Exhibit 13


                                                                      Exhibit 13








                               ANNUAL REPORT 2006










                                   COVER PAGE


<PAGE>



                                  INSIDE COVER

<PAGE>
<TABLE>
<CAPTION>


                                                       FINANCIAL SUMMARY

================================================================================================================================

                                                                                                        05 to 06     04 to 05
As of or For Year Ended November 30                          2006           2005            2004        % Change     % Change
--------------------------------------------------------------------------------------------------------------------------------

Operations
--------------------------------------------------------------------------------------------------------------------------------

<S>                                                        <C>             <C>             <C>                 <C>         <C>
Net revenues                                               $ 8,468,892     $ 8,431,656     $ 6,634,964         0.4         27.1
Operating income                                           $   174,964     $   165,577     $    85,577         5.7         93.5
Income  before income taxes                                $   121,378     $   127,654     $    61,207        (4.9)       108.6
Net income                                                 $   121,378     $   127,654     $    61,207        (4.9)       108.6
Weighted average common shares outstanding                   4,844,026       4,826,654       4,806,807         0.4          0.4

--------------------------------------------------------------------------------------------------------------------------------

Per Share Data
--------------------------------------------------------------------------------------------------------------------------------

Net income                                                       $ .03           $ .03           $ .01           -        200.0
Cash dividends                                                   $   -           $   -           $   -           -            -
Stockholders' equity                                             $ .16           $ .13           $ .11        23.1         18.2

--------------------------------------------------------------------------------------------------------------------------------

Financial Position
--------------------------------------------------------------------------------------------------------------------------------

Assets                                                     $ 2,590,991     $ 3,017,929     $ 2,956,478       (14.1)         2.1
Working capital                                            $   926,011     $   783,849     $   658,391        18.1         19.1
Property and equipment                                     $   128,654     $   133,569     $   121,433        (3.7)        10.0
Long-term debt, less current maturities                    $   306,799     $   309,355     $   300,000        (0.8)         3.1
Stockholders' equity                                       $   779,720     $   639,917     $   511,678        21.8         25.1

--------------------------------------------------------------------------------------------------------------------------------

Number of employees                                           44             36              30
Number of stockholders                                   approx. 596     approx. 655     approx. 650

--------------------------------------------------------------------------------------------------------------------------------




================================================================================================================================

                                                             INDEX
Financial Summary                                                                                                1
Letter to Shareholders                                                                                           2
Selected Financial Data                                                                                          3
Management's Discussion and Analysis of Financial Condition and Results of Operation                             4
Report of Independent Registered Public Accounting Firm                                                         11
Balance Sheets                                                                                                  12
Statements of Income                                                                                            14
Statements of Stockholders' Equity                                                                              15
Statements of Cash Flows                                                                                        16
Notes to the Financial Statements                                                                               18
Shareholder Information                                                                                         31
Directors and Officers                                                                                          31

</TABLE>



                                       1
<PAGE>



                            DEAR FELLOW SHAREHOLDER:

===============================================================================

In 2006, our company  continued to build a solid foundation for sustained future
growth and  profitability  in our expanded  business plan of factory  automation
integration.  The  company  experienced  good  improvement  in its gross  profit
margins from 26.1% to 30.0%. This improvement  resulted primarily from intensive
efforts to  improve  our  engineering  processes  and  methods,  resulting  in a
decrease in the average cost to complete a project. This increase in engineering
efficiency  occurred  in  a  year  in  which  we  significantly   increased  our
engineering  staff and so was a real tribute to the dedication and effectiveness
of our employees.  We are pleased to have achieved ISO 9001 2000 registration in
the first quarter of 2006. These efforts will continue in the coming year.

The past year saw many challenges.  Despite the gross margin  improvements,  our
net  income  was  comparable  to that of 2005.  Real  improvements  in 2007 will
require   improvements  in  sales  of  new,  integrated  systems.   The  process
improvements  we have  achieved and will  continue to implement  will generate a
better foundation for sustained sales growth.

During the past year,  we were  successful in expanding our customer base in the
automotive, food and beverage and healthcare industries. Existing customers also
rewarded  us with  repeat  business.  In January  2007 we  demonstrated  our new
Automatic  Trailer  Loading  System (ATLS) at the PROMAT show in Chicago.  Until
recently,  automatic guided vehicles with this capability were a missing link to
fully  integrating the material flow in many distribution  applications.  We are
now quoting this exciting  solution to customers who share our  excitement  over
this new  technology.  ATLS is a leading example of new technology that benefits
customers  by  automating   material   handling   systems  from   "receiving  to
manufacturing to shipping."  Providing and integrating  these  technologies will
drive our growth in the coming year.

I am pleased to report that the federal  government  has begun to recognize  the
burdens placed on small  businesses by the  Sarbanes-Oxley  Act. We have not yet
been forced to incur the full  expense and  paperwork  required by the  previous
interpretation of this  legislation,  and we are hopeful the SEC ultimately will
endorse realistic requirements for small businessES.

We look  forward  to 2007 with  optimism.  We will  continue  to  implement  our
business plan and to release new automation solutions for our target industries.

On behalf of the Board of Directors and our  employees,  I thank you your valued
interest and continued support.



Sincerely yours,




Claude Imbleau
CEO & President

February 2007


                                       2


<PAGE>
<TABLE>
<CAPTION>

                                              SELECTED FINANCIAL DATA

===========================================================================================================================

                                                                 As of or For Year Ended November 30
                                              -----------------------------------------------------------------------------

                                                 2006           2005            2004            2003            2002
---------------------------------------------------------------------------------------------------------------------------
Statements of Operations Data:
<S>                                            <C>             <C>             <C>             <C>              <C>
    Net revenues                               $ 8,468,892     $ 8,431,656     $ 6,634,964     $ 4,215,957      $4,317,258
    Cost of goods sold                           5,926,691       6,231,231       4,399,168       2,578,840       2,844,282
---------------------------------------------------------------------------------------------------------------------------
       Gross profit                            $ 2,542,201     $ 2,200,425     $ 2,235,796     $ 1,637,117      $1,472,976
---------------------------------------------------------------------------------------------------------------------------
Operating expenses:
    Selling                                      $ 622,797     $   546,821       $ 664,313     $   451,668      $  527,450
    General and administrative                   1,432,268       1,206,658       1,186,729         817,686       1,074,520
    Research and development                       312,172         281,369         299,177         241,175         133,365
---------------------------------------------------------------------------------------------------------------------------
                                               $ 2,367,237     $ 2,034,848     $ 2,150,219     $ 1,510,529      $1,735,335
---------------------------------------------------------------------------------------------------------------------------
       Operating income (loss)                 $   174,964     $   165,577     $    85,577     $   126,588      $ (262,359)
---------------------------------------------------------------------------------------------------------------------------
Interest expense                               $   (53,586)    $   (37,923)    $   (24,370)    $   (10,459)     $  (13,753)
---------------------------------------------------------------------------------------------------------------------------

Income (loss) before income taxes (benefit)    $   121,378     $   127,654     $    61,207     $   116,129      $ (276,112)
Federal and state income taxes                           -               -               -               -               -
---------------------------------------------------------------------------------------------------------------------------
       Net income (loss)                       $   121,378     $   127,654     $    61,207     $   116,129      $ (276,112)
===========================================================================================================================
Weighted average number of
   common shares outstanding:
  Basic                                          4,844,026       4,826,654       4,806,807       3,810,013       3,586,451
===========================================================================================================================
  Diluted                                        4,946,606       4,942,247       4,877,195       3,984,139       3,586,451
===========================================================================================================================
Basic earnings (loss) per share                      $ .03           $ .03           $ .01           $ .03          $ (.08)
===========================================================================================================================
Diluted earnings (loss) per share                    $ .03           $ .03           $ .01           $ .03          $ (.08)
===========================================================================================================================
Cash dividend declared per common share              $   -           $   -           $   -           $   -          $    -
===========================================================================================================================
Balance Sheet Data:
Working capital (Deficit)                      $   926,011     $   783,849     $   658,391     $   593,907     $  (126,195)
Total assets                                   $ 2,590,991     $ 3,017,929     $ 2,956,478     $ 1,689,531     $ 1,160,746
Long-term debt, less current maturities          $ 306,799     $   309,355     $   300,000     $   300,000     $         -
Total liabilities                              $ 1,811,271     $ 2,378,012     $ 2,444,800     $ 1,264,873     $ 1,149,954
Stockholders' equity                           $   779,720     $   639,917     $   511,678     $   424,658     $    10,792
</TABLE>



                                       3


<PAGE>




                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION

===============================================================================

     The following  discussion and analysis  should be read in conjunction  with
the financial  statements  (including  the notes  thereto)  presented  elsewhere
herein.

Overview

     The  Company  derives  virtually  all of its  revenues  from  the  sale  of
hardware,   software  and  engineering  services  in  connection  with  projects
incorporating its licensed Automated Guided Vehicle (AGV) control technology. In
the current and prior  years,  the  Company's  net  revenues  from AGV  systems,
vehicles and technology were derived primarily from sales to customers serving a
limited  number  of  industries  -  automotive,  food and  paper,  textiles  and
newspaper  publishing.  The Company's  results of operations  can be expected to
continue to depend  substantially  upon the capital  expenditure levels in those
industries and in other industries that the Company may enter.

     Due to the long sales cycle involved,  uncertainties in timing of projects,
and the large dollar amount of a typical  project,  the Company has experienced,
and can be expected to continue to experience,  substantial  fluctuations in its
quarterly and annual results of operations.

     The  Company  sells  its  products  and  services  primarily  in two  ways.
Vehicles,  technology and other products and services may be sold in a "project"
that  becomes  an  integrated  AGV  system.  The other way is to sell  hardware,
software  and services as standard  items or spare parts for  existing  systems,
with less  involvement  by the  Company in overall  system  design.  The Company
generally  would  recognize  lower net revenue but would  realize a higher gross
profit margin percentage in selling standard items, in each case compared to the
sale of a  project,  due to the  inclusion  in project  sales of other  vendors'
products  and services  with  margins  generally  lower than the  Company's  own
products and services.  Between any given accounting periods,  the levels of and
mixture of standard item sales and project sales can cause considerable variance
in net revenues,  gross profit,  gross profit margin,  operating  income and net
income.

     Revenues from  standard  item sales are  recognized  upon  shipment,  while
revenues from project sales are recognized  under the "percentage of completion"
method.  Under this method,  with respect to any particular  customer  contract,
revenues are recognized as costs are incurred  relative to each major  component
of the project.  Although the  percentage of completion  method will  ordinarily
smooth out the net  revenue and  profitability  effects of large  projects  over
time,  such method  subjects the Company's  results of operations to substantial
fluctuations  dependent  upon the progress of work on project  components.  Such
components  can differ  markedly  from one another in amount and in gross profit
margin.

     Project  contracts are billed upon attainment of certain  "milestones." The
Company grants payment terms of 30 days to its customers.  It typically receives
a cash advance ranging from 20% to 30% of the total contract  amount.  Bills are
thereafter  delivered as milestones  are reached.  Upon delivery of the project,
the customer typically reserves a "retainage" of 10% to 20% pending final system
acceptance.

     Notwithstanding  the receipt of cash  advances and periodic  payments  upon
reaching project milestones,  the Company requires external financing to finance
uncompleted contracts, inventories, receivables and other assets.

     The  Company's  backlog  consists of all amounts  contracted  to be paid by
customers but not yet recognized as net revenues by the Company.


                                       4
<PAGE>




                      MANAGEMENT'S DISCUSSION AND ANALYSIS

===============================================================================


      Forward-looking statements: This report (including information included or
incorporated by reference  herein) contains certain  forward-looking  statements
with  respect  to  the  financial  condition,   results  of  operation,   plans,
objectives, future performance and business of the Company.

      These forward-looking  statements involve certain risks and uncertainties.
Factors  that  may  cause  actual  results  to  differ   materially  from  those
contemplated  by such  forward-looking  statements  include,  among others,  the
following possibilities:

o        Revenues  from  end  user  systems   sales,   new  Original   Equipment
         Manufacturers  ("OEMs")  and new niches may be lower than  expected  or
         delayed.
o        General economic or business  conditions,  either  nationally or in the
         markets in which the Company is doing  business,  may be less favorable
         than  expected  resulting in, among other things,  a  deterioration  of
         market share or reduced demand for its products.






                                       5










<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS

===============================================================================

RESULTS OF OPERATIONS

     The table below shows the relationship of income and expense items relative
to net  revenues for the fiscal  years ended  November 30, 2006,  2005 and 2004,
respectively.

<TABLE>
<CAPTION>
                                                                                     Percentage of Change
                                                                                      Period to Period
                                            Percentage of Net Revenues                Increase (Decrease)
------------------------------------------------------------------------------------------------------------------
                                                                                   Year Ended       Year Ended
                                                  For year ended                   November 30,     November 30,
                                       2006            2005           2004         2005 to 2006     2004 to 2005
------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>             <C>               <C>           <C>
Net revenues                          100.0%          100.0%          100.0%            0.4%          27.1%

Cost of  goods sold                    70.0            73.9            66.3            (4.9)          41.7
------------------------------------------------------------------------------------------------------------------
Gross profit                           30.0            26.1            33.7            15.5           (1.6)

Operating expenses:
   Selling                              7.3             6.5            10.0            13.9          (17.7)
   General and administrative          16.9            14.3            17.9            18.7            1.7
   Research and development             3.7             3.3             4.5            11.0           (6.0)
------------------------------------------------------------------------------------------------------------------
                                       27.9            24.1            32.4            16.3           (5.4)

Operating income                        2.1             2.0             1.3             5.7           93.5
Net interest expense                   (0.7)           (0.5)           (0.4)           41.3           55.6
------------------------------------------------------------------------------------------------------------------
Income before income taxes              1.4             1.5             0.9            (4.9)         108.6
Income tax expense                     --              --              --              --             --
------------------------------------------------------------------------------------------------------------------
Net income                              1.4%            1.5%          0.9 %            (4.9)%        108.6%
==================================================================================================================
</TABLE>


                                                                 6
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

===============================================================================

Fiscal Year Ended  November 30, 2006 Compared To Fiscal Year Ended  November 30,
2005

     Net  revenues  were  basically  flat  increasing  by  $37,236  or 0.4% from
$8,431,656  for the fiscal year ended  November 30, 2005 to  $8,468,892  for the
fiscal year ended November 30, 2006.  Engineering  revenues  increased over last
year,  but  product  sales  decreased  mainly due to the timing of orders by our
customers  compared  to last  year.  The  Company's  revenues  during  2006 were
primarily   derived  from  the  printing,   food  and  beverage  and  automotive
industries.

     Cost of goods sold decreased from $6,231,231 to $5,926,691,  or (4.9%), due
primarily to better profit margins and more efficient use of engineering  labor.
As a percentage  of net  revenues,  cost of goods sold  decreased  from 73.9% to
70.0%  primarily  due to better  margins  on  engineering  and  lower  equipment
revenues  compared to the prior year.  Gross profit  increased  by $341,776,  or
15.5%, from $2,200,425 to $2,542,201.

    Selling expenses increased from $546,821 to $622,797 or 13.9%, primarily due
to increased  personnel  expense in the current year compared to the prior year.
As a percentage of net revenues,  selling  expenses  increased from 6.5% to 7.3%
primarily  due to an  additional  allocation  of  engineering  labor to  selling
expense to provide more engineering input with salable customer  solutions early
in the bid process. General and administrative expenses increased by $225,610 or
18.7% from  $1,206,658  to $1,432,268  compared to the prior year.  The increase
came from additional  personnel costs including recruiting and moving costs. The
Company  continued  to  invest  in the  development  of new AGV  and  automation
solutions  to  expand  its  product  line  in the  current  year.  Research  and
development expenses increased from $281,369 to $312,172 in the current year.

     Primarily as a result of the  foregoing,  the  Company's  operating  income
increased by $9,387 from an operating  income of $165,577 to an operating income
of $174,964 for the current year.

    Net interest expense increased from $37,923 to $53,586, an increase of 41.3%
due to higher banking and borrowing costs compared to the prior year relating to
an increased borrowing line utilized to handle additional business expansion.

      The  Company  did not  recognize  any tax expense in 2006 and 2005 for its
earnings as the Company  had net  operating  loss  carryforwards.  Deferred  tax
assets  have  not  been   recognized   since   utilization   of  operating  loss
carryforwards in the future is not assured.

     Primarily  due to an overall  increase in expenses  in 2006,  as  described
above,  the  Company's  net  income  decreased  by $6,276  from a net  income of
$127,654  in the year ended 2005 to net income of $121,378 in the same period of
2006.

Backlog

       Backlog  consists of all amounts  contracted  to be paid by customers but
not yet  recognized  as net revenues by the Company.  At November 30, 2006,  the
Company had a backlog of approximately  $2,900,000  compared to $2,400,000 total
backlog one year earlier.  Substantial  fluctuations  in backlog are  considered
normal due to the size and volume of AGV system contracts.

                                       7


<PAGE>




                      MANAGEMENT'S DISCUSSION AND ANALYSIS

===============================================================================

Fiscal Year Ended  November 30, 2005 Compared To Fiscal Year Ended  November 30,
2004

     Net  revenues  increased by  $1,796,692  or 27.1% from  $6,634,964  for the
fiscal  year ended  November  30, 2004 to  $8,431,656  for the fiscal year ended
November 30, 2005.  The increase is  primarily  due to the  Company's  increased
parts sales and project AGV system product sales. The Company's  revenues during
2005 were primarily derived from the printing,  food and beverage and automotive
industries.

     Cost of goods sold increased from $4,399,168 to $6,231,231,  or 41.7%,  due
primarily to increased  revenues and higher cost of engineering,  AGVs and third
party  equipment in the current year compared to the prior year. As a percentage
of net revenues,  cost of goods sold increased from 66.3% to 73.9% primarily due
to lower margins on  engineering  and equipment  revenues  compared to the prior
year. Gross profit decreased by $35,371, or 1.6%, from $2,235,796 to $2,200,425.

    Selling expenses decreased from $664,313 to $546,821 or 17.7%, primarily due
to decreased  personnel  expense in the current year compared to the prior year.
As a percentage of net revenues,  selling expenses  decreased from 10.0% to 6.5%
primarily  due to the  combination  of  increased  revenues  and lower  expenses
compared to the prior year.  General and  administrative  expenses  increased by
$19,929 or 1.7% from  $1,186,729 to $1,206,658  compared to the prior year.  The
Company  continued  to  invest  in the  development  of new AGV  and  automation
solutions  to  expand  its  product  line  in the  current  year.  Research  and
development expenses decreased from $299,178 to $281,369 in the current year.

     Primarily as a result of the  foregoing,  the  Company's  operating  income
increased by $80,000 from an operating  income of $85,577 to an operating income
of $165,577 for the current year.

    Net interest expense increased from $24,370 to $37,923, an increase of 55.6%
due to higher banking and borrowing costs compared to the prior year relating to
increased borrowing needs due to expansion.

      The  Company  did not  recognize  any tax expense in 2005 and 2004 for its
earnings as the Company  had net  operating  loss  carryforwards.  Deferred  tax
assets  have  not  been   recognized   since   utilization   of  operating  loss
carryforwards in the future is not assured.

     Primarily  due to an overall  decrease in expenses  in 2005,  as  described
above,  the  Company's  net income  increased  by  $66,447  from a net income of
$61,207 in the year ended 2004 to net income of  $127,654  in the same period of
2005.

                                        8
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

===============================================================================

Liquidity and Capital Resources

The Company  experiences  needs for external sources of financing to support its
working capital,  capital  expenditures and acquisition  requirements  when such
requirements exceed its cash generated from operations in any particular period.
The amount and timing of external financing  requirements  depend  significantly
upon the nature,  size,  number and timing of projects and  contractual  billing
arrangements  with  customers  relating to project  milestones.  The Company has
relied upon bank financing under a revolving working capital facility, long-term
debt, capital leases and proceeds of its public and private offerings to satisfy
its external financing needs.

During the period ended November 30, 2006 net cash used in operating  activities
was $30,230.  The Company's accounts receivable and inventory balances decreased
as receivables  from previous  quarters were collected.  These funds, as well as
additional  funds  from the line of  credit,  were used to pay  amounts  owed to
vendors.

The Company renewed its bank line of credit (as further described in Note 4) and
the bank  increased  availability  on the line to $750,000  in March  2006.  The
credit line is  evidenced  by a demand note which is  reviewed  annually  unless
called prior to the anniversary date.

The Company  believes that its working  capital of $926,011 at November 30, 2006
is adequate for its current operations.

     The  Company  will,  from  time  to  time,  reexamine  the  possibility  or
feasibility  of going  private to reduce its operating  expenses.  The Company's
current  expenses  relating to being  publicly held are  approximately  $250,000
annually  and  are  presently   expected  to  increase   significantly  if  full
implementation  of the  Sarbanes-Oxley  section 404 becomes  effective for small
public  companies.  Such expenses are  significant  in relation to the Company's
revenues.



                                        9
<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS

===============================================================================

Critical Accounting Policies:

Use of Estimates in Preparation of Condensed Financial Statements:

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the financial  statements  and the reported  amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.

Revenue recognition:

The  Company  recognizes  revenue  from the sale of  distribution  products  and
engineering services as shipments are made and/or services rendered.

The Company recognizes  revenues under AGV system contracts on the percentage of
completion method, measured by the percentage of each component cost incurred to
date to  estimated  total  component  contract  costs for each  component in the
contract.   Component  costs  include  material,  direct  labor,   subcontracts,
engineering,  overhead, and miscellaneous costs. Provisions for estimated losses
are made in the period in which they first become determinable.

"Costs and estimated  earnings in excess of billings on  uncompleted  contracts"
represent revenue recognized in excess of amounts billed. "Billings in excess of
costs and estimated  earnings on uncompleted  contracts"  represent  billings in
excess of revenues recognized.

Due to the  average  length of typical  AGV system  projects,  the large  dollar
amount of each  project,  and  inherent  difficulties  in  estimating  the total
component  costs,  the use of  different  estimates  and  assumptions  may  have
provided materially different results.

Stock options:

Statement  123(R),  Share Based  Payment,  (Statement 123 (R)) requires that the
compensation cost relating to share-based payment  transactions be recognized in
financial  statements.  The cost is  measured  based  on the  fair  value of the
instruments  issued.  Statement  123(R)  covers  a  wide  range  of  share-based
compensation  arrangements  including  share  options,  restricted  share plans,
performance-based  awards, share appreciation rights and employee share purchase
plans.  The  Company  adopted  Statement  123(R)  on  March 1,  2006,  requiring
compensation  cost to be recognized as expense for outstanding  unvested awards,
based on the  grant-date  fair value of those awards.  The adoption of Statement
123(R) did not have a material  impact on its financial  position as all options
granted  as of the  beginning  of the year  ended  November  30,  2006 are fully
vested.  The Company's future  compensation  arrangements,  at this time, do not
include the use of share-based payments.

For the year ending  November  30,  2005,  grants to  employees  under the stock
option plans were  accounted  for  following  the  recognition  and  measurement
provisions  of  APB  Opinion  No.  25  and  related  interpretations.   No  such
compensation cost was recognized during the year ended November 30, 2005.

The impact on reported net income and earnings per share of using the fair value
method of accounting for  stock-based  compensation  was not significant for the
period ending November 30, 2005.

At November 30, 2006 and November 30, 2005, options were outstanding to purchase
a total of 211,500  shares of Common  Stock of the  Company at  weighted-average
exercise  prices of varying  amounts.  All  outstanding  options were vested and
exercisable at November 30, 2006 and 2005.




                                       10


<PAGE>



             Report of Independent Registered Public Accounting Firm

To the Board of Directors
Transbotics Corporation

We have audited the  accompanying  balance sheets of Transbotics  Corporation (a
Delaware  corporation)  as of  November  30,  2006  and  2005,  and the  related
statements of income,  stockholders'  equity,  and cash flows for three years in
the  period  ended  November  30,  2006.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted  our audit 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.  The Company is not  required to
have,  nor were we  engaged to perform  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of Transbotics  Corporation as of
November 30, 2006 and 2005, and the results of its operations and its cash flows
for each of the three years in the period ended  November 30, 2006 in conformity
with accounting principles generally accepted in the United States of America.

As  discussed  in Note 1 of the  financial  statements,  the Company has adopted
Financial Accounting Standards Board Statement No. 123(R), Share-Based Payments,
in 2006.


Charlotte, North Carolina
February 16, 2007

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                 BALANCE SHEETS
================================================================================================================
                                                                                      November 30,
                                                                                 2006              2005
----------------------------------------------------------------------------------------------------------------
      ASSETS

CURRENT ASSETS
<S>                                                                              <C>               <C>
     Cash                                                                        $   282,118       $   177,026
     Accounts receivable, net (Notes 2, 4, 5 and 9)                                1,096,421         1,946,326
     Inventories                                                                     436,857           482,772
     Costs and estimated earnings in excess of
            billings on uncompleted contracts (Note 3)                               572,091           223,442
     Prepaid expenses and other assets                                                42,996            22,940
----------------------------------------------------------------------------------------------------------------
              Total current assets                                               $ 2,430,483       $ 2,852,506
----------------------------------------------------------------------------------------------------------------

NONCURRENT DEPOSITS                                                              $    31,854       $    31,854
----------------------------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT (Note 4)
      Furniture, fixtures, and office equipment                                  $   285,130       $   254,001
      Machinery and equipment                                                        101,047            90,031
----------------------------------------------------------------------------------------------------------------
                                                                                 $   386,177       $   344,032
       Less accumulated depreciation                                                 257,523           210,463

----------------------------------------------------------------------------------------------------------------
                                                                                 $   128,654       $   133,569

----------------------------------------------------------------------------------------------------------------
                                                                                 $ 2,590,991       $ 3,017,929
================================================================================================================

See Notes to Financial Statements
</TABLE>


                                       12

<PAGE>
<TABLE>
<CAPTION>


                                 BALANCE SHEETS

=================================================================================================================
                                                                                      November 30,
                                                                                  2006              2005
-----------------------------------------------------------------------------------------------------------------
      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                              <C>              <C>
     Note payable, bank (Note 4)                                                  $   600,000      $   395,000
     Current maturities long-term debt (Notes 4, 9 and 11)                              2,556            2,249
     Accounts payable                                                                 649,601        1,029,870
     Accrued expenses and customer deposits                                            70,503          237,162
     Billings in excess of costs and estimated
              earnings on uncompleted contracts (Note 3)                              181,812          404,376
----------------------------------------------------------------------------------------------------------------
              Total current liabilities                                           $ 1,504,472      $ 2,068,657
----------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT (Notes 4, 9 and 11)                                                $   306,799      $   309,355
----------------------------------------------------------------------------------------------------------------

COMMITMENTS  (Note 10)

STOCKHOLDERS' EQUITY  (Notes 11 and 12)
       Preferred stock, par value $.01 per share
             authorized 1,000,000 shares; no shares issued                        $         -      $         -

       Common stock, par value $.01 per share;
                11,000,000 shares authorized at 2006 and 2005;
                4,854,951 shares and 4,827,451 shares were issued
                and outstanding at 2006 and 2005, respectively                         48,549           48,274
       Additional paid-in capital                                                   4,590,111        4,571,961
       Accumulated deficit                                                         (3,858,940)      (3,980,318)
----------------------------------------------------------------------------------------------------------------
                                                                                  $   779,720      $   639,917
----------------------------------------------------------------------------------------------------------------
                                                                                  $ 2,590,991      $ 3,017,929
================================================================================================================
</TABLE>

                                       13

<PAGE>

<TABLE>
<CAPTION>
                              STATEMENTS OF INCOME

======================================================================================================================

                                                                               Years ended November 30,
                                                                       2006              2005              2004
----------------------------------------------------------------------------------------------------------------------

<S>                                                                    <C>               <C>              <C>
Net revenues (Notes 5 and 9)                                           $ 8,468,892       $ 8,431,656      $ 6,634,964
Cost of goods sold (Note 9)                                              5,926,691         6,231,231        4,399,168
----------------------------------------------------------------------------------------------------------------------
    Gross profit                                                       $ 2,542,201       $ 2,200,425      $ 2,235,796
----------------------------------------------------------------------------------------------------------------------

Operating expenses:
      Selling                                                            $ 622,797         $ 546,821        $ 664,313
      General and administrative (Notes 9, 10 and 12)                    1,432,268         1,206,658        1,186,729
      Research and development                                             312,172           281,369          299,177
----------------------------------------------------------------------------------------------------------------------
                                                                       $ 2,367,237       $ 2,034,848      $ 2,150,219
----------------------------------------------------------------------------------------------------------------------
            Operating income                                           $   174,964       $   165,577      $    85,577
----------------------------------------------------------------------------------------------------------------------

Interest expense (Note 9):                                             $   (53,586)      $   (37,923)     $   (24,370)
----------------------------------------------------------------------------------------------------------------------

Income before income taxes                                             $   121,378       $   127,654      $    61,207

Federal and state income taxes  (Note 6)                                         -                 -                -
----------------------------------------------------------------------------------------------------------------------
           Net income                                                  $   121,378       $   127,654      $    61,207
======================================================================================================================
Basic earnings per share (Note 7)                                            $ .03             $ .03            $ .01
======================================================================================================================
Diluted earnings per share ( Note 7)                                         $ .03             $ .03            $ .01
======================================================================================================================
Weighted average common shares outstanding (basic)                       4,844,026         4,826,654        4,806,807
======================================================================================================================
Weighted average common shares outstanding (diluted)                     4,946,606         4,942,247        4,877,195
======================================================================================================================
Dividends per common share                                                     $ -               $ -              $ -
======================================================================================================================

See Notes to Financial Statements

</TABLE>



                                       14


<PAGE>
<TABLE>
<CAPTION>
                       STATEMENTS OF STOCKHOLDERS' EQUITY

=========================================================================================================================


                                                                        Years Ended November 30,
-------------------------------------------------------------------------------------------------------------------------
                                                     2006                    2005                     2004
                                                    Amount      Shares      Amount      Shares       Amount      Shares
-------------------------------------------------------------------------------------------------------------------------
Common Stock:
<S>                                               <C>           <C>          <C>         <C>       <C>          <C>
        Balance, beginning                        $    48,274   4,827,451   $    48,244  4,824,451 $    47,864  4,786,451
        Stock options exercised                             -           -            30      3,000         380     38,000
        Issuance of common stock for
          services (Note 11 )                             275      27,500           -          -             -          -
-------------------------------------------------------------------------------------------------------------------------
        Balance, ending                              $ 48,549   4,854,951   $    48,274  4,827,451 $    48,244  4,824,451
=========================================================================================================================

Additional Paid-in Capital:
       Balance, beginning                         $ 4,571,961               $ 4,571,406            $ 4,545,973
        Stock options exercised                             -                       555                  7,030
        Stock option compensation (Note 12)                 -                       -                   18,403
        Issuance of common stock
          for services (Note 11)                       18,150                       -                       -
-------------------------------------------------------------------------------------------------------------------------
       Balance, ending                            $ 4,590,111               $ 4,571,961            $ 4,571,406
=========================================================================================================================

Accumulated Deficit:
       Beginning deficit                          $(3,980,318)              $(4,107,972)           $(4,169,179)
       Net income                                     121,378                   127,654                 61,207
-------------------------------------------------------------------------------------------------------------------------
       Ending deficit                             $(3,858,940)              $(3,980,318)           $(4,107,972)
=========================================================================================================================


-------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity  at November 30              $   779,720   4,854,951   $   639,917  4,827,451 $   511,678  4,824,451
=========================================================================================================================

See Notes to Financial Statements

</TABLE>

                                       15

<PAGE>
<TABLE>
<CAPTION>

                            STATEMENTS OF CASH FLOWS

==========================================================================================================================
                                                                                      Years ended November 30,
                                                                                2006            2005            2004
--------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                              <C>             <C>             <C>
         Net income                                                              $ 121,378       $ 127,654       $ 61,207
         Adjustments to reconcile net income to net
             cash used in operating activities:
            Depreciation                                                            70,333          63,819         55,359
            (Decrease) increase in provision for doubtful accounts                  (7,880)         11,000        (15,000)
            Loss on sale of property and equipment                                   2,011           1,132              -
            Loss on foreign currency exchange rate                                  17,630           2,451         16,106
            Stock  option noncash compensation                                           -               -         18,403
            Issuance of Common Stock for services                                   18,425               -              -
        Change in assets and liabilities:
            Decrease (increase)  in accounts receivable                            857,785        (456,690)      (801,982)
            Decrease (increase) in inventories                                      45,915         (70,047)      (111,687)
            (Increase) decrease in costs and estimated earnings in
                excess of billings on uncompleted contracts                       (348,649)        387,020       (597,546)
            (Increase) decrease in prepaid expenses
                and other assets                                                   (20,056)         19,460        (25,515)
            (Decrease ) increase in accounts payable
                and accrued expenses                                              (564,558)        (66,086)       868,468
            (Decrease) increase in billings in excess of costs and
               estimated earnings on uncompleted contracts                        (222,564)       (259,757)       145,353
--------------------------------------------------------------------------------------------------------------------------
            NET CASH USED IN
                OPERATING ACTIVITIES                                             $ (30,230)     $ (240,044)    $ (386,834)
--------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
        Purchase of  equipment                                                   $ (67,429)      $ (63,817)     $ (78,801)
--------------------------------------------------------------------------------------------------------------------------
            NET CASH USED IN
                 INVESTING ACTIVITIES                                            $ (67,429)      $ (63,817)     $ (78,801)
--------------------------------------------------------------------------------------------------------------------------

See Notes to Financial Statements
</TABLE>


                                       16


<PAGE>
<TABLE>
<CAPTION>
                            STATEMENTS OF CASH FLOWS

======================================================================================================================

                                                                                  Years ended November 30,
                                                                             2006            2005           2004
----------------------------------------------------------------------------------------------------------------------

CASH FLOW FROM FINANCING ACTIVITIES
<S>                                                                           <C>            <C>            <C>
        Borrowings on revolving credit agreement, net of repayments           $ 205,000      $ 245,000      $ 150,000
        Net proceeds from exercise of stock options                                   -            585          7,410
        Principal payments on long-term borrowings,
           including capital lease obligations                                   (2,249)        (1,666)             -
----------------------------------------------------------------------------------------------------------------------

              NET CASH PROVIDED BY
                   FINANCING ACTIVITIES                                       $ 202,751      $ 243,919      $ 157,410
----------------------------------------------------------------------------------------------------------------------
       Increase (decrease) in cash                                            $ 105,092      $ (59,942)     $(308,225)

      Cash:

           Beginning                                                            177,026        236,968        545,193
----------------------------------------------------------------------------------------------------------------------
           Ending                                                             $ 282,118      $ 177,026      $ 236,968
======================================================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
       Cash payments for :
           Interest                                                           $ 53,867       $ 37,320       $  24,370

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
      Capital lease obligations incurred for use of equipment                 $      -       $ 13,270       $      -
      Issuance of Common Stock for services                                   $ 18,425       $      -       $      -

</TABLE>
                                       17

<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 1.  Nature of Business and Significant Accounting Policies

Nature of business:

    The Company  was formed to  acquire,  develop,  market,  and sell  hardware,
software and engineering services that are incorporated into and used to control
automatic guided vehicle systems ("AGVs") and other related automation products.
The  Company  markets  its  products  and  services  to end users of  automation
systems,  designers of integrated  automation  systems,  and original  equipment
manufacturers primarily within the North American continent.

    A summary of the Company's significant accounting policies follows:


Revenue recognition:

    The Company recognizes  revenue from the sales of distribution  products and
engineering services as shipments are made and/or services rendered.

    The Company recognizes  revenues under long-term contracts on the percentage
of completion method, measured by the percentage of each component cost incurred
to date to estimated  total  component  contract costs for each component in the
contract.   Component  costs  include  material,  direct  labor,   subcontracts,
engineering,  overhead, and miscellaneous costs. Provisions for estimated losses
are made in the period in which they first become determinable.

    "Costs  and  estimated   earnings  in  excess  of  billings  on  uncompleted
contracts"  represent revenue recognized in excess of amounts billed.  "Billings
in excess of costs and estimated  earnings on uncompleted  contracts"  represent
billings in excess of revenues recognized.

Estimates:

    The  preparation  of financial  statements  in  conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and the disclosure of contingent  assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from these
estimates.

Inventories:

    Inventories  are  priced at the  lower of cost or  market,  with cost  being
determined by the  weighted-average  method.  Inventories  consist  primarily of
parts to manufacture  Automatic Guided Vehicles which include control components
from Danaher and motors from Sauer Danfoss.


Property and equipment:

    Property and equipment is stated at cost. Depreciation is primarily computed
using the straight-line method over the following useful lives:
                                                             Years

          Furniture, fixtures and office equipment             4-10
          Machinery and equipment                               3-5


Foreign currency transactions:

    Payables to foreign companies that are denominated in foreign currencies are
adjusted to  year-end  foreign  exchange  rates.  Resultant  gains or losses are
reflected in cost of goods sold.  The costs of items of foreign origin which are
included in inventory have been recorded at historical exchange rates prevailing
at the date of acquisition.


                                       18

<PAGE>




                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 1.  Nature of Business and Significant Accounting Policies (Continued)

Income taxes:

    Provisions  for income taxes are provided on an asset and  liability  method
whereby deferred tax assets are recognized for deductible temporary differences,
operating losses, and tax credit carryforwards, and deferred tax liabilities are
recognized for taxable  temporary  differences.  Temporary  differences  are the
differences between the reported amounts of assets and liabilities and their tax
bases.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of  management,  it is more likely than not that some  portion or all of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.

Earnings per common share:

      Basic per share  amounts  are  computed,  by  dividing  net  income by the
weighted-average number of common shares outstanding.  Diluted per share amounts
assume the  conversion,  exercise,  or issuance of all  potential  Common  Stock
instruments  unless  the effect is  antidilutive.  As  described  in Note 12, at
November 30, 2006 and 2005,  the Company had options  outstanding  to purchase a
total of 211,500 shares of Common Stock at  weighted-average  exercise prices of
varying amounts.

Advertising:

    The  Company  follows  the  policy of  charging  advertising  to  expense as
incurred.  Advertising expenses for the years ending November 30, 2006, 2005 and
2004 were $21,400, $25,434, and $24,093, respectively.

Stock options:

      Statement 123(R),  Share Based Payment,  (Statement 123 (R)) requires that
the compensation cost relating to share-based payment transactions be recognized
in  financial  statements.  The cost is measured  based on the fair value of the
instruments  issued.  Statement  123(R)  covers  a  wide  range  of  share-based
compensation  arrangements  including  share  options,  restricted  share plans,
performance-based  awards, share appreciation rights and employee share purchase
plans.  The  Company  adopted  Statement  123(R)  on  March 1,  2006,  requiring
compensation  cost to be recognized as expense for outstanding  unvested awards,
based on the  grant-date  fair value of those awards.  The adoption of Statement
123(R) did not have a material  impact on its financial  position as all options
granted  as of the  beginning  of the year  ended  November  30,  2006 are fully
vested.  The Company's future  compensation  arrangements,  at this time, do not
include the use of share-based payments.
 For the year ending  November  30, 2005,  grants to  employees  under the stock
option plans were  accounted  for  following  the  recognition  and  measurement
provisions  of  APB  Opinion  No.  25  and  related  interpretations.   No  such
compensation cost was recognized during the year ended November 30, 2005.

The impact on reported net income and earnings per share of using the fair value
method of accounting for  stock-based  compensation  was not significant for the
period ending November 30, 2005.

At November 30, 2006 and November 30, 2005, options were outstanding to purchase
a total of 211,500  shares of Common  Stock of the  Company at  weighted-average
exercise  prices of varying  amounts.  All  outstanding  options were vested and
exercisable at November 30, 2006 and 2005.

Recent Accounting Developments:

As of November 30, 2006, the Company adopted SEC Staff  Accounting  Bulletin No.
108 (SAB  108),  Considering  the  Effects  of  Prior  Year  Misstatements  When
Quantifying Misstatements in Current Year Financial Statements. SAB 108 requires
the  quantification  of misstatements  based on their impact to both the balance
sheet and the income statement to determine  materiality.  The guidance provides
for a one-time  cumulative  effect  adjustment to correct for  misstatements for
errors that were not deemed  material  under a prior  approach  but are material
under the SAB 108  approach.  The  adoption of SAB 108 did not have an effect on
the Company's results of operations or financial position.

                                       19

<PAGE>




                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 1.  Nature of Business and Significant Accounting Policies (Continued)


In July 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued FASB
Interpretation  No.  48,  "Accounting  for  Uncertainty  in  Income  Taxes -- an
interpretation  of FASB  Statement  No.  109"  (FIN  48),  which  clarifies  the
accounting and disclosure for uncertainty in tax positions,  as defined.  FIN 48
seeks to reduce the diversity in practice associated with certain aspects of the
recognition  and  measurement  related  to  accounting  for income  taxes.  This
interpretation  is effective for fiscal years beginning after December 15, 2006.
The Company does not expect the  interpretation  will have a material  impact on
its results of operations or financial position.

In September 2006, the FASB issued statement No. 157, "Fair Value Measurements",
(SFAS 157).  SFAS 157 defines fair value,  establishes a framework for measuring
fair value in accordance with accounting  principles  generally  accepted in the
United States, and expands disclosures about fair value  measurements.  SFAS 157
is effective for fiscal years  beginning  after November 15, 2007,  with earlier
application  encouraged.  Any amounts  recognized  upon adoption as a cumulative
effect  adjustment will be recorded to the opening balance of retained  earnings
in the year of adoption.  The Company has not yet  determined the impact of this
Statement on its financial condition and results of operations.

Note 2. Accounts Receivable

    Accounts  receivable consist of the following at November 30, 2006 and 2005,
respectively:


<TABLE>
<CAPTION>
                                                                             2006               2005
----------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                  <C>
Trade and contract                                                        $ 1,097,380          $ 1,952,897

Less: Allowance for doubtful accounts                                          (3,120)             (11,000)
----------------------------------------------------------------------------------------------------------
                                                                          $ 1,094,260          $ 1,941,897
Employees
                                                                                2,161                4,429
----------------------------------------------------------------------------------------------------------
                                                                          $ 1,096,421          $ 1,946,326
==========================================================================================================
</TABLE>

      Accounts  receivable  are  recognized  when bills are  rendered.  Accounts
receivable  are considered  past due or delinquent  when payment is not received
within the credit  terms  extended to the  customer.  An  allowance  for loss on
accounts  receivable is provided based on a review of the accounts along with an
analysis of historical  losses and recoveries.  Receivables are written off when
deemed to be uncollectible.

Note 3.  Costs and Estimated Earnings on Uncompleted Contracts

       Costs and  estimated  earnings on  uncompleted  contracts  consist of the
following at November 30, 2006 and 2005, respectively:

<TABLE>
<CAPTION>
                                                                      2006                 2005
----------------------------------------------------------------------------------------------------
<S>                                                            <C>                 <C>
Total contracts in process                                     $       6,708,046   $     3,918,113
====================================================================================================
Costs incurred on uncompleted contracts                        $       3,064,272   $     1,556,568
Estimated earnings                                                     1,632,703           715,888
----------------------------------------------------------------------------------------------------
                                                               $       4,696,975   $     2,272,456
Less billings to date                                                 (4,306,696)       (2,453,390)
----------------------------------------------------------------------------------------------------
                                                               $         390,279   $      (180,934)
====================================================================================================

</TABLE>

                                       20
<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================
 Included in the accompanying balance sheets under the following captions:

<TABLE>
<CAPTION>
                                                                                            2006               2005
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                <C>
Costs and estimated earnings in excess of billings
     on uncompleted contracts                                                            $ 572,091          $ 223,442
Billings in excess of costs and estimated earnings
     on uncompleted contracts                                                             (181,812)          (404,376)
---------------------------------------------------------------------------------------------------------------------

                                                                                         $ 390,279          $(180,934)
=====================================================================================================================
</TABLE>


Note 4.  Pledged Assets, Note Payable, Bank and Long-Term Debt
<TABLE>
<CAPTION>

Current debt consists of the following:                                            2006         2005

---------------------------------------------------------------------------------------------------------
<S>                                                                               <C>           <C>
Line of Credit with a financial institution that allows the Company to borrow up
to $750,000 and bears interest at the lender's prime rate. The line of credit is
secured by the Company's  assets and expires March 23, 2007.  Under the terms of
the agreement,  the obligation includes a "payable on demand" feature.  The loan
agreement obligation is evidenced by a demand note. (1)(2)
                                                                                  $ 600,000    $ 395,000
---------------------------------------------------------------------------------------------------------

Long-term debt consists of the following :
---------------------------------------------------------------------------------------------------------

In  September  2003,  the  Company  issued  $300,000   principal  amount  of  6%
convertible   subordinated  notes  due  September  2013.   Interest  on  the  6%
convertible  notes is payable  quarterly on each  February 28, May 31, August 31
and  November  30 during the term of the notes.  The 6%  convertible  notes were
issued at 100% principal value, and are convertible,  in aggregate, into 750,000
shares of common  stock at the option of the  holders at any time while the note
is  outstanding at a price of $0.40 per share.  The 6% convertible  notes may be
redeemed,  in whole or in part, at the Company's option after September 30, 2006
at 100% of the principal  amount.  To date,  no redemption  has been made by the
Company.

                                                                                  $ 300,000    $ 300,000

Obligations under capital leases                                                      9,355        11,604
---------------------------------------------------------------------------------------------------------
                                                                                    309,355       311,604
Less current maturities:
---------------------------------------------------------------------------------------------------------
         Notes                                                                            -            -
---------------------------------------------------------------------------------------------------------
         Obligations under capital leases                                             2,556         2,249
---------------------------------------------------------------------------------------------------------
                                                                                  $ 306,799    $  309,355
=========================================================================================================
(1)   The prime rate at November 30, 2006 was 8.25%.
(2)   The line of credit is secured by a first priority security interest in the
      Company's accounts receivable, inventory, software and intangibles.

</TABLE>
                                       21
<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 5.  Major Customers

       Net  revenues  and  accounts  receivable  as of and for the  years  ended
November 30, 2006, 2005, and 2004, respectively,  include sales to the following
major  customers  (each  of which  accounted  for 10% or more of the  total  net
revenues of the Company for the years indicated):

<TABLE>
<CAPTION>

                                                      Amount of Net Revenues
                                                      Year Ended November 30,

Customer     2006                        %                2005                     %          2004                 %
---------------------------------------------------------------------------------------------------------------------------
<S>             <C>                         <C>                  <C>                  <C>               <C>
A               $      2,632,904            31.1                 $ 899,438            10.7              $     *          *
B                      1,179,108            13.9                         *               *                    *          *
C                              *               *                 1,356,653            16.1                    *          *
D                              *               *                         *               *            1,517,596       22.9
E                              *               *                 1,034,957            12.3            1,137,955       17.1
F                              *               *                 1,129,736            13.4                    *          *


                                                   Amount of Accounts Receivable
                                                           November 30,

             2006                        %                2005                     %          2004                 %
---------------------------------------------------------------------------------------------------------------------------
A                     $  415,146            37.8                  $ 346,971           17.8              $     *          *
B                         85,551             7.8                         *               *                    *          *
C                              *               *                   300,944            15.4                    *          *
D                              *               *                         *               *              456,688       30.4
E                              *               *                   403,138            20.7                    *          *
F                              *               *                   258,442            13.3               70,800        4.7
</TABLE>

*Not a major customer.

 Note 6.   Income Taxes

     Income  taxes  consist  of the  following  components  for the years  ended
November 30, 2006, 2005, and 2004, respectively:

<TABLE>
<CAPTION>
                                                   2006           2005           2004
----------------------------------------------------------------------------------------
<S>                                             <C>           <C>             <C>
Current                                         $     -       $      -        $     -
Deferred                                              -              -              -
----------------------------------------------------------------------------------------
                                                $     -       $      -        $     -
========================================================================================
</TABLE>

     Net deferred tax assets consist of the following  components as of November
30, 2006 and 2005, respectively:

<TABLE>
<CAPTION>


                                                        2006            2005                   2004
                                          ---------------------------------------------------------------
Deferred tax assets:
<S>                                              <C>                  <C>                  <C>
   Allowance for doubtful accounts               $     1,203          $     4,241          $      --
   Inventory valuation reserves                        3,084                6,169               11,566
   Net operating loss carryforward                 1,493,597            1,540,886            1,573,830
   General business credit carryforwards              45,367               45,367               45,367
   Other                                               8,594                3,113                2,038
Deferred tax liabilities:
   Depreciation                                       (4,286)              (3,333)                (150)
   Other                                                --                   --                  6,210
                                                 -----------          -----------          -----------
                                                 $ 1,547,559          $ 1,596,443          $ 1,596,443

   Less valuation allowance                        1,547,559            1,596,443            1,596,443
                                                 -----------          -----------          -----------

   Net deferred taxes                            $      --            $      --            $      --
=========================================================================================================
</TABLE>



                                       22


<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 6.   Income Taxes (continued)

The changes in the valuation  allowance  for the years ended  November 30, 2006,
2005 and  2004  were  $(48,884),  $(42,418)  and  $(31,003),  respectively.  The
deferred  tax  asset  has  been  offset  by a  valuation  allowance  due  to the
uncertainty of realization. The Company's net operating loss begins to expire as
follows:

<TABLE>
<CAPTION>
                                      Federal NOL      North Carolina NEL
        Year ending November 30       carryforward        carryforward
----------------------------------------------------------------------------
<S>                                  <C>                  <C>
                 2009                     $          -         $    978,424
                 2010                        1,313,927            1,891,517
                 2011                           39,630               39,630
                 2012                          984,312              984,312
                 2013                                -              334,184
                 2015                                -              760,907
                 2017                                -              374,283
                 2018                          334,184                    -
                 2020                          760,907                    -
                 2022                          374,283                    -
----------------------------------------------------------------------------
                 Total                    $  3,807,243        $   5,363,257
============================================================================
</TABLE>

    A  reconciliation  of the  statutory  income tax to the  income tax  expense
included in the statements of operations is as follows:

<TABLE>
<CAPTION>
                                            2006                          2005                         2004
-------------------------------------------------------------------------------------------------------------------
                                                  % of                             % of                     % of
                                 Dollar           Pre-tax        Dollar            Pre-tax       Dollar     Pre-tax
                                 Amount           Income         Amount            Income        Amount     Income
-------------------------------------------------------------------------------------------------------------------
<S>                              <C>                   <C>       <C>                   <C>       <C>           <C>
Statutory federal income
  tax (benefit)                  $ 41,269              34.0      $ 43,402              34.0      $ 20,814      34.0
Increase (decrease) in
taxes resulting from:
State income taxes                  4,391               3.6         3,056               2.4         7,481      12.2
Changes in valuation allowance    (48,884)            (40.3)      (42,418)            (33.2)      (31,003)    (50.6)
Other                               3,224               2.7        (4,040)             (3.2)        2,708       4.4
                                 ----------------------------------------------------------------------------------
                                 $     --                --      $     --                --      $     --        --
                                 ==================================================================================
</TABLE>

                                       23


<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================
Note 7. Earnings per common share

The following table sets forth the comparison of basic and diluted  earnings per
share:

The following table sets forth the comparison of basic and diluted  earnings per
share:


<TABLE>
<CAPTION>

                                        2006                2005                2004
                                      ----------------------------------------------------
BASIC INCOME  PER SHARE:
<S>                                   <C>                <C>                <C>
  Net income                          $  121,378         $  127,654         $   61,207
  Weighted -average shares             4,844,026          4,826,654          4,806,807
                                      ----------------------------------------------------
  Basic earnings per share            $     0.03         $     0.03         $     0.01
                                      ====================================================
DILUTED INCOME PER SHARE:
  Net income                          $  121,378         $  127,654         $   61,207
                                      ----------------------------------------------------
  Weighted -average shares             4,844,026          4,826,654          4,806,807
  Plus effect of dilutive
      potential shares:
     Stock options                       102,580            115,593             70,388
                                      ----------------------------------------------------
                                       4,946,606          4,942,247          4,877,195
                                      ----------------------------------------------------
Diluted earnings per share            $     0.03         $     0.03         $     0.01
                                      ====================================================
</TABLE>



Common  stock  options  outstanding  excluded  from the  computation  of diluted
earnings per share because the effect would have been antidilutive were 0, 0 and
78,500 for the years ended November 30, 2006, 2005 and 2004, respectively.

Convertible  notes  outstanding  are excluded  from the  computation  of diluted
earnings per share because the effect would have been antidilutive for the years
ended November 30, 2006, 2005 and 2004, respectively.


                                       24
<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 8.   401(k) Profit Sharing Plan

    The Company has a profit  sharing plan through an unrelated  human  resource
firm which administers the Company's employee benefits. Company contributions to
this plan are discretionary.

    The  401(k)  profit  sharing  plan  allows  both the  Company  and  eligible
employees to contribute.  The Company may, at its  discretion,  match 50% of the
participant's  contribution,  up to a maximum of 6% of the employee's  salary or
the maximum allowed by the IRS. The Company's  contribution  for the years ended
November  30,  2006,  2005 and 2004  amounted to $46,188,  $35,824,  and $20,908
respectively.

Note 9.   Related Party Transactions


     In 2003, Curt Kennington,,  the general partner of Kenninton Family Limited
LLC,  the  Company's  landlord,  became a related  party when he invested in the
Company by acquiring  shares and  convertible  debt (see note 11). The Company's
rent paid for the years  ended  November  30,  2006,  2005 and 2004  amounted to
$161,850, $158,491, and $153,785 respectively.  Mr. Kennington received interest
payments  from the  Company  of $4,500 on the  convertible  debt for each of the
years ended November 30, 2006, 2005 and 2004.

    In 2003,  Mr.  John  Robison  became a Director  and  related  party when he
invested in the Company by acquiring  shares and convertible debt (see note 11).
Mr.  Robison  received  interest  payments  from the  Company  of  $9,000 on the
convertible  debt for each of the years ended November 30, 2006,  2005 and 2004,
respectively.

    In 2003, Mr.  Anthony Packer became a shareholder  and related party when he
invested in the Company by acquiring  shares and convertible debt (see note 11).
Mr.  Packer  received  interest  payments  from the  Company  of  $4,500  on the
convertible debt for each of the years ended November 30, 2006, 2005 and 2004.

The  Company's  Executive  Vice  President,  Tommy  Hessler,  owns  50%  of  NDC
Technologies Australia PTY Ltd ("NDCTA") which is an AGV supplier for Australia.
Revenues  from sales to NDCTA were $0, $0 and $2,559 for years  ending  November
30, 2006, 2005 and 2004, respectively.


                                       25
<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 10.  Commitments

    At November 30, 2006 and 2005, the Company had outstanding  forward exchange
contracts to purchase EURO's and Swedish Krona totaling approximately  US$49,000
in 2006 and US$440,000 in 2005. The fair value of these contracts as of November
30, 2006 and 2005  totaled  approximately  $2,000 and  $(17,000),  respectively.
These  contracts  are  purchased  as needed  from time to time to hedge  various
foreign currency payable inventory purchase commitments.

    The Company leases property and equipment under long-term  operating  leases
expiring on various  dates  through  March 2006 and on a  month-to-month  basis.
Rental expense was $208,666, $189,553, and $185,861 for the years ended November
30, 2006, 2005, and 2004 respectively.

    Minimum rental commitments under long-term  operating leases at November 30,
2006 were as follows:

2007                  $         38,000
2008                            12,800
Thereafter                           -
                     -----------------
                      $         50,200
                     =================



    The Company has an employment contract with the President which provides for
a minimum  annual base salary of $140,000.  The base salary is subject to annual
reviews.  The contract  renews on March 1, 2007 for a one year extension  unless
terminated in advance.


Note 11.  Issuance of Common Stock and Convertible Debt

     On September  23, 2003,  in a private  placement  pursuant to  Regulation D
promulgated  by the  Securities  and  Exchange  Commission,  the Company 1) sold
1,200,000 shares of its common stock, par value $0.01 per share ("common stock")
at $0.25 a share, and 2) issued $300,000 of Convertible  Subordinated Notes. The
interest  rate on the Notes is 6% per annum and is payable  quarterly  beginning
November 30, 2003.  Principal and unpaid  interest shall be payable on September
30, 2013. For as long as these Notes are outstanding,  any of these Notes may be
converted in whole,  but not in part, at the option of the holder into shares of
common stock of the Company, at a conversion price of $0.40 per share. The Notes
are  subject to  redemption  in whole or in part at the option of the Company at
any time after September 30, 2006. The Company has agreed to register the shares
of common  stock and any new  shares  issued  upon  conversion  of the notes for
resale under the  Securities  Act of 1933,  as amended,  pursuant to an investor
rights agreement dated September 23, 2003. Under the agreement,  the Company has
filed a  registration  statement for these shares,  as well as 1,208,214  shares
held by two Company officers and/or affiliates of such officers.

        The net  proceeds to the Company from the sale of these shares and Notes
was approximately  $559,000 (deducting related offering  expenses).  The Company
applied  such  proceeds  to bring  payables  to  vendors  current  and apply the
remainder of such proceeds to working capital needs and other general  corporate
purposes.

     On April 24,  2006  during  the 2006  Annual  Meeting,  the Board  approved
issuing 7,500 IRS Section 144 stock shares to the independent  elected directors
who own less than 5% of the  Company's  stock.  These shares were granted  based
upon the  directors'  election to the Board.  A retiring  Board  member was also
granted  5,000  shares for his work over the years.  The total ISR  Section  144
shares  issued for 2006 were  27,500,  which were  expensed  in 2006 at $.67 per
share or $18,425. No shares were granted in 2005 or 2004.

                                       26

<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================

Note 12.  Stock Option Plans


    For the year ending  November 30, 2005,  Grants to employees under the stock
option plans were  accounted  for  following  the  recognition  and  measurement
provisions  of APB Opinion No. 25 and related  interpretations.  Due to the fact
the plans provided for performance  conditions in order for employees to be able
to  exercise  their  awards,  the stock  options are  accounted  for as variable
awards. In 2004, non-cash  compensation expense of $18,403 was recognized with a
corresponding  credit to  additional  paid-in  capital to record the  difference
between the market price of the stock when the options became  exercisable  less
the amounts the employees are required to pay to exercise the options.


1997 Stock Option Plan:

    On December 7, 1996 , the  Compensation  Committee of the Board of Directors
adopted The NDC  Automation,  Inc.  1997 Stock Option Plan ("the 97 Plan"),  the
adoption of which was ratified by the  shareholders  at the annual  meeting held
April 25,  1997.  The 97 Plan  authorized  225,000  options to all  officers and
employees in the form of incentive stock options,  of which 210,000 were granted
in January 1997 at an exercise price of $0.50 per share.  The shares vested upon
achievement by the Company of certain financial  performance  targets set by the
Board of Directors on an annual basis.

2001 Stock Option Plan:

    On May 10,  2001,  the  Compensation  Committee  of the  Board of  Directors
adopted The NDC  Automation,  Inc.  2001 Stock Option Plan ("the 01 Plan"),  the
adoption of which was ratified by the  shareholders  at the annual  meeting held
May 10,  2002.  The 01 Plan  authorized  225,000  options  to all  officers  and
employees in the form of incentive stock options,  of which 194,000 were granted
in May 2001 and June 2002 at an exercise price of $0.195 per share and the final
31,000 were granted in January 2004 at an exercise price of $0.43 per share. The
granted  shares  vest upon  achievement  by the  Company  of  certain  financial
performance  targets set by the Board of  Directors  on an annual  basis.  As of
February  19, 2004  performance  targets  were met and all  granted  shares were
vested.  Forfeited  options  for  terminated  employees  are  reissued  to other
employees  with  exercise  prices not less than fair market value at the date of
reissuance.

    Transactions  involving  these plans for the years ended  November 30, 2006,
2005 and 2004 respectively, are summarized as follows:

                                       27
<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================
Note 12.  Stock Option Plans (continued)

<TABLE>
<CAPTION>
<S>                                           <C>              <C>              <C>                   <C>


STOCK OPTIONS                                                             2006*
----------------------------------------------------------------------------------------------- ---------------------
                                                                                                 Weighted-average
                                                                                                  exercise price

                                                  97 Plan     01 Plan                Total
                                               ---------------------------------------------------------------------

Outstanding, December 1                                36,500           175,000          211,500              $0.29
Granted                                                     -                 -                -                  -
Expired                                                     -                 -                -                  -
Forfeited                                                   -                 -                -                  -
Reissued                                                                      -                -                  -
Exercised                                                   -                 -                -                  -
--------------------------------------------------------------------------------------------------------------------

Outstanding, November 30                               36,500           175,000          211,500              $0.29
====================================================================================================================

Exercisable, November 30                               36,500           175,000          211,500              $0.29
====================================================================================================================


STOCK OPTIONS                                                             2005*
----------------------------------------------------------------------------------------------- ---------------------
                                                                                                 Weighted-average
                                                                                                  exercise price

                                                  97 Plan     01 Plan                Total
                                               ---------------------------------------------------------------------

Outstanding, December 1                                36,500           184,000          220,500              $0.29
Granted                                                     -                 -                -                  -
Expired                                                     -                 -                -                  -
Forfeited                                                   -           (6,000)          (6,000)               0.31
Reissued                                                                      -                -                  -
Exercised                                                   -           (3,000)          (3,000)               0.20
--------------------------------------------------------------------------------------------------------------------

Outstanding, November 30                               36,500           175,000          211,500              $0.29
====================================================================================================================

Exercisable, November 30                               36,500           175,000          211,500              $0.29
====================================================================================================================

STOCK OPTIONS                                                             2004*
---------------------------------------------------------------------------------------------------------------------
                                                                                                 Weighted-average
                                                                                                  exercise price
                                                  97 Plan     01 Plan                Total
                                               ---------------------------------------------------------------------

Outstanding, December 1                                36,500           191,000          227,500              $0.24
Granted                                                     -            31,000           31,000               0.43
Expired                                                     -                 -                -                  -
Forfeited                                                   -          (11,000)         (11,000)               0.20
Reissued                                                                 11,000           11,000               0.43
Exercised                                                   -          (38,000)         (38,000)               0.20
--------------------------------------------------------------------------------------------------------------------

Outstanding, November 30                               36,500           184,000          220,500              $0.29
====================================================================================================================

Exercisable, November 30                               36,500           184,000          220,500              $0.29
====================================================================================================================

*    The  weighted-average  exercise  price  per share of  options  outstanding,
     granted,  canceled,  exercised, or exercisable for the 97 Plan is $0.50 and
     for the 01 Plan is $0.245.

</TABLE>
                                       28
<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

===============================================================================



Note 13.  Foreign Currency Contracts

    The Company  purchases  foreign  currency  exchange  contracts  to hedge and
settle its  international  commitments and debts.  The Company will purchase and
settle these  contracts on the same day or may hedge against future  liabilities
with forward contracts. Any gains and losses on the foreign-currency-denominated
debts or forward  contracts are recorded as  transaction  adjustments in current
earnings.  The  Company had a gain (loss) on foreign  currency  transactions  of
$(41,678),  $26,866, and $(54,662), for the three years ended November 30, 2006,
2005, and 2004, respectively.

Note 14.  Fair Value of Financial Instruments

     The carrying amounts of accounts receivable,  accounts payable and the line
of credit  approximate  fair values due to the  short-term  maturities  of these
instruments.  The  forward  exchange  contracts  are valued at fair  value.  The
carrying   amount  and  estimated  fair  value  of  the  Company's   convertible
subordinated notes at November 30, 2006 and 2005 are as follows:

                                         Carrying         Estimated
                                          Amount          Fair Value
------------------------------------- ---------------- -----------------
Convertible subordinated notes:
2006                                     $300,000          $236,796
2005                                     $300,000          $248,793



The  fair  value  of  the  convertible   subordinated  notes  was  estimated  by
discounting the future cash flows using rates believed to be currently available
for debt of similar terms and maturity.


                                       29
<PAGE>




                        (page intentionally left blank)

===============================================================================

                                       30

<PAGE>

<TABLE>
<CAPTION>

                             SHAREHOLDER INFORMATION

===========================================================================================================
<S>                                                             <C>
ANNUAL MEETING                                                  DIRECTORS
        The annual meeting will be held at 10:00 am, Friday,
        April 27, 2007, at Transbotics Corporate offices        D.Bruce Wise
        in Charlotte, North Carolina.                           Chairman of the Board of Directors

SHAREHOLDER RELATIONS                                           Claude Imbleau
        A copy of Transbotics Annual Report and form 10-KSB,    Director
        which is filed with the Securities and Exchange
        Commission, will be sent to any shareholder upon        John H. Robison
        written request to Manager-Investor Relations           Director
         Transbotics Corporation
        3400 Latrobe Drive                                      Charles  W. Robison
        Charlotte, North Carolina 28211                         Director

CORPORATE OFFICES                                               Tommy Hessler
        Transbotics Corporation                                 Director
        3400 Latrobe Drive
        Charlotte, North Carolina 28211-4849                    Larrimore Wright
                                                                Director
         (704) 362-1115 Telephone
         (704) 364-4039 Facsimile

STOCK EXCHANGE LISTINGS                                         OFFICERS
        Over the Counter: OTC Bulletin Board
        OTC Symbol: "TNSB"                                      Claude Imbleau
                                                                Chief Executive Officer & President
TRANSFER AGENT                                                  Chief Financial Officer
        First Citizens Bank
        Raleigh, North Carolina
                                                                Tommy Hessler
LEGAL COUNSEL                                                   Executive Vice President
        Shumaker, Loop and Kendrick, LLP
        Charlotte, North Carolina                               Randall E. Jennings
                                                                Vice President
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
        Grant Thornton LLP                                      Robert T. Plyler
        Charlotte, North Carolina                               Chief Accounting Officer

                                                                E. Thomas Watson
                                                                General Counsel, Secretary
</TABLE>
<TABLE>
<CAPTION>


================================================================================================================================

COMMON STOCK DATA
                                                                   Market Price Per Share
                     -----------------------------------------------------------------------------------------------------------
                      2006                                                       2005
                     ----------------------------------------------------    ---------------------------------------------------
Quarter Ended                High                         Low                          High                       Low
                       Bid           Ask          Bid           Ask              Bid          Ask           Bid          Ask
-------------------------------------------------------------------------    ---------------------------------------------------
<S>                <C>           <C>           <C>           <C>              <C>          <C>          <C>           <C>
 February 28          0.82          1.05          0.48          0.55             1.01         1.10         0.31          0.50
 May 31               0.65          0.70          0.51          0.58             1.08         1.10         0.35          0.55
 August 31            0.58          0.70          0.51          0.55             0.80         1.01         0.25          0.58
 November 30          0.52           0.7          0.42          0.48             0.66         0.85         0.40          0.51
=========================================================================    ===================================================



</TABLE>
                              31