ended February 29, 2008 and February 28, 2007 total
  purchases of fuel from Texaco were $2,083,284 and $510,222, respectively. As
  of February 29, 2008 and February 28, 2007, total accounts payable due to Texaco
  were $324,862 and $160,526, respectively.

Inventory 
  Inventory consists of bus fuel and bus spare parts for internal consumption.
  All inventory is stated at the lower of cost, utilizing the first-in, first-out
  method, or market. An obsolescence reserve is estimated for items whose value
  has been determined to be impaired or whose future utility appears limited.
  As of February 29, 2008 and February 28, 2007, there was no obsolescence reserve.

Inventory as of February 29, 2008 and February 29, 2007 were
  as follows:

|                |   | February 29, |  |   | February 28, | 
|--------------- | - | ------------ |  | - | ------------ | 
|                |   | 2008         |  |   | 2007         | 
|Spare parts     | $ | 260,820      |  | $ | 54,135       | 
|Fuel            |   | 44,158       |  |   | -            | 
|                |   |              |  |   |              | 
|Total inventory | $ | 304,978      |  | $ | 54,135       | 

Property and Equipment 
  Property and equipment is stated at cost and depreciated or amortized using
  the straight-line method over the estimated useful lives of the assets as follows:

|Asset Description       |  | Useful Life (years)
|----------------------- |  | -------------------
|Computer equipment      |  | 3                  
|Computer software       |  | 3                  
|Furniture and equipment |  | 3 - 5              
|Buses                   |  | 3                  
|Automobile equipment    |  | 5                  

Leasehold and building improvements are amortized on the straight-line
  method over the term of the lease or estimated useful life, whichever is shorter.

F-10

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Costs for capital assets not yet available for commercial use,
  if any, are capitalized as construction in progress and will be depreciated
  once placed in service. Assets classified as held for future use,
  if any, are not depreciated until they are placed in productive service. Costs
  for repairs and maintenance are expensed as incurred.

Capital lease obligations 
  The Company capitalizes buses acquired under a lease obligation, which, by its
  terms, is equivalent to an installment purchase.

Revenue and Expense Recognition 
  The Company recognizes revenue in accordance with the Securities and Exchange
  Commissions (SEC) Staff Accounting Bulletin No. 104, Revenue
  Recognition in Financial Statements (SAB 104) and the American
  Institute of Certified Public Accountants (AICPA) Statement of Position
  (SOP) 97-2, Software Revenue Recognition, as amended
  by SOP 98-4 and SOP 98-9.

In June 2006, the Emerging Issues Task Force (EITF) reached a
  consensus on Issue No. 06-03, How Taxes Collected from Customers and Remitted
  to Governmental Authorities Should Be Presented in the Income Statement (That
  Is, Gross versus Net Presentation (EITF 06-03). EITF 06-03 applies to
  taxes assessed by a governmental authority that are directly imposed on a revenue-producing
  transaction between a seller and a customer, and states that the presentation
  of such taxes on either a gross basis (included in revenues and costs) or on
  a net basis (excluded from revenues) is an accounting policy decision that should
  be disclosed. Additionally, for such taxes reported on a gross basis, the amount
  of such taxes should be disclosed in interim and annual financial statements
  if the amounts are significant. The provisions of EITF 06-03 are effective for
  interim and annual reporting periods beginning after December 15, 2006. On March
  1, 2007, the Company adopted EITF 06-03. The Company collects certain Value
  Added Taxes (VAT) on its ticket sales, which are levied by the government
  of Cameroon. For the years ended February 29, 2008 and February 28, 2007, revenue
  is recorded at gross value inclusive of VAT. For the years ended February 29,
  2008 and February 28, 2007, total VAT taxes levied on ticket sales and included
  in cost of revenue were $1,090,740 and $160,557, respectively.

The majority of the Companys revenues were derived from
  the sale of tickets for its inter-city and city bus operations. The Company
  recognizes revenue from the sale of bus tickets when the transportation services
  have been provided. The Company also generates revenue from cash subsidies provided
  by agencies of the government of Cameroon (government subsidies).
  Revenue from government subsidies are recognized as revenue when earned and
  when collection is reasonably assured. As of February 29, 2008, the Company
  received $338,440 of subsidy income in advance, which has been recorded as deferred
  revenue in the accompanying consolidated financial statements.

Selling, general and administrative costs are charged to operations
  as incurred.

Organization and Start Up Costs 
  Costs of start up activities, including organization costs, are expensed as
  incurred.

Earnings (Loss) Per Share 
  Basic earnings (loss) per common share is computed by dividing net income (loss)
  available to common stockholders by the weighted-average number of common stock
  outstanding during the period. Diluted earnings (loss) per common share is computed
  by dividing the net income (loss) available to common stockholders by the weighted-average
  number of shares of common stock outstanding during the year increased to include
  the number of additional shares of common stock that would have been outstanding
  if the dilutive potential shares of common stock had been issued. The shares
  issuable upon the exercise of warrants and convertible debentures for the years
  ended February 28, 2008 and 2007, were anti-dilutional and, therefore, excluded
  from the calculation of net loss per share. The following potential common shares
  have been excluded from the computation of diluted net loss per share for each
  of the fiscal years ended February 29, 2008 and February 28, 2007 because the
  effect would have been anti-dilutive:

|                                                                    |  | For the years ended | 
|------------------------------------------------------------------- |  | ------------------- | 
|                                                                    |  | February 29, 2008   | 
|Shares to be issued upon conversion of convertible
      debentures |  | -                   | 
|Warrants                                                            |  | 15,692,273          | 
|Total                                                               |  | 15,692,273          | 

F-11

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes 
  The Company follows the liability method of accounting for income taxes. Deferred
  income tax assets and liabilities are recognized for the future tax consequences
  of (i) temporary differences between the tax bases of assets and liabilities
  and their reported amounts in the financial statements, and (ii) operating loss
  and tax credit carry forwards for tax purposes. Deferred tax assets are reduced
  by a valuation allowance when, based upon managements estimates, it is
  more likely than not that a portion of the deferred tax assets will not be realized
  in a future period. Income tax expense or benefit is the tax payable or refundable
  for the period plus or minus the change during the period in deferred tax assets
  and liabilities.

According to the Provisional Regulations of Cameroon on Income
  Tax, the income tax rate is 38.5% .

Impairment of Long-Lived Assets 
  In accordance with Statement of Financial Accounting Standards No. 144, "Accounting
  for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), when facts
  and circumstances indicate that the cost of long-lived assets may be impaired,
  an evaluation of the recoverability is performed by comparing the carrying value
  of the assets to the estimated undiscounted future cash flows. If the estimated
  undiscounted future cash flows are less than the carrying value, a write-down
  would be recorded to reduce the related asset to its estimated fair value. In
  addition, the remaining estimated useful life or amortization period for the
  impaired asset would be reassessed and revised if necessary. During the year
  ended February 29, 2008, the Company recognized an impairment loss of $315,000
  on buses used in operations. The Companys management determined that the
  carrying amount of these buses exceeded their fair value based on an analysis
  of current market prices.

Advertising and Marketing Costs 
  The Company expenses costs of advertising and marketing as incurred. Advertising
  and marketing expense for the years ended February 29, 2008 and February 28,
  2007 amounted to $167,134 and $211,594, respectively.

Segment Reporting 
  SFAS No. 131, Disclosures About Segments of an Enterprise and Related
  Information, which superceded SFAS No. 14, Financial Reporting for
  Segments of a Business Enterprise, establishes standards for the way that
  public enterprises report information about operating segments in annual financial
  statements and requires reporting of selected information about operating segments
  in interim financial statements regarding products and services, geographic
  areas and major customers. SFAS No. 131 defines operating segments as components
  of an enterprise about which separate financial information is available that
  is evaluated regularly by the chief operating decision maker in deciding how
  to allocate resources and in assessing performances. In the years ended February
  29, 2008 and February 28, 2007, the Company operated in two segments based on
  the sources of revenue: inter-city bus revenue, LeBus, and coach buses, LeCar
  (note 12).

Reclassifications 
  Certain prior year amounts have been reclassified to conform to the current
  year presentation.

Recent accounting pronouncementsIn September 2006, FASB issued SFAS No. 157 Fair Value Measurements.
  This Statement defines fair value, establishes a framework for measuring fair
  value in generally accepted accounting principles (GAAP), and expands disclosures
  about fair value measurements. This Statement applies under other accounting
  pronouncements that require or permit fair value measurements, FASB having previously
  concluded in those accounting pronouncements that fair value is the relevant
  measurement attribute. Accordingly, this Statement does not require any new
  fair value measurements. However, for some entities, the application of this
  Statement will change current practice. This Statement is effective for financial
  statements issued for fiscal years beginning after November 15, 2007, and interim
  periods within those fiscal years. Management believes that this Statement will
  not have a significant impact on the consolidated financial statements.

In September 2006, FASB issued SFAS No. 158 Employers Accounting
  for Defined Benefit Pension and Other Postretirement Plans - an amendment of
  FASB Statements No. 87, 88, 106, and 132(R). This Statement improves financial
  reporting by requiring an employer to recognize the over funded or under funded
  status of a defined benefit postretirement plan (other than a multiemployer
  plan) as an asset or liability in its statement of financial position and to
  recognize changes in that funded status in the year in which the changes occur
  through comprehensive income of a business entity or changes in unrestricted
  net assets of a not-for-profit organization. This Statement also improves financial
  reporting by requiring an employer to measure the funded status of a plan as
  of the date of its year-end statement of financial position, with limited exceptions.
  An employer with publicly traded equity securities is required to initially
  recognize the funded status of a defined benefit postretirement plan and to
  provide the required disclosures as of the end of the fiscal year ending after
  December 15, 2006.

F-12

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TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

However, an employer without publicly traded equity securities
  is required to disclose the following information in the notes to financial
  statements for a fiscal year ending after December 15, 2006, but before June
  16, 2007, unless it has applied the recognition provisions of this Statement
  in preparing those financial statements:

| | a) | A brief description of the provisions of this Statement;                                              
| | -- | ------------------------------------------------------------------------------------------------------
| | b) | The date that adoption is required; and                                                               
| | c) | The date the employer plans to adopt the recognition
        provisions of this Statement, if earlier.

The requirement to measure plan assets and benefit obligations
  as of the date of the employers fiscal year-end statement of financial
  position is effective for fiscal years ending after December 15, 2008. We are
  currently evaluating the effect of this pronouncement on our consolidated financial
  statements.

In February 2007, FASB issued SFAS No. 159, The Fair Value
  Option for Financial Assets and Financial Liabilities. SFAS No. 159 is
  effective for fiscal years beginning after November 15, 2007. This Statement
  allows entities to choose, at specified election dates, to measure eligible
  financial assets and liabilities at fair value that are not otherwise required
  to be measured at fair value. If a company elects the fair value option for
  an eligible item, changes in that item's fair value in subsequent reporting
  periods must be recognized in current earnings. SFAS No. 159 also establishes
  presentation and disclosure requirements designed to draw comparison between
  entities that elect different measurement attributes for similar assets and
  liabilities. Management does not believe SFAS No. 159 will have a material impact
  on our consolidated financial position, results of operations or cash flows,
  as the Company has elected not to apply the fair value option for any of its
  eligible financial instruments and other items.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling
  Interests in Consolidated Financial Statements. This Statement amends
  ARB 51 to establish accounting and reporting standards for the noncontrolling
  (minority) interest in a subsidiary and for the deconsolidation of a subsidiary.
  It clarifies that a noncontrolling interest in a subsidiary is an ownership
  interest in the consolidated entity that should be reported as equity in the
  consolidated financial statements. SFAS No. 160 is effective for the fiscal
  years, and interim periods within those fiscal years, beginning on or after
  December 15, 2008. Based on current conditions, management does not expect the
  adoption of SFAS No. 160 to have a significant impact on the Companys
  results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141(R), Business
  Combinations. This Statement replaces SFAS No. 141, Business Combinations.
  This Statement retains the fundamental requirements in SFAS No. 141 that the
  acquisition method of accounting (which Statement 141 called the purchase method)
  be used for all business combinations and for an acquirer to be identified for
  each business combination. This Statement also establishes principles and requirements
  for how the acquirer: a) recognizes and measures in its financial statements
  the identifiable assets acquired, the liabilities assumed, and any noncontrolling
  interest in the acquiree; b) recognizes and measures the goodwill acquired in
  the business combination or a gain from a bargain purchase and c) determines
  what information to disclose to enable users of the financial statements to
  evaluate the nature and financial effects of the business combination. SFAS
  No. 141(R) will apply prospectively to business combinations for which the acquisition
  date is on or after the beginning of the first annual reporting period beginning
  on or after December 15, 2008. Management does not expect the adoption of SFAS
  No. 141(R) to have a significant impact on its financial position or results
  of operations.

In March 2008, FASB issued SFAS No. 161, Disclosures about
  Derivative Instruments and Hedging Activities. The new standard is intended
  to improve financial reporting about derivative instruments and hedging activities
  by requiring enhanced disclosures to enable investors to better understand their
  effects on an entitys financial position, financial performance, and cash
  flows. This Statement is effective for financial statements issued for fiscal
  years and interim periods beginning after November 15, 2008, with early application
  encouraged. The Standard also improves transparency about the location and amounts
  of derivative instruments in an entitys financial statements; how derivative
  instruments and related hedged items are accounted for under SFAS No. 133; and
  how derivative instruments and related hedged items affect its financial position,
  financial performance, and cash flows. SFAS No. 161 achieves these improvements
  by requiring disclosure of the fair values of derivative instruments and their
  gains and losses in a tabular format. It also provides more information about
  an entitys liquidity by requiring disclosure of derivative features that
  are credit risk-related. Management does not expect this Statement to have an
  impact on its financial condition or results of operations.

F-13

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TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

In May of 2008, FSAB issued SFASB No.162, The Hierarchy
  of Generally Accepted Accounting Principles. The pronouncement mandates
  the GAAP hierarchy reside in the accounting literature as opposed to the audit
  literature. This has the practical impact of elevating FASB Statements of Financial
  Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective
  60 days following SEC approval. The Company does not believe this pronouncement
  will impact its financial statements.

In May of 2008, FASB issued SFASB No. 163, Accounting for
  Financial Guarantee Insurance Contracts-an interpretation of FASB Statement
  No. 60. The scope of the statement is limited to financial guarantee insurance
  (and reinsurance) contracts. The pronouncement is effective for fiscal years
  beginning after December 31, 2008. The Company does not believe this pronouncement
  will impact its financial statements.

3.PROPERTY, BUSES & EQUIPMENT

As of February 29, 2008 and February 28, 2007, property, buses
  and equipment consist of the following:

|                                                |   | February 29, |   |   | February 28, |  
|----------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                |   | 2008         |   |   | 2007         |  
|Computer equipment                              | $ | 59,345       |   | $ | 62,388       |  
|Computer software                               |   | 48,512       |   |   | 6,264        |  
|Furniture and equipment                         |   | 206,815      |   |   | 115,051      |  
|Land                                            |   | 286,201      |   |   | -            |  
|Automotive equipment                            |   | 5,641        |   |   | 7,030        |  
|Building improvements                           |   | 418,998      |   |   | 86,508       |  
|Buses used in operations                        |   | 7,674,632    |   |   | 3,059,661    |  
|                                                |   | 8,700,144    |   |   | 3,336,902    |  
|Less: accumulated depreciation and amortization |   | (2,461,980   | ) |   | (274,965     | )
|                                                |   | 6,238,164    |   |   | 3,061,937    |  
|Construction in progress                        |   | 62,251       |   |   | 171,819      |  
|Total property and equipment                    | $ | 6,300,415    |   | $ | 3,233,756    |  

Included in property, buses and equipment as of February 28,
  2007 was $1,500,000 of capitalized buses used in operations, which was leased
  under a non-cancellable lease from a related party (see Note 9) and accounted
  for as a capital lease. As of February 28, 2007, the accumulated depreciation
  on the buses used in operations under this capital lease was $236,932. As of
  February 29, 2008, the capital lease obligation was paid off and the buses were
  retained by the Company as per the bargain purchase option.

Depreciation and amortization expense for the fiscal years ended
  February 29, 2008 and February 28, 2007 were $1,988,946 and $268,391, respectively,
  out of this, $1,890,873 and $240,381, respectively, has been included in cost
  of revenue.

4.ACCOUNTS PAYABLE & ACCRUED EXPENSES &
  GOVERNMENT PAYABLES

(A) ACCOUNTS PAYABLE & ACCRUED EXPENSES

As of February 29, 2008, and February 28, 2007, accounts payable
  and accrued expenses were comprised of the following:

|                                                   |   | February 29, |  |   | February 28, | 
|-------------------------------------------------- | - | ------------ |  | - | ------------ | 
|                                                   |   | 2008         |  |   | 2007         | 
|Accounts payable                                   | $ | 1,531,523    |  | $ | 978,205      | 
|Payroll liabilities                                |   | 180,878      |  |   | 247,920      | 
|Accrued expenses                                   |   | 297,964      |  |   | 558,934      | 
|Taxes payable to governmental agencies of Cameroon |   | 224,012      |  |   | 174,763      | 
|Provision for fines and penalties                  |   | 190,166      |  |   | 163,241      | 
|Total accounts payable and accrued expenses        | $ | 2,424,543    |  | $ | 2,123,063    | 

F-14

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(B) VAT AND CUSTOM DUTIES PAYABLE TO GOVERNMENT OF CAMEROON

As of February 29, 2008 and February 28, 2007, the Company owes
  $3,377,287 and $1,022,370 in Value Added Taxes (VAT) and custom duties payable
  to the government of Cameroon (Government). The Company is currently
  negotiating with the Government for a complete tax rebate on these taxes. However,
  to date, the Company has not yet been successful in such negotiations. The Company
  may need pay penalty on the late payment of these taxes if the negotiations
  are not successful.

5. OBLIGATIONS UNDER CAPITAL LEASE

In 2007, the Company was committed to lease payments of $200,000
  per month for nine months commencing October 2006 for the acquisition of 28
  buses for its urban and rural transportation services in Cameroon. The lease
  obligation initially consisted of $1,500,000 used for the acquisition of the
  related buses and $300,000 deferred finance charges to be written off over the
  term of the capital lease obligation and is payable to a Trust for which a director
  of the Company is a trustee. As of February 28, 2007, $765,622 was outstanding
  under this capital lease obligation. The lease expired in June 2007, when all
  remaining principal and unpaid interest were repaid. The buses were purchased
  by the Company based on the bargain purchase option.

6. NOTES PAYABLE

The Company issued various promissory notes payable which are
  unsecured, due on demand, and bear interest at rates ranging from 7% to 40%
  per annum.

|• | As of February 29, 2008 and February 27, 2007,
        the Company had $110,000 outstanding due to two unrelated parties that
        bear interest at 7% per annum and are due on demand. The accrued interest
        on these notes payable as of February 29, 2008 and February 28, 2007 were
        $18,326 and $8,575, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | On February 12, 2007, the Company was advanced
        $400,000 under a short-term unsecured promissory note obligation from
        an unrelated party, bearing interest at 40% with an original maturity
        date of May 12, 2007. The Company negotiated an extended repayment term
        through January 31, 2008. Under the terms of the renewal agreement, the
        Company issued to the holder 30,000 shares of the Companys common
        stock. The Company recognized $41,100 of aggregate debt discount, representing
        the fair market value of the 30,000 shares issued pursuant to this obligation,
        which is included in additional paid-in capital in the accompanying consolidated
        balance sheet as of February 29, 2008. Under the terms of the renewal
        agreement, $40,000 of accrued interest as of May 12, 2007 was converted
        into a note payable. In February 2008, the Company paid $500,000 to satisfy
        this obligation, comprised of $440,000 of principal and $60,000 of accrued
        interest. As of February 28, 2007, an aggregate of $407,111 was outstanding
        under this obligation, comprised of $400,000 of principal and $7,111 of
        accrued interest.                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | On March 28, 2007, the Company was advanced
        $400,000 under a short-term unsecured promissory note obligation from
        an unrelated party, bearing interest at 14% per annum and payable in full
        on September 28, 2007. Under the terms of the promissory note agreement
        and related renewal agreements, the Company issued to the holder 70,000
        shares of the Companys common stock. The Company recognized $52,000
        of aggregate debt discount, representing the fair market value of the
        70,000 shares under this obligation, which is included in additional paid-in
        capital in the accompanying consolidated balance sheet as of February
        29, 2008. Under the terms of the renewal agreement, $40,000 of accrued
        interest as of May 12, 2007 was converted into a notes payable. In January,
        2008, $220,000, representing one half of the outstanding principal under
        this obligation, was assigned to Mr. Seid Sadat, the Companys acting
        chief executive officer, chief financial officer and a director of the
        Company repaid $230,157 to satisfy the remaining balances outstanding
        under this obligation, comprised of $220,000 of principal and $10,157
        of accrued interest.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|• | As of February 29, 2008 and February 28, 2007,
        an aggregate of $2,815,000 and $825,000, respectively, was due to related
        parties (note 9), comprised as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-15

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TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

| |      | The fourth installment of $1,020,000 was advanced in
        November 2006 and was initially classified as a convertible debenture
        under which the trust could convert these debentures into 2,240,143 shares
        of common stock. The debenture expired in December 2007 and the trustee
        of Tov did not elect conversion. Borrowings under this $1,020,000 obligation
        are due on demand and bear interest at 7% per annum. As of February 29,
        2008 and February 28, 2007, an aggregate of $2,595,000 and $825,000, respectively,
        of unsecured promissory note obligations were due to Tov. As of February
        29, 2008 and February 28, 2007, accrued interest due to Tov under these
        obligations was $374,527 and $39,773, respectively.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (ii) | In January 2008, an unsecured creditor assigned Seid
        Sadat $220,000 of outstanding borrowings owed to him by the Company. These
        amounts represented one half of an unsecured promissory note obligation
        owed to this creditor by the Company, which was repaid to this creditor
        by Mr. Sadat. Borrowings under this related party obligation are unsecured,
        due on demand and bear interest at 14% per annum. As of February 29, 2008,
        an aggregate of $220,000 was outstanding under this obligation. As of
        February 29, 2008, an aggregate of $10,939 of accrued interest was owed
        to Mr. Sadat under this obligation.                                                                                                          

7. CONVERTIBLE DEBENTURES

Convertible Debentures

Through the end of the fiscal year ended February 28, 2007, the
  Company raised an aggregate of $3,781,000 from the issuance of convertible debentures
  (convertible debentures) under several private placement memorandum
  offerings. The debentures were convertible into the common stock of the Company
  at exercise prices ranging from $.48 to $.50 per share. The debentures bear
  interest at 7% per annum and are automatically converted into common stock after
  one year from the date of issuance, unless converted earlier. There were no
  convertible debentures issued during the year ended February 29, 2008.

The Company calculated the beneficial conversion feature embedded
  in the convertible debentures in accordance with EITF 98-5, Accounting
  for Convertible Securities with Beneficial Conversion Features or Contingently
  Adjustable Conversion Ratios (EITF 98-5) and EITF 00-27, Application
  of Issue No. 98-5 to Certain Convertible Instruments, (EITF 00-27)
  and recorded $1,003,050 of aggregate debt discount for the year ended February
  28, 2007, which was included in additional paid-in capital as of February 28,
  2007.

The Company also issued to the holders of the convertible debentures
  warrants to acquire an aggregate of 8,427,416 shares of the Companys common
  stock at an exercise price of $1.50 per share. The warrants had an original
  term of two-years from the date of issuance. In connection with these debentures,
  the Company recorded aggregate debt discount of $2,777,950 related to the fair
  of the warrants issued, which was included in additional paid-in capital as
  of February 28, 2007.

The debt discount underlying the valuation of the warrants was
  calculated using the Black-Scholes pricing model with the following assumptions:
  applicable risk-free interest rate based on the current treasury-bill interest
  rate at the grant date of 3.5%; dividend yields of 0%; volatility factors of
  the expected market price of the Companys common stock of 203%; and an
  expected life of the warrants of one year. The debt discount is being amortized
  over one year, the life of the convertible debentures. Total finance costs associated
  with the amortization of the warrants for the years ended February 29, 2008
  and February 28, 2007 was $1,316,654 and $1,461,296, respectively.

During the year ended February 29, 2008, $2,498,500 of convertible
  debentures and $118,731 of related accrued interest were converted into 5,596,998
  shares of common stock. During the year ended February 28, 2007, $262,500 of
  convertible debentures and $10,184 of related accrued interest were converted
  into 588,036 shares of common stock.

The following is a schedule of the aggregate amounts of outstanding
  convertible debentures as of February 28, 2007:

|                                                    |   |              |  |   |             |  |   | Convertible | 
|--------------------------------------------------- | - | ------------ |  | - | ----------- |  | - | ----------- | 
|                                                    |   | Convertible  |  |   | Unamortized |  |   | Debentures  | 
|February 28, 2007                                   |   | Debentures - |  |   | Warrant     |  |   | Net of Debt | 
|                                                    |   | Gross        |  |   | Discounts   |  |   | Discount    | 
|                                                    |   |              |  |   |             |  |   |             | 
|Convertible debentures, non related parties         | $ | 2,348,500    |  | $ | 824,711     |  | $ | 1,523,789   | 
|                                                    |   |              |  |   |             |  |   |             | 
|Related party convertible debentures (Note
      9) | $ | 1,170,000    |  | $ | 491,943     |  | $ | 678,057     | 

F-16

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TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The effective interest rate on aggregate convertible debentures
  inclusive of the amortization of the benefit on conversion and the amortization
  of the fair value of the warrants for the year ended February 28, 2007 was 73%.

On May 24, 2007, the Companys Board of Directors issued
  a resolution to extend the maturity date of the convertible debentures issued
  pursuant to the Private Placement Memorandum dated January 23, 2006 and to increase
  the number of shares of common stock eligible for conversion. The number of
  warrants issued to convertible debenture holders was also adjusted to equal
  the number of shares to be issued upon conversion. In connection with the Board
  Resolution, the maturity date on the warrants was extended from two years to
  five years and the conversion rate of the exercise option was reduced from $.48
  - $.50 per share to an adjusted conversion rate of $.4464 per share. The reduction
  in the conversion rate resulted in an increase of 455,226 additional warrants
  outstanding and an additional 455,226 shares of common stock eligible for conversion
  for the debenture holders. On account of the repricing of the conversion price
  and issuance of additional warrants, the Company recorded a finance cost of
  $445,326 for the year ended February 29, 2008.

8. EQUITY TRANSACTIONS

Common stock

The Company cancelled 18,000,000 shares of common stock pursuant
  to the acquisition of PAGI. The cancellation was part of a corporate restructuring
  in the Companys ongoing efforts to provide equity for qualified interested
  parties.

Under the terms of subscription agreements for the purchase of
  the Companys common stock, Taug received an aggregate of $972,071 from
  two accredited investors during the fiscal year ended February 28, 2007. In
  aggregate, the Company issued 2,201,287 shares of common stock under these subscription
  agreements.

On November 30, 2006, the Company received $800,000 of contributed
  capital from the Chamber of Commerce, Industry, Mines and Handicraft (CCIMA)
  of Cameroon for the Companys urban transportation operations in Yaoundé,
  which commenced operations in late September 2006. CCIMA is one of the Companys
  minority shareholders in LeBus. These amounts have been reflected in the accompanying
  consolidated balance sheet as additional-paid in capital, net of minority interest
  of $271,482.

On November 21, 2006, the Company issued 332,000 shares of common
  stock in connection with the cancellation of $83,000 of indebtedness owed to
  a creditor. The Company recognized a loss of $355,240 from the extinguishment
  of debt as a result of this transaction.

During the year ended February 29, 2008, $2,498,500 of convertible
  debentures and $118,731 of related accrued interest were converted into 5,596,998
  shares of common stock. During the year ended February 28, 2007, $262,500 of
  convertible debentures and $10,184 of related accrued interest were converted
  into 588,036 shares of common stock (note 7).

In connection with a Private Placement Memorandum to accredited
  investors dated January 17, 2007, the Company entered into Subscription Agreements
  with various accredited investors for the sale of investment units (Units),
  with each Unit consisting of (i) one share of the Companys common stock
  at $0.50 per share and (ii) a warrant to purchase one share of common stock
  at $1.50 per share. The warrants to not offer a cashless exercise
  provision and holders will be required to pay $1.50 per share to exercise each
  warrant. The warrants have a term of five years from the date of each underlying
  Subscription Agreement. The Company has agreed to pay the placement agents the
  equivalent of $173,125 of commissions (or 5% of the proceeds received from the
  sale of the Units) as compensation for their services.

During the years ended February 29, 2008 and February 28, 2007,
  investors purchased an aggregate of 4,377,500 and $375,000, respectively, in
  Units representing 8,755,000 (2008) and 750,000 (2007) shares of common stock
  at a price of $0.50 per share, and warrants to purchase an additional 8,755,000
  (2008) and 750,000 (2007) shares of common stock at $1.50 per share. The fair
  value of the 8,755,000 warrants issued in connection with the January 17, 2007
  private placement offering was $3,041,587. This amount was calculated using
  the Black-Scholes pricing model with the following assumptions: applicable risk-free
  interest rate based on the current treasury-bill interest rate at the date of
  grant of 3.5%; dividend yield of 0%; volatility factors of the expected market
  price of our common stock of 203%; and an expected life of the warrants of five
  years.

During the year ended February 29, 2008, the Company recognized
  $445,326 of finance costs in connection with additional shares issued to debenture
  holders as a result of the repricing of the investment units sold to debenture
  holders (note 7).

F-17

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

During the year ended February 29, 2008, the Company recognized
  an aggregate of $326,000 (including $232,900 to a related party) of deferred
  finance costs in connection with the issuance of 270,000 (including 170,000
  to a related party) shares of the Companys common stock to various holders
  of unsecured promissory note obligations (see note 6). Total finance costs associated
  with the amortization of the deferred interest under these obligations for the
  year ended February 29, 2008 was $326,000.

Warrants

The following schedules present a summary of the activity of
  the aggregate number of warrants outstanding as of February 29, 2008:

|Warrants outstanding             |   | Aggregate       |  |  | Number of  |  
|-------------------------------- | - | --------------- |  |  | ---------- | -
|                                 |   | Intrinsic Value |  |  | Warrants   |  
|Outstanding at February 28, 2007 | $ | -               |  |  | 8,722,190  |  
|Granted                          |   | -               |  |  | 9,210,226  |  
|Exercised                        |   | -               |  |  | -          |  
|Cancelled                        |   | -               |  |  | (2,240,143 | )
|Outstanding at February 29, 2008 | $ | -               |  |  | 15,692,273 |  

Outstanding
        Warrants
      
      
      
      Exercisable
        WarrantsRange of
      
      
      
      Weighted Average
      
      Weighted AverageExercise
      
      
      
      Remaining
      
      Exercise
      
      
      
      Average ExercisePrice
      
      Number
      
      Contractual Life
      
      Price
      
      Number
      
      Price$ 1.50
      
      15,692,273
      
      3.9 years
      
      $ 1.50
      
      15,692,273
      
      $ 1.50


The fair value of the 8,755,000 warrants issued in connection
  with the private placement memorandum (dated January 17, 2007) during the year
  ended February 29, 2008 was calculated using the Black-Sholes pricing model
  with the following assumptions: Applicable risk-free interest rate based on
  the current treasury-bill interest rate at the date of grant of 3.5%; dividend
  yield of 0%; volatility factors of the expected market price of our common stock
  of 203%; and an expected life of the warrants of five years.

The fair value of the 455,226 warrants issued to convertible
  debenture holders was calculated using the Black-Sholes pricing model with the
  following assumptions: applicable risk-free interest rate based on the current
  treasury-bill interest rate at the grant date of 3.5%; dividend yields of 0%;
  volatility factors of the expected market price of the Companys common
  stock of 203%; and an expected life of the warrants of five years.

9. RELATED PARTY TRANSACTIONS

On May 15, 2006, the Company entered into a capital lease obligation
  with Tov Trust (Tov), a trust whose trustee is Seid Sadat, the Chief
  Financial Officer and director of TAUG, for the acquisition of the first shipment
  of 28 buses to be used in our urban transportation operations in Cameroon. Under
  the terms of the lease agreement, TAUG was committed to lease payments of $200,000
  per month for nine months commencing in October 2006, with total payments aggregating
  $1,500,000 of principal payments and $300,000 for deferred finance charges.
  As of February 28, 2007, $765,622 was outstanding under this lease obligation
  representing $800,000 of principal payments less $34,378 of deferred interest.
  The lease expired in June 2007, when all remaining principal and unpaid interest
  were repaid. The interest expense for the years ended February 29, 2008 and
  February 28, 2007 under this related party obligation was $34,378 and $265,622,
  respectively.

As of February 29, 2008, and February 28, 2007, an aggregate
  of $2,595,000 was $825,000, respectively, was borrowed from Tov. These borrowings
  were advanced in four separate installments. The first installment of $425,000
  was advanced on November 6, 2006 and is unsecured, bearing interest at 10% and
  is due on demand. The second installment of $400,000 was advanced on February
  12, 2007. Borrowings under the second advance are unsecured, bearing interest
  at 40% per annum, and was due on October 31, 2007, including unpaid interest.
  The third installment of $750,000 was borrowed on May 30, 2007 and is unsecured,
  bearing interest at 10% per annum and was due on October 31, 2007. The Company
  is currently negotiating renewal provisions for these obligations with the Trustee
  of Tov.

F-18

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The fourth installment of $1,020,000 was advanced in November
  2006 and was initially classified as a convertible debenture under which Tov
  could convert these debentures into 2,240,143 shares of common stock and warrants
  to purchase 2,240,243 shares of common stock. The debenture expired in December
  2007 and the trustee of Tov did not elect conversion. Borrowings under this
  $1,020,000 obligation are due on demand and bear interest at 7% per annum.

The interest expense for the years ended February 29, 2008 and
  February 28, 2007 under related party obligations due to Tov was $334,754 and
  $39,773, respectively. As of February 29, 2008 and February 28, 2007, accrued
  interest due to Tov under these related party obligations was $374,527 and $39,773,
  respectively.

During the year ended February 29, 2008, an aggregate of 170,000
  shares of the Companys common stock were issued to Tov in consideration
  for the Company being granted a deferred maturity date on $1,575,000 of outstanding
  promissory note obligations advanced by Tov (note 6). During the year ended
  February 29, 2008, total deferred finance costs charged to operations in connection
  with the issuance of these shares was $232,900.

On March 24, 2006, the Company was advanced $150,000 from the
  plan assets of a pension plan for the benefit of the Companys chief financial
  officer, Seid Sadat (related party debenture) in connection with
  a private placement offering of 7% convertible debentures and stock warrants
  to accredited investors (note 7). Under the terms of the subscription agreement,
  the related party debenture is convertible into 336,022 shares of common stock.
  In connection with the subscription agreement for this related party debenture,
  the pension plan was also issued 5-year warrants to acquire an additional 336,022
  shares of common stock at an exercise price of $1.50. On May 21, 2007, the related
  party debenture of $150,000 and $10,120 of accrued interest on the debenture
  were converted into 336,022 shares of common stock. The interest expense for
  the years ended February 29, 2008 and February 28, 2007 under this related party
  obligation was $157 and $9,963, respectively.

In January 2008, an unsecured creditor assigned the Companys
  chief financial officer, Seid Sadat, $220,000 of outstanding borrowings owed
  to him by the Company (note 6). These amounts represented one-half of an unsecured
  promissory note obligation owed to this creditor by the Company, which was repaid
  to this creditor by Mr. Sadat. Borrowings under this related party obligation
  are unsecured, due on demand and bear interest at 14% per annum. As of February
  29, 2008, an aggregate of $220,000 of principal and $10,939 of accrued interest
  was outstanding under this obligation. Total interest expense for the year ended
  February 29, 2008 under this related party obligation was $10,939.

The Company entered into a consulting agreement with Magidoff
  Sadat & Gilmore, LLP (MSG), a professional services firm, pursuant
  to which MSG agreed to provide services to TAUG including assistance in managerial
  oversight, internal accounting and financial reporting, and advisory services.
  The agreement also obligates the Company to reimburse MSG $3,500 per month in
  shared rent costs. For the years ended February 29, 2008 and February 28, 2007,
  the Company was charged an aggregate of $586,000 and $472,000, respectively,
  for these services including $42,000 of shared rent costs, by MSG under this
  consulting agreement. As of February 29, 2008 and February 28, 2007, $831,486
  and $485,854 was owed to MSG, which is included in due to related party in the
  accompanying consolidated balance sheets as of February 29, 2008 and February
  28, 2007. Seid Sadat is the managing partner of MSG and also the acting chief
  executive officer and chief financial officer of the Company.

F-19

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

10. INCOME TAXES

The components of the income tax provision are as follows:

|                                 |   | For the year ended | 
|-------------------------------- | - | ------------------ | 
|                                 |   | February 29, 2008  | 
|Current:                         | $ |                    | 
|Federal                          |   | -                  | 
|State                            |   | 800                | 
|Cameroon                         |   | -                  | 
|Total                            |   | 800                | 
|                                 |   |                    | 
|Deferred                         |   |                    | 
|Federal                          |   | -                  | 
|State                            |   | -                  | 
|Cameroon                         |   | -                  | 
|Total                            |   | -                  | 
|Total Income
      Tax Provision |   |                    | 
|                                 | $ | 800                | 

|                                     |   | For the year ended |  
|------------------------------------ | - | ------------------ | -
|                                     |   | February 29, 2008  |  
|Federal statutory rate               |   | (34)%              |  
|State tax expense net of federal tax |   | (6)%               |  
|Changes in valuation allowance       |   | 40%                |  
|Foreign income tax, Cameroon         |   | (38.5)%            |  
|Change in valuation allowance        |   | 38.5%              |  
|Tax expense at actual rate           |   | -                  |  
|                                     |   |                    |  
|                                     |   |                    |  
|                                     |   | For the year ended |  
|                                     |   | February 29, 2008  |  
|Net operating losses                 | $ | 3,804,166          |  
|Deferred tax asset                   |   | 1,521,666          |  
|Valuation allowance                  |   | (1,521,666         | )
|Net deferred tax asset               | $ | -                  |  

Through February 29, 2008, the Company incurred net operating
  losses for tax purposes of approximately $3,804,166. The net operating loss
  carry forward for federal and state purposes may be used to reduce taxable income
  through the year 2026. Net operating loss carry forwards for the state of California
  is generally available to reduce taxable income through the year 2012. The availability
  of the Companys net operating loss carry forwards is subject to limitation.
  The provision for income taxes consists of the state minimum tax imposed on
  corporations.

The gross deferred tax asset balance as of February 29, 2008
  has been offset in its entirety by a valuation allowance against the deferred
  tax asset given the uncertainty surrounding the eventual realization of the
  related deferred tax assets.

Utilization of the net operating loss carry forwards is subject
  to significant limitations imposed by the change in control rules under I.R.C.
  382, limiting its annual utilization to the value of the Company at the date
  of change in control times the federal discount rate. A significant portion
  of the NOL may expire before it can be utilized.

F-20

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

11. COMMITMENTS AND CONTINGENCIES

Officer Indemnification

Under the organizational documents, the Companys officers
  are indemnified against certain liabilities arising out of the performance of
  their duties to the Company. The Company does not maintain insurance for its
  directors and officers to insure them against liabilities arising from the performance
  of their duties required by the positions with the Company. The Companys
  maximum exposure under these arrangements is unknown as this would involve future
  claims that may be made against the Company that have not yet incurred.

Employment Agreements

On July 31, 2007, the Company entered into an employment agreement
  with the president of the Companys African operations, S. Lal Karsanbhai.
  Under the terms of the agreement, the Company agreed to remunerate the president
  cash compensation of $6,000 per month plus deferred compensation of $4,000 per
  month payable in stock through the duration of his employment. The Company has
  accrued $36,000 of deferred compensation owed to Mr. Karsanbhai as of February
  29, 2008, representing deferred compensation payable under this employment agreement
  through the end of February 29, 2008.

Facility leases used in operations

The Company leases two agency facilities for their inter-city
  bus operations, LeCar, in the city of Yaoundé, Cameroon and an office building
  used by LeCars corporate, sales and administrative staff under non-cancellable
  operating lease agreements expiring in various years through 2027. The Company
  also leases a residential home in Cameroon that is used by its senior management
  personnel and various automobiles and equipment that are leased on a month-to-month
  basis.

The future minimum rental payments (exclusive of real estate
  taxes, maintenance, etc.) under the non-cancellable operating lease commitments
  are as follows:

|Fiscal year ended February 28, |   |           | 
|------------------------------ | - | --------- | 
|2009                           | $ | 157,036   | 
|2010                           |   | 135,376   | 
|2011                           |   | 135,376   | 
|2012                           |   | 135,376   | 
|2013                           |   | 135,376   | 
|Thereafter                     |   | 1,850,139 | 
|                               | $ | 2,548,679 | 

Rent expense charged to operations for the fiscal years ended
  February 29, 2008 and February 28, 2007 was $409,892 and $362,961, respectively.

Loss contingency

The Companys subsidiary, LeCar, subleases an agency physically
  located on the premises of a large hotel in Douala under a two year lease term.
  On May 15, 2007, the Company received notification from the management of the
  hotel to terminate the lease agreement and vacate the premises. The matter has
  been referred to legal counsel and is currently in mediation. In the event the
  cease and desist demand is upheld, the Company would be required to record an
  impairment charge of approximately $130,000, resulting from the write off construction
  in progress and other building improvement costs incurred by the Company on
  its agency facility.

F-21

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Litigation

On March 19, 2007, one of the Companys inter-city coach
  buses was involved in a collision en route between Yaoundé and Douala that
  resulted in the deaths of two passengers and injuries sustained to the surviving
  passengers. In accordance with Cameroonian law, the Companys subsidiary,
  LeCar, was cited with responsibility for the collision. The Company maintains
  insurance coverage for damage claims arising from collisions. However, management
  cannot determine the amount of monetary damages in excess of amounts covered
  under insurance, if any, that may be awarded to passengers involved in this
  collision.

On November 8, 2007, the Companys subsidiary, LeCar Transportation
  Corporation, S.A. (LeCar), was named a defendant in a wrongful termination
  case involving several disgruntled former employees of the subsidiary who were
  terminated by the Company during 2007. The plaintiffs are seeking unspecified
  amounts in compensatory damages, including deferred salary, and punitive damages.
  Under Cameroonian law, the cases are first investigated by the Labor Board Division
  and subsequently referred to the higher courts based on the merits of the respective
  allegations. To date, the cases are still pending review by the Labor Board
  Division. The Company believes the former employees claims are without
  merit and intends to vigorously defend against the claims brought forth by these
  suits and to pursue all available legal remedies. The Company has not provided
  for any loss contingencies, in the event of an unfavorable outcome.

On September 12, 2007, the Companys subsidiary, Transnational
  Automotive Group, Cameroon S.A., was named a defendant in a breach of contract
  claim brought forth by its former ad agency, Nelson Cameroun (Nelson).
  The complaint alleges the Company wrongfully terminated its contract with Nelson
  prior to its expiration. The plaintiff was seeking damages of $300,000, representing
  amounts owed by the Company pursuant to the terms of the ad agency contract.
  The Company filed a counter-suit against Nelson alleging breach of good faith,
  breach of contract, fraud, misrepresentation, and negligence and breach of fiduciary
  duty. The Company is seeking unspecified amounts as compensatory damages pursuant
  to its cross-complaint. The Company has reserved $64,651, representing the entire
  accounts receivable balance due from Nelson as of February 29, 2008 pursuant
  to the terms of the ad agency agreement prior to its termination. The Company
  has not provided for any loss contingencies, in the event of an unfavorable
  outcome.

The Company is involved in various other legal claims and assessments.
  Management believes that these actions, either individually or in the aggregate,
  will not have a material adverse effect on the Companys results of operations
  or financial condition.

F-22

---

TRANSNATIONAL AUTOMOTICE GROUP, INC.NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

12. SEGMENT INFORMATION

|                                            |   |                    |   |   |                    |   |   | Corporate and |   |   |              |  
|------------------------------------------- | - | ------------------ | - | - | ------------------ | - | - | ------------- | - | - | ------------ | -
|Year Ended February 29, 2008                |   | LeBus (intra-city) |   |   | LeCar (inter-city) |   |   | Other         |   |   | Consolidated |  
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Net revenue                                 | $ | 3,935,415          |   | $ | 4,229,724          |   | $ | -             |   | $ | 8,165,139    |  
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Cost of revenue                             | $ | 3,960,132          |   | $ | 3,455,350          |   | $ | -             |   | $ | 7,415,482    |  
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Operating expenses (excluding depreciation) | $ | 1,880,900          |   | $ | 1,629,728          |   | $ | 1,796,876     |   | $ | 5,307,504    |  
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Depreciation                                | $ | 36,517             |   | $ | 55,557             |   | $ | 6,000         |   | $ | 98,074       |  
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Other (income) expense                      | $ | (9,433             | ) | $ | 76,847             |   | $ | 2,581,205     |   | $ | 2,648,619    |  
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Net loss                                    | $ | (1,932,701         | ) | $ | (987,758           | ) | $ | (4,384,081    | ) | $ | (7,304,540   | )
|                                            |   |                    |   |   |                    |   |   |               |   |   |              |  
|Segment assets                              | $ | 5,454,485          |   | $ | 2,170,461          |   | $ | 539,378       |   | $ | 8,164,324    |  

|                                            |   |                   |   |   |                   |   |   | Corporate and |   |   |              |  
|------------------------------------------- | - | ----------------- | - | - | ----------------- | - | - | ------------- | - | - | ------------ | -
|Year Ended February 28, 2007                |   | LeBus (Intercity) |   |   | LeCar (inter-city |   |   | Other         |   |   | Consolidated |  
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Net revenue                                 | $ | 490,901           |   | $ | 531,685           |   | $ | -             |   | $ | 1,022,586    |  
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Cost of revenue                             | $ | 756,626           |   | $ | 451,211           |   | $ | -             |   | $ | 1,207,837    |  
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Operating expenses (excluding depreciation) | $ | 1,621,681         |   | $ | 331,258           |   | $ | 3,611,574     |   | $ | 5,564,513    |  
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Depreciation                                | $ | 17,402            |   | $ | 3,608             |   | $ | 7,000         |   | $ | 28,010       |  
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Other (income) expense                      | $ | 184,770           |   | $ | 80,384            |   | $ | 2,998,692     |   | $ | 3,263,846    |  
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Net income (loss)                           | $ | (1,558,677        | ) | $ | (334,776          | ) | $ | (6,617,266    | ) | $ | (8,510,719   | )
|                                            |   |                   |   |   |                   |   |   |               |   |   |              |  
|Segment assets                              | $ | 2,390,692         |   | $ | 1,502,489         |   | $ | 1,317,328     |   | $ | 5,210,509    |  

13. SUBSEQUENT EVENT

On May 29, 2008, the Company was named a defendant in a lawsuit
  filed by one of its shareholders. The plaintiff alleges certain shareholders
  of the Company concluded an agreement amongst themselves to restructure the
  shares held by them in the Company. As a consequence of that agreement, the
  plaintiff alleges that 3.15 million shares allegedly held by him were cancelled
  by the shareholder group. The plaintiff has made demand upon the Company to
  reinstate and recognize his ownership of these 3.15 million allegedly cancelled
  shares. Additionally, the plaintiff is seeking damages equal to the fair market
  value of the 3.15 million shares. The Companys management is currently
  evaluating the impact of this claim, if any, on its operations. The Companys
  management believes the plaintiffs claims are without merit and intends
  to vigorously defend against the claims brought forth by this lawsuit. The Company
  has not provided for any loss contingencies, in the event of an unfavorable
  outcome.

F-23

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