Exhibit 13








                               ANNUAL REPORT 2005










                                   COVER PAGE



















<PAGE>

                                  INSIDE COVER


























<PAGE>

<TABLE>
<CAPTION>
<S>                                                   <C>              <C>           <C>       <C>         <C>
                                                 FINANCIAL SUMMARY

===================================================================================================================
                                                                                            04 to 05    03 to 04
As of or For Year Ended November 30                    2005          2004         2003      % Change    % Change
--------------------------------------------------- -----------  -----------  -----------  ----------- ------------
Operations
-------------------------------------------------------------------------------------------------------------------
Net revenues                                       $ 8,431,656    $ 6,634,964   $4,215,957        27.1        57.4
Operating income                                   $   165,577    $    85,577   $  126,588        93.5       (32.4)
Income  before income taxes                        $   127,654    $    61,207   $  116,129       108.6       (47.3)
Net income                                         $   127,654    $    61,207   $  116,129       108.6       (47.3)
Weighted average common shares outstanding           4,826,654      4,806,807    3,810,013         0.4        26.2
-------------------------------------------------------------------------------------------------------------------
Per Share Data
-------------------------------------------------------------------------------------------------------------------
Net income (loss)                                  $       .03    $       .01   $      .03       200.0       (66.7)
Cash dividends                                     $         -    $         -   $        -           -           -
Stockholders' equity                               $       .13    $       .11   $      .09        18.2        22.2
-------------------------------------------------------------------------------------------------------------------
Financial Position
-------------------------------------------------------------------------------------------------------------------
Assets                                             $ 3,017,929    $ 2,956,478   $1,689,531         2.1        75.0
Working capital                                    $   783,849    $   658,391   $  593,907        19.1        10.9
Property and equipment                             $   133,569    $   121,433   $   97,991        10.0        23.9
Long-term debt, less current maturities            $   309,355    $   300,000   $  300,000         3.1           -
Stockholders' equity                               $   639,917    $   511,678   $  424,658        25.1        20.5
-------------------------------------------------------------------------------------------------------------------
Number of employees                                         36             30           25
Number of stockholders                             approx. 655    approx. 650  approx. 641
-------------------------------------------------------------------------------------------------------------------
</TABLE>


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

                                      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 Operations                                                      14
Statements of Stockholders' Equity (Deficit)                                  15
Statements of Cash Flows                                                      16
Notes to the Financial Statements                                             18
Shareholder Information                                                       32
Directors and Officers                                                        32

                                        1

<PAGE>

                            DEAR FELLOW SHAREHOLDER:

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

Two  thousand  and  five  was a year  of  significant  growth,  opportunity  and
challenge for our Company. We increased our revenues by over 27% compared to the
prior  year and our net income  increased  by 108.6%.  The  foundation  for this
growth  lies in our  expanded  vision--  to grow  your  Company  as the  leading
provider of "Tailor-Made"  integrated material handling  transportation products
and solutions.  Our specialty is to integrate  automatic  guided vehicle systems
with other types of  automation  equipment.  This new  emphasis  on  integrating
multiple, complementary,  automation technologies with our traditional automatic
guided  vehicles has directly  contributed  to an expansion in our customer base
and product  offering.  As an example,  in 2005 Transbotics  worked closely with
KUKA Robotics  Corporation and its parent, KUKA Roboter GmbH, one of the world's
largest  and  most  advanced  manufacturers  of  industrial  robots,  on a novel
application  for a  new  customer.  This  collaboration  led  to  the  Company's
announcement  in the first  quarter  of 2006 that it has  signed a  distribution
agreement with KUKA Robotics  Corporation.  This System  Partner  Agreement will
allow the  Company to expand its  automation  capabilities  by  offering  unique
palletizing  solutions  to  its  existing  and  potential  customers.  The  KUKA
agreement will bring us that much closer to fulfilling our Mission:

   Efficiently "moving your business" from receiving to production to shipping
           through innovative, intelligent transportation automation.

Rapid growth in  opportunities  and personnel also brought  growing  pains.  Our
margins  decreased  significantly  compared to the prior year.  The  decrease is
mostly  related to higher  training costs of our new engineers and cost overruns
on projects  that could open up new  products  and markets for the  Company.  We
began to address the issues that underlay our declining  margins by  identifying
process weaknesses and driving continuous process  improvement.  The cornerstone
of this effort was our successful campaign to obtain ISO 9001 2000 registration,
which was  achieved on schedule in the first  quarter of 2006.  Considering  the
complexity  of all  the  things  we do as a  small  company,  this  was a  major
accomplishment. We will continue to aggressively invest in improving our methods
of production  and  engineering  in 2006. At the same time,  the Company will be
extremely focused on regaining its margins to more traditional  levels to ensure
its growth and profit  objectives  are met.  The  Company has adopted a business
plan for 2006 and  beyond  that  will  enable  it to  implement  its  vision  by
addressing the opportunities  for improvement  revealed in 2005 while continuing
to grow.

The cost of implementing the  Sarbanes-Oxley Act has been a big concern for this
Company  in the  past  year,  even to the  point  that we  thought  we  might be
compelled  to  go  private.  Fortunately,   during  2005  the  SEC  delayed  the
implementation  of  Sarbanes-Oxley  Section  404  for  another  year  for  small
companies like ours and appointed a special  committee to evaluate and recommend
how this  provision  should be  applied  to small  issuers.  At this time we are
cautiously  optimistic  that the  Company  will  get  relief  from  the law.  It
continues to be very important for  shareholders of small companies like ours to
contact their legislative representatives to request that changes be made to the
law.

We look forward to 2006 with  optimism as we continue to implement  our business
plan and release new automation solutions for our target industries.

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



Sincerely yours,


Claude Imbleau
CEO & President

February 2006



                                        2

<PAGE>
<TABLE>
<CAPTION>
<S>                                                <C>           <C>            <C>        <C>            <C>
                             SELECTED FINANCIAL DATA

==================================================================================================================
                                                                As of or For Year Ended November 30
                                                 -----------------------------------------------------------------
                                                    2005          2004          2003        2002           2001
------------------------------------------------------------------------------------------------------------------
Statements of Operations Data:
    Net revenues                                $8,431,656    $6,634,964    $4,215,957  $4,317,258     $6,015,214
    Cost of goods sold                           6,231,231     4,399,168     2,578,840   2,844,282      3,959,246
------------------------------------------------------------------------------------------------------------------
       Gross profit                             $2,200,425    $2,235,796    $1,637,117  $1,472,976     $2,055,968
------------------------------------------------------------------------------------------------------------------

Net gain on sale of real property               $        -    $        -    $        -  $        -     $  581,023
------------------------------------------------------------------------------------------------------------------

Operating expenses:
    Selling                                     $  546,821    $  664,313    $  451,668  $  527,450     $  673,671
    General and administrative                   1,206,658     1,186,729       817,686   1,074,520      1,226,321
    Research and development                       281,369       299,177       241,175     133,365         80,562
------------------------------------------------------------------------------------------------------------------
                                                $2,034,848    $2,150,219    $1,510,529  $1,735,335     $1,980,554
------------------------------------------------------------------------------------------------------------------
       Operating income (loss)                  $  165,577    $   85,577    $  126,588  $ (262,359)    $  656,437
------------------------------------------------------------------------------------------------------------------

Interest expense                                $  (37,923)   $  (24,370)   $  (10,459) $  (13,753)    $  (72,566)
------------------------------------------------------------------------------------------------------------------

Income (loss) before income taxes (benefit)     $  127,654    $   61,207    $  116,129  $ (276,112)    $  583,871
Federal and state income taxes                           -             -             -           -          3,053
------------------------------------------------------------------------------------------------------------------
       Net income (loss)                        $  127,654    $   61,207    $  116,129  $ (276,112)    $  580,818
==================================================================================================================

Weighted average number of
 common shares outstanding:
  Basic                                          4,826,654     4,806,807     3,810,013   3,586,451      3,586,451
==================================================================================================================
  Diluted                                        5,224,715     4,877,195     3,984,139   3,586,451      3,586,451
==================================================================================================================
Basic earnings (loss) per share                 $      .03    $      .01    $      .03  $     (.08)    $      .16
==================================================================================================================
Diluted earnings (loss) per share               $      .03    $      .01    $      .03  $     (.08)    $      .16
==================================================================================================================
Cash dividend declared per common share         $        -    $        -    $        -  $        -     $        -
==================================================================================================================

Balance Sheet Data:
Working capital (Deficit)                       $  783,849    $  658,391    $  593,907  $ (126,195)    $  124,511
Total assets                                    $3,017,929    $2,956,478    $1,689,531  $1,160,746     $1,984,837
Long-term debt, less current maturities         $  309,355    $  300,000    $  300,000  $        -     $        -
Total liabilities                               $2,378,012    $2,444,800    $1,264,873  $1,149,954     $1,697,933
Stockholders' equity                            $  639,917    $  511,678    $  424,658  $   10,792     $  286,904
</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  over  time  the net  revenue  and  profitability  effects  of large
projects,  such method nevertheless 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, 2005,  2004 and 2003,
respectively.
<TABLE>
<CAPTION>
<S>                                                 <C>         <C>         <C>           <C>              <C>
                                                                                               Percentage of Change
                                                                                                Period to Period
                                                       Percentage of Net Revenues              Increase (Decrease)
------------------------------------------------------------------------------------------------------------------------
                                                                                          Year Ended       Year Ended
                                                            For year ended                November 30,     November 30,
                                                    2005        2004          2003        2004 to 2005     2003 to 2004
------------------------------------------------------------------------------------------------------------------------

Net revenues                                       100.0 %     100.0 %       100.0 %         27.1 %             57.4 %
Cost of goods sold                                  73.9        66.3          61.2           41.7               70.6
------------------------------------------------------------------------------------------------------------------------
Gross profit                                        26.1        33.7          38.8           (1.6)              36.6

Operating expenses:
   Selling                                           6.5        10.0          10.7          (17.7)              47.1
   General and administrative                       14.3        17.9          19.4            1.7               45.1
   Research and development                          3.3         4.5           5.7           (6.0)              24.0
------------------------------------------------------------------------------------------------------------------------
                                                    24.1        32.4          35.8           (5.4)              42.3
------------------------------------------------------------------------------------------------------------------------
Operating income                                     2.0         1.3           3.0           93.5              (32.4)
Net interest expense                                (0.5)       (0.4)         (0.2)          55.6              133.0
------------------------------------------------------------------------------------------------------------------------
Income before income taxes                           1.5         0.9           2.8          108.6              (47.3)
Income tax expense                                     -           -             -              -                 -
------------------------------------------------------------------------------------------------------------------------
Net income                                           1.5 %       0.9 %         2.8 %        108.6 %            (47.3)%
========================================================================================================================
</TABLE>

                                        6




<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% 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.

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, 2005, the Company
had a backlog of approximately  $2,400,000  compared to $3,330,000 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, 2004 Compared To Fiscal Year Ended  November 30,
2003

     Net  revenues  increased by  $2,419,007  or 57.4% from  $4,215,957  for the
fiscal  year ended  November  30, 2003 to  $6,634,964  for the fiscal year ended
November 30, 2004. The increase is primarily due to a recovering economy and the
Company's  increased  project AGV system sales to new  customers.  The Company's
revenues  during  2004 were  primarily  derived  from the  automotive,  food and
beverage and printing industries.

     Cost of goods sold increased from $2,578,840 to $4,399,168,  or 70.6%,  due
primarily  to  increased  revenues  and  higher  cost of 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 61.2% to 66.3%  primarily  due to
lower  margins on equipment  revenues  compared to the prior year.  Gross profit
increased by $598,679, or 36.6%, from $1,637,117 to $2,235,796.

     Selling  expenses  increased from $451,668 to $664,313 or 47.1%,  primarily
due to increased  personnel  expense in the current  year  compared to the prior
year.  General and  administrative  expenses increased by $369,043 or 45.1% from
$817,686 to $1,186,729 compared to the prior year. The increase is primarily due
to increases in personnel,  professional  fees relating to documenting  internal
controls for Sarbanes-Oxley,  and other expenses.  The Company also incurred, in
the first quarter of 2004 a $18,403 noncash stock option compensation expense as
part of its general and administrative expenses due to the Company's stock price
rising in 2004.  The same type of expense in 2003 was $38,893 (see note 12). The
Company continued to invest in the development of new AGV products to expand its
product line in the current  year.  Research and  development  expenses  were up
24.0% from $241,175 to $299,177 in the current year.

     Primarily as a result of the  foregoing,  the  Company's  operating  income
decreased by $41,011 from an operating income of $126,588 to an operating income
of $85,577 for the current year.

     Net interest  expense  increased  from  $10,459 to $24,370,  an increase of
133.0% due to higher banking and borrowing costs compared to the prior year.

     The  Company  did not  recognize  any tax  expense in 2004 and 2003 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 the lower gross profit and increased  expenses in 2004, as
described above, the Company's net income decreased by $54,922 from a net income
of  $116,129  in the year ended 2003 to net income of $61,207 in the same period
of 2004.



                                        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 upon  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  year  ended  November  30,  2005 net  cash  used in  operating
activities was $240,044 primarily due to a large increase in accounts receivable
in November.  A significant  portion of the Company's November 30, 2005 accounts
receivable  were  collected  in  December  of 2005 and January of 2006 to create
positive cash flows for the Company.

     The  Company  renewed and  increased  its  $150,000  bank line of credit to
$400,000  on March 23,  2005 as  further  described  in Note 4 to the  financial
statements.  The credit  line  contains a demand  note which is  expected  to be
reviewed for renewal annually unless called prior to the anniversary date.

     The Company  believes that its working  capital of $783,849 at November 30,
2005 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  expenses  compared  to the
Company's net income.



                                        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:

     In December 2004, the Financial Accounting Standards Board issued Statement
     123 (revised  2004),  Share-Based  Payment  (Statement  123(R)).  Statement
     123(R) requires that the compensation cost relating to share-based  payment
     transactions  be  recognized  in  financial  statements.  The cost  will be
     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
     will adopt 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  Company  does not expect the
     adoption of  Statement  123(R) to have a material  impact on its  financial
     position as all options granted through November 30, 2005 are fully vested,
     and 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.  Compensation
     cost under APB 25 was $18,403 for the period ended  November  30, 2004.  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 periods ending November 30, 2005 and 2004.

     At November 30, 2005 and November 30,  2004,  options were  outstanding  to
     purchase a total of  211,500,  and  220,500  shares of common  stock of the
     Company,  respectively,  at  weighted-average  exercise  prices of  varying
     amounts.  At November 30, 2005, 211,500 outstanding options were vested and
     exercisable  while  220,500  options at  November  30, 2004 were vested and
     exercisable.



                                       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,  2005  and  2004,  and the  related
statements of operations,  stockholders'  equity,  and cash flows for years then
ended.  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 audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  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, 2005 and 2004, and the results of its operations and its cash flows
for the years then ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, North Carolina
January 20, 2006



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

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
Transbotics Corporation
Charlotte, North Carolina

We have audited the accompanying statement of operations, stockholders' equity,
and cash flows for the year ended November 30, 2003 of Transbotics Corporation.
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 audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations of Transbotics Corporation and
its operations and its cash flows for the year ended November 30, 2003, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the 2003
financial statements, there is substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 15 to the 2003 financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/ McGladrey & Pullen, LLP

Charlotte, North Carolina
January 9, 2004




                                       11

<PAGE>

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
<S>                                                          <C>              <C>
=====================================================================================
                                                                  November 30,
                                                             2005            2004
-------------------------------------------------------------------------------------
  ASSETS

CURRENT ASSETS
  Cash                                                    $  177,026      $  236,968
  Accounts receivable, net (Notes 2, 4, 5 and 9)           1,946,326       1,500,636
  Inventories                                                482,772         412,725
  Costs and estimated earnings in excess of
    billings on uncompleted contracts (Note 3)               223,442         610,462
  Prepaid expenses and other assets                           22,940          42,400
-------------------------------------------------------------------------------------
        Total current assets                              $2,852,506      $2,803,191
-------------------------------------------------------------------------------------
NONCURRENT DEPOSITS                                       $   31,854      $   31,854
-------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT (Note 4)
  Furniture, fixtures, and office equipment               $  254,001      $  195,054
  Machinery and equipment                                     90,031          78,960
-------------------------------------------------------------------------------------
                                                          $  344,032      $  274,014
    Less accumulated depreciation                            210,463         152,581
-------------------------------------------------------------------------------------
                                                          $  133,569      $  121,433
-------------------------------------------------------------------------------------
                                                          $3,017,929      $2,956,478
=====================================================================================
</TABLE>





                                       12
<PAGE>

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
<S>                                                          <C>              <C>
=====================================================================================
                                                                  November 30,
                                                             2005            2004
-------------------------------------------------------------------------------------
  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Note payable, bank (Note 4)                               $   395,000  $   150,000
  Current maturities long-term debt (Notes 4, 9 and 11)           2,249            -
  Accounts payable                                            1,029,870    1,105,983
  Accrued expenses and customer deposits                        237,162      224,684
  Billings in excess of costs and estimated
    earnings on uncompleted contracts (Note 3)                  404,376      664,133
-------------------------------------------------------------------------------------
        Total current liabilities                           $ 2,068,657  $ 2,144,800
-------------------------------------------------------------------------------------
LONG-TERM DEBT (Notes 4, 9 and 11)                          $   309,355  $   300,000
-------------------------------------------------------------------------------------
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  2005 and 2004;
     4,827,451 shares and 4,824,451 shares were issued
     and outstanding at 2005 and 2004, respectively              48,274       48,244
    Additional paid-in capital                                4,571,961    4,571,406
    Accumulated deficit                                      (3,980,318)  (4,107,972)
-------------------------------------------------------------------------------------
                                                            $   639,917  $   511,678
-------------------------------------------------------------------------------------
                                                            $ 3,017,929  $ 2,956,478
=====================================================================================
</TABLE>













                                       13

<PAGE>

                              STATEMENTS OF INCOME
<TABLE>
<CAPTION>
<S>                                                                  <C>               <C>          <C>
=============================================================================================================

                                                                            Years ended November 30,
                                                                     2005             2004           2003
-------------------------------------------------------------------------------------------------------------
Net revenues (Notes 5 and 9)                                      $8,431,656       $6,634,964     $4,215,957
Cost of goods sold (Note 9)                                        6,231,231        4,399,168      2,578,840
-------------------------------------------------------------------------------------------------------------
    Gross profit                                                  $2,200,425       $2,235,796     $1,637,117
-------------------------------------------------------------------------------------------------------------
Operating expenses:
      Selling                                                     $  546,821       $  664,313     $  451,668
      General and administrative
       (Notes 9, 10 and 12)                                        1,206,658        1,186,729        817,686
      Research and development                                       281,369          299,177        241,175
-------------------------------------------------------------------------------------------------------------
                                                                  $2,034,848       $2,150,219     $1,510,529
-------------------------------------------------------------------------------------------------------------
            Operating income                                      $  165,577       $   85,577     $  126,588
-------------------------------------------------------------------------------------------------------------
Interest expense (Note 9):                                        $  (37,923)      $  (24,370)    $  (10,459)
-------------------------------------------------------------------------------------------------------------
Income before income taxes                                        $  127,654       $   61,207     $  116,129

Federal and state income taxes  (Note 6)                                   -                -              -
-------------------------------------------------------------------------------------------------------------
           Net income                                             $  127,654       $   61,207     $  116,129
=============================================================================================================
Basic earnings per share (Note 7)                                 $      .03       $      .01     $      .03
=============================================================================================================
Diluted earnings per share (Note 7)                               $      .03       $      .01     $      .03
=============================================================================================================
Weighted average common shares outstanding (basic)                 4,826,654        4,806,807      3,810,013
=============================================================================================================
Weighted average common shares outstanding (diluted)               5,224,715        4,877,195      3,984,139
=============================================================================================================
Dividends per common share                                        $        -       $        -     $        -
=============================================================================================================
</TABLE>
See Notes to Financial Statements




                                       14

<PAGE>

                       STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S>                                                   <C>       <C>           <C>      <C>          <C>      <C>
=======================================================================================================================

                                                                        Years Ended November 30,
-----------------------------------------------------------------------------------------------------------------------
                                                           2005                    2004                   2003
                                                    Amount      Shares      Amount     Shares     Amount      Shares
                                                 ----------------------------------------------------------------------
Common Stock:
        Balance, beginning                       $    48,244   4,824,451 $    47,864 4,786,451  $    35,864  3,586,451
        Stock options exercised                           30       3,000         380    38,000            -          -
        Issuance of common stock (Note 11 )                -           -           -         -       12,000  1,200,000
-----------------------------------------------------------------------------------------------------------------------
        Balance, ending                          $    48,274   4,827,451 $    48,244 4,824,451  $    47,864  4,786,451
=======================================================================================================================

Additional Paid-in Capital:
       Balance, beginning                        $ 4,571,406             $ 4,545,973            $ 4,260,236
       Stock options exercised                           555                   7,030                      -
       Stock option compensation (Note 12)                 -                  18,403                 38,893
       Issuance of common stock (Note 11)                  -                       -                246,844
-----------------------------------------------------------------------------------------------------------------------
       Balance, ending                           $ 4,571,961             $ 4,571,406            $ 4,545,973
=======================================================================================================================

Accumulated Deficit:
       Beginning deficit                         $(4,107,972)            $(4,169,179)           $(4,285,308)
       Net income                                    127,654                  61,207                116,129
-----------------------------------------------------------------------------------------------------------------------
       Ending deficit                            $(3,980,318)            $(4,107,972)           $(4,169,179)
=======================================================================================================================

-----------------------------------------------------------------------------------------------------------------------
Stockholders' Equity  at November 30             $   639,917   4,827,451 $   511,678 4,824,451  $   424,658  4,786,451
=======================================================================================================================
</TABLE>
See Notes to Financial Statements



                                       15

<PAGE>

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S>                                                                           <C>           <C>              <C>
==================================================================================================================

                                                                                     Years ended November 30,
                                                                             2005            2004            2003
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
        Net income                                                      $ 127,654       $  61,207       $ 116,129
        Adjustments to reconcile net income to net
         cash provided by (used in) operating activities:
           Depreciation                                                    63,819          55,359          50,821
           Increase (decrease) in provision for doubtful accounts          11,000         (15,000)         (5,000)
           (Gain) loss on sale of property and equipment                    1,132               -            (400)
           (Gain) loss on foreign currency exchange rate                    2,451          16,106          (3,455)
           Stock  option noncash compensation                                   -          18,403          38,893
        Change in assets and liabilities:
           (Increase) decrease in accounts receivable                    (456,690)       (801,982)         35,220
           (Increase) in inventories                                      (70,047)       (111,687)        (32,636)
           (Increase) decrease in costs and estimated earnings in
             excess of billings on uncompleted contracts                   387,020       (597,546)          5,355
           (Increase) decrease in prepaid expenses
             and other assets                                               19,460        (25,515)         (1,132)
           Increase (decrease) in accounts payable
             and accrued expenses                                         (66,086)        868,468        (248,535)
           Increase  (decrease) in billings in excess of costs and
             estimated earnings on uncompleted contracts                 (259,757)        145,353          93,960
------------------------------------------------------------------------------------------------------------------
        NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES             $(240,044)      $(386,834)      $  49,220
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
        Proceeds from the sale of property and equipment                $       -       $       -       $     400
        Purchase of  equipment                                            (63,817)        (78,801)        (44,585)
------------------------------------------------------------------------------------------------------------------
                NET CASH USED IN INVESTING ACTIVITIES                   $ (63,817)      $ (78,801)      $ (44,185)
------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements




                                       16

<PAGE>

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S>                                                                     <C>             <C>           <C>
=============================================================================================================

                                                                             Years ended November 30,
                                                                       2005             2004           2003
-------------------------------------------------------------------------------------------------------------

CASH FLOW FROM FINANCING ACTIVITIES
        Borrowings on revolving credit agreement,
         net of repayments                                          $245,000        $ 150,000       $      -
        Proceeds from  long-term borrowings                                -                -        300,000
        Net proceeds from exercise of stock options                      585            7,410
        Net proceeds from common stock issued                              -                -        258,844
        Principal payments on long-term borrowings,
         including capital lease obligations                          (1,666)               -        (27,051)
-------------------------------------------------------------------------------------------------------------
                NET CASH PROVIDED BY FINANCING ACTIVITIES           $243,919        $ 157,410       $531,793
-------------------------------------------------------------------------------------------------------------
        Increase (decrease) in cash                                 $(59,942)       $(308,225)      $536,828
        Cash:
           Beginning                                                 236,968          545,193          8,365
-------------------------------------------------------------------------------------------------------------
           Ending                                                   $177,026        $ 236,968       $545,193
=============================================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
        Cash payments for :
           Interest                                                $ 37,320        $  24,370       $ 10,459
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES
        Capital lease obligations incurred for use of equipment    $ 13,270        $       -       $      -
</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:

     The 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


                                       18

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

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

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



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.


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,  2005,  2004 and 2003,  the  Company had  options  outstanding  to
purchase  a total of  211,500,  220,500,  and  227,500  shares of common  stock,
respectively, 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, 2005, 2004 and
2003 were $25,434, $24,093, and $20,755, respectively.

Stock options:

     In December 2004, the Financial Accounting Standards Board issued Statement
123 (revised 2004),  Share-Based  Payment (Statement  123(R)).  Statement 123(R)
requires that the compensation cost relating to share-based payment transactions
be recognized in financial  statements.  The cost will be 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  will  adopt  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 Company does not
expect  the  adoption  of  Statement  123(R)  to have a  material  impact on its
financial  position as all options granted  through  November 30, 2005 are fully
vested, and 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.  Compensation cost
under APB 25 were $0, $18,403 and $38,893 for the years ended November 30, 2005,
2004 and 2003, respectively.


                                       19

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

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

Note 2. Accounts Receivable

     Accounts receivable consist of the following at November 30, 2005 and 2004,
respectively:

<TABLE>
<CAPTION>
<S>                                                               <C>             <C>
                                                                2005             2004
--------------------------------------------------------------------------------------------

Trade and contract                                          $    1,952,897  $     1,499,476

Less: Allowance for doubtful accounts                              (11,000)               -
--------------------------------------------------------------------------------------------
                                                            $    1,941,897  $     1,499,476
Employees                                                            4,429            1,160
--------------------------------------------------------------------------------------------
                                                            $    1,946,326  $     1,500,636
============================================================================================
</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, 2005 and 2004, respectively:

<TABLE>
<CAPTION>
<S>                                                                    <C>             <C>
                                                                    2005             2004
--------------------------------------------------------------------------------------------

Total contracts in process                                  $    3,918,113  $     6,705,397
============================================================================================

Costs incurred on uncompleted contracts                     $    1,556,568  $     2,644,223
Estimated earnings                                                 715,888        1,246,122
--------------------------------------------------------------------------------------------
                                                            $    2,272,456  $     3,890,345
Less billings to date                                           (2,453,390)      (3,944,016)
--------------------------------------------------------------------------------------------
                                                            $     (180,934) $       (53,671)
============================================================================================

     Included in the accompanying balance sheets under the following captions:

                                                                    2005             2004
--------------------------------------------------------------------------------------------
Costs and estimated earnings in excess of billings
     on uncompleted contracts                               $      223,442  $       610,462
Billings in excess of costs and estimated earnings
     on uncompleted contracts                                     (404,376)        (664,133)
--------------------------------------------------------------------------------------------
                                                            $     (180,934) $       (53,671)
============================================================================================

</TABLE>


                                       20

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

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


Note 4.  Pledged Assets, Note Payable, Bank and Long-Term Debt

<TABLE>
<CAPTION>
<S>                                                                                     <C>               <C>
Current debt consists of the following:                                                    2005             2004
----------------------------------------------------------------------------------------------------------------------

Note payable  agreement with a financial  institution that allows the Company to
borrow up to $400,000 and bears  interest at the lender's  prime rate per annum.
The loan agreement is further secured by the Company's  assets and expires March
23, 2006. Under the terms of the renegotiated agreement, the obligation includes
a "payable on demand" feature.  The loan agreement  obligation is evidenced by a
demand note.  (1)(2) The note payable  agreement was  renegotiated  on March 23,
2005. Prior to the renegotiation, the Company could borrow up to $150,000 at the
lender's prime rate plus 1.5%.                                                          $ 395,000         $ 150,000
----------------------------------------------------------------------------------------------------------------------

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  into 750,000  shares of
common  stock  at the  option  of the  holder  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 on or after September 30,
2006 at 100% of the principal amount.                                                   $ 300,000         $ 300,000

Obligations under capital leases                                                           11,604                 -
----------------------------------------------------------------------------------------------------------------------
                                                                                          311,604           300,000
Less current maturities:
----------------------------------------------------------------------------------------------------------------------
         Notes                                                                                  -                 -
----------------------------------------------------------------------------------------------------------------------
         Obligations under capital leases                                                   2,249                 -
----------------------------------------------------------------------------------------------------------------------
                                                                                        $ 309,355         $ 300,000
======================================================================================================================
(1)   The prime rate at November 30, 2005 was 7.0% .
(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, 2005,  2004, and 2003,  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>
<S>                                 <C>                   <C>                   <C>               <C>
                                                      Amount of Net Revenues
                                                      Year Ended November 30,

Customer                                   2005       %          2004     %           2003       %
----------------------------------------------------------------------------------------------------
A                                  $  1,356,653   16.1   $          *      *    $         *      *
B                                     1,129,736   13.4              *      *        754,481   17.8
C                                     1,034,957   12.3      1,137,955   17.1              *      *
D                                       899,438   10.7              *      *              *      *
E                                             *      *      1,517,596   22.9              *      *
F                                             *      *              *      *        412,799    9.8

                                                   Amount of Accounts Receivable
                                                            November 30,

                                          2005       %           2004     %           2003       %
----------------------------------------------------------------------------------------------------
A                                  $    300,944   15.4   $          *      *    $         *
B                                       258,442   13.3              *      *              -      -
C                                       403,138   20.7         70,800    4.7              *      *
D                                       346,971   17.8              *      *              *      *
E                                             *      *        456,688   30.4              *      *
F                                             *      *              *      *              -      -

* Not a major customer.

</TABLE>


Note 6. Income Taxes

     Income  taxes  consist  of the  following  components  for the years  ended
November 30, 2005, 2004, and 2003, respectively:

<TABLE>
<CAPTION>
<S>                                          <C>                 <C>                 <C>
                                                  2005                2004               2003
-----------------------------------------------------------------------------------------------------
Current                                      $           -       $          -        $          -
Deferred                                                 -                  -                   -
-----------------------------------------------------------------------------------------------------
                                             $           -       $          -        $          -
=====================================================================================================
</TABLE>

     Net deferred tax assets consist of the following  components as of November
30, 2005 and 2004, respectively:

<TABLE>
<CAPTION>

                                                                      2005            2004
                                                             ------------------------------
<S>                                                                   <C>             <C>
Deferred tax assets:
   Allowance for doubtful accounts                          $        4,241  $            -
   Inventory valuation reserves                                      6,169          11,566
   Net operating loss carryforward                               1,540,886       1,573,830
   General business credit carryforwards                            45,367          45,367
   Other                                                             3,113           2,038
Deferred tax liabilities:
   Depreciation                                                     (3,333)           (150)
   Other                                                                 -           6,210
-------------------------------------------------------------------------------------------
                                                            $    1,596,443  $    1,638,861

   Less valuation allowance                                      1,596,443       1,638,861
-------------------------------------------------------------------------------------------

   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, 2005,
2004 and  2003  were  $(42,418),  $(31,003)  and  $(72,771),  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:

                                       Federal NOL         North Carolina NEL
        Year ending November 30        carryforward           carryforward
--------------------------------------------------------------------------------
                 2009                      $          -           $   1,034,990
                 2010                         1,429,156               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                     $  3,922,472           $   5,419,823
================================================================================

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

<TABLE>
<CAPTION>
                                                     Years Ended November 30,
                                           2005              2004              2003
-------------------------------------------------------------------------------------------
                                               % 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)                    $   43,402   34.0  $   20,814   34.0  $   39,484   34.0
Increase (decrease) in
taxes resulting from:
State income taxes                      3,056    2.4       7,481   12.2      11,476    9.9
Changes in valuation allowance        (42,418) (33.2)    (31,003) (50.6)    (72,771) (62.7)
Other                                  (4,040)  (3.2)      2,708    4.4      21,811   18.8
-------------------------------------------------------------------------------------------
                                   $        -      -  $        -      -  $        -      -
===========================================================================================
</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:

<TABLE>
<CAPTION>

                                                                           2005          2004         2003
                                                                  -----------------------------------------
<S>                                                                   <C>           <C>          <C>
BASIC INCOME  PER SHARE:
  Net income                                                     $      127,654  $     61,207  $   116,129
  Weighted-average shares                                             4,826,654     4,806,807    3,810,013
                                                                 -----------------------------------------

  Basic earnings per share                                       $         0.03  $       0.01  $      0.03
                                                                 =========================================

DILUTED INCOME PER SHARE:
  Net income                                                     $      127,654  $     61,207  $   116,129
  Plus impact of assumed conversions:
    Interest on 6% convertible notes, net of related tax effect          18,000             -        3,450
                                                                 -----------------------------------------
                                                                 $      145,654  $     61,207  $   119,579
                                                                 -----------------------------------------
Weighted average shares                                               4,826,654     4,806,807    3,810,013
  Plus effect of dilutive potential shares:
     Stock options                                                      115,593        70,388       34,016
     Convertible notes                                                  282,468             -      140,110
                                                                 -----------------------------------------
                                                                      5,224,715     4,877,195    3,984,139
                                                                 -----------------------------------------
Diluted earnings per share                                       $         0.03  $       0.01  $      0.03
                                                                 =========================================

</TABLE>

Common  stock  options  outstanding  excluded  from the  computation  of diluted
earnings  per share  because  the effect  would have been  antidilutive  were 0,
78,500  and  36,500  for the  years  ended  November  30,  2005,  2004 and 2003,
respectively.

Convertible  notes  outstanding  are excluded  from the  computation  of diluted
earnings  per share  because  the effect  would have been  antidilutive  were 0,
750,000  and  0  for  the  years  ended  November  30,  2005,   2004  and  2003,
respectively.


                                       24

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

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

Note 8. 401(k) Profit Sharing Plan

     The Company has a profit  sharing plan through a 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,  2005,  2004  and  2003  amounted  to  $35,824,  $20,908,  and  $0
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,  2005,  2004 and 2003  amounted to
$158,491,  $153,785, and $24,205 respectively.  Mr. Kennington received interest
payments from the Company of $4,500, $4,500 and $862 on the convertible debt for
the years ended November 30, 2005, 2004 and 2003, respectively.

     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,  $9,000 and
$1,724 on the  convertible  debt for the years ended November 30, 2005, 2004 and
2003, 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,  $4,500 and
$862 on the  convertible  debt for the years ended  November 30, 2005,  2004 and
2003, respectively.

     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,  $2,559 and $0 for years ending  November
30, 2005, 2004 and 2003, respectively.


                                       25

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

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

Note 10. Commitments

     At November 30, 2005 and 2004, the Company had outstanding forward exchange
contracts to purchase EURO's and Swedish Krona totaling approximately US$440,000
in 2005 and US$180,000 in 2004. The fair value of these contracts as of November
30, 2005 and 2004 totaled  approximately  $(17,000)  and $18,000,  respectively.
These  contracts  are  purchased  as needed  from time to time to hedge  various
foreign  currency  payable  inventory  purchase  commitments.  No contracts were
outstanding in 2003.

     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 $189,553, $185,861, and $152,572 for the years ended November
30, 2005, 2004, and 2003 respectively.

     Minimum rental commitments under long-term operating leases at November 30,
2005 were as follows:

2006                  $        71,375
2007                                -
Thereafter                          -
                     -----------------
                      $        71,375
                     =================

     The Company has an employment  contract with the President  which  provides
for a minimum  annual  base  salary of  $130,000.  The base salary is subject to
annual  reviews.  The contract  renews on March 1, 2006 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.


                                       26

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

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

Note 12. Stock Option Plans

     In December 2004, the Financial Accounting Standards Board issued Statement
123 (revised 2004),  Share-Based  Payment (Statement  123(R)).  Statement 123(R)
requires that the compensation cost relating to share-based payment transactions
be recognized in financial  statements.  The cost will be 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  will  adopt  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 Company does not
expect  the  adoption  of  Statement  123(R)  to have a  material  impact on its
financial  position as all options granted  through  November 30, 2005 are fully
vested, and 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.  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, noncash  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.  In 2003
the noncash compensation expense of $38,893 was recognized.

     Statement of Financial  Accounting  Standards (`SFAS') No. 123,  Accounting
for Stock-Based  Compensation  requires pro forma disclosures for options grants
when  accounting for stock-based  compensation  plans in accordance with APB 25.
The pro forma effects are determined as if the compensation costs are recognized
using a fair value based method which  measures  compensation  cost at the grant
date  based  upon the value of the  awards,  which is then  recognized  over the
vesting period. The accounting  requirements of the statement apply to awards to
employees  entered into fiscal  years that begin after  December 15, 1995 and to
transactions with non-employees entered into after December 15, 1995.

1990 and 1993 Stock Option Plans:

     As of November 30, 2003, all unexercised options expired.

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.


                                       27

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

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

Note 12. Stock Option Plans (continued)

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, 2005,
2004 and 2003 respectively, are summarized as follows:

<TABLE>
<CAPTION>


STOCK OPTIONS                                           2005*
------------------------------------------------------------------------------------------
<S>                                      <C>         <C>      <C>       <C>     <C>
                                                                                 Weighted-
                                                                                 average
                                                                                 exercise
                                         93 Plan   97 Plan  01 Plan     Total      price
                                        --------------------------------------------------
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
                                         93 Plan   97 Plan  01 Plan     Total     price
                                        ---------------------------------------------------
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
==========================================================================================


STOCK OPTIONS                                            2003*
-------------------------------------------------------------------------------------------
                                                                                 Weighted-
                                                                                  average
                                                                                 exercise
                                         93 Plan   97 Plan  01 Plan     Total     price
                                        ---------------------------------------------------
Outstanding, December 1                    48,500    36,500   194,000   279,000 $    0.47
                                        --------------------------------------------------
Granted                                         -         -         -         -         -
Expired                                   (48,500)        -         -   (48,500)     1.56
Forfeited                                       -         -   (28,000)  (28,000)     0.20
Reissued                                                       25,000    25,000      0.20
Exercised                                       -         -         -         -         -
------------------------------------------------------------------------------------------
Outstanding, November 30                        -    36,500   191,000   227,500 $    0.24
==========================================================================================
Exercisable, November 30                        -    36,500   191,000   227,500 $    0.24
==========================================================================================

</TABLE>
* The weighted-average exercise price per share of options outstanding, granted,
canceled, exercised, or exercisable for the 93 Plan is $1.56 , for the 97 Plan
is $0.50 and for the 01 Plan is $0.245.


                                       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
$26,866,  $(54,662), and $(48,701), for the three years ended November 30, 2005,
2004, and 2003, 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, 2005, 2004 and 2003 are as follows:

                                         Carrying         Estimated
                                          Amount          Fair Value
------------------------------------------------------------------------
Convertible subordinated notes:
2005                                     $300,000          $248,793
2004                                     $300,000          $279,595
2003                                     $300,000          $300,000


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>


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











                                       30

<PAGE>


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











                                       31

<PAGE>

                             SHAREHOLDER INFORMATION
<TABLE>
<CAPTION>
<S>                                                                   <C>
=======================================================================================================

ANNUAL MEETING                                                      DIRECTORS
  The annual meeting will be held at 10:00 am, Monday,
  April 24, 2006, 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                              Edward H. Gross
                                                                    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                                                E. Thomas Watson
  Charlotte, North Carolina                                         General Counsel, Secretary

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

COMMON STOCK DATA
                                                          Market Price Per Share
                                     ----------------------------------------------------------------
                                                 2005                            2004
                                     -----------------------------   --------------------------------
Quarter Ended                             High           Low              High            Low
                                       Bid    Ask    Bid     Ask       Bid    Ask     Bid      Ask
-----------------------------------------------------------------------------------------------------
 February 28                           1.01   1.10    0.31   0.50      1.05   1.25     0.40     0.45
 May 31                                1.08   1.10    0.35   0.55      0.78   1.04     0.35     0.45
 August 31                             0.80   1.01    0.25   0.58      0.51   0.90     0.31     0.40
 November 30                           0.66   0.85    0.40   0.51      0.52   0.75     0.28     0.35
=======================================================================================================
</TABLE>



                                       32