10-Q 1 evsv_20120331-10q.htm EVSV 10-Q 3-31-2012

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

———————

FORM 10-Q

———————

 

(Mark One) 
[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012.

 
     

or

 

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [--Date---] to [--Date---]
 

  

Commission File Number: 000-27131

 

ENVIRO-SERV, INC.

(Exact name of registrant as specified in its charter)

  

DELAWARE   88-0381258

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer Identification No.)

     
8446 Flagstone Drive, Tampa, FL   33615
(Address of principal executive offices)   (Zip Code)

(813) 708-9910

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

———————

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  [_]    No  [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): N/A since the registrant is neither required nor permitted to post Interactive Data Files.

 

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

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  [_]    No  [X]

 

The registrant has 240,663,748 shares of common stock outstanding at March 31, 2012.

 

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2010

  Page
Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011 (unaudited)        F-1
   
Condensed Consolidated Statement of Operations for the three months ended March 31, 2012 (unaudited)     F-2
   
Condensed Consolidated Statement of Operations for the three months ended March 31, 2012 (unaudited) F-3
   
Notes to Condensed Consolidated Financial Statements F-4 through F-13

 

 1

 

  

TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
           

 

   March 31, 2012  December 31, 2011
   (Unaudited)   
CURRENT ASSETS          
Cash  $390   $775 
Other assets   —     2,191 
   $—    $2,966 
FIXED ASSETS          
Equipment, net of accumulated depreciation of $2,418 and $2,015, respectively   401    401 
           
TOTAL ASSETS  $791   $3,367.00 
           
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable  $67,241   $67,241 
Accrued expenses   898,452    898,452 
Derivative liability   296,521    296,521 
Convertible notes and notes payable   546,800    546,800 
Related party loans   101,200    101,200 
Total current liabilities  $1,910,214   $1,910,214 
           
STOCKHOLDERS' DEFICIT          
Common stock, par value $.001 per share;          
250,000,000 shares authorized in 2011 and 2010 and 249,963,747          
116,164,376 outstanding at March 31, 2012 and December 31, 2011, respectively  $249,963   $116,164 
Additional paid-in capital   46,408,962    45,775,161 
Accumulated deficit   (44,751,303)   (44,751,303)
Total stockholders' deficit   (1,909,423)   2,042,232 
           
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT  $791   $4,183 

 

 F-1

 

 

TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Unaudited) 
           

    
   March 31, 2012  March 31, 2011
       
REVENUES          
Net sales  $2,470   $3,833 
Cost of sales   500    2,248 
Gross Profit (Loss)  $1,970   $1,585 
           
COSTS AND EXPENSES          
Selling, general and administrative  $302,350   $159,279 
Total costs and expenses   302,350    159,270 
           
LOSS BEFORE OTHER INCOME (LOSS)   (300,380)   (157,685)
           
OTHER INCOME (LOSS)          
           
Interest expense  $(48,528)  $(146,212)
Other expense   (114,798)     
Total other income (loss)  $(163,326)  $(146,212)
           
           
(LOSS) BEFORE PROVISION FOR INCOME TAX  $(453,801)  $(303,906)
           
PROVISION FOR INCOME TAX   —      —   
NET LOSS  $(453,801)  $(303,906)
           
           
NET LOSS PER COMMON SHARE - BASIC AND DILUTED  $(0.00)  $(0.03)
           
           
WEIGHTED AVERAGE OUTSTANDING SHARES          
OF COMMON STOCK - BASIC AND DILUTED   139,006,289    116,163,748 

 

 F-2

 

 

TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Unaudited)
    
    
   March 31, 2012  March 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(453,801)  $(303,906)
Adjustments to reconcile net loss to   —      —   
net cash used in operating activities:   —      —   
Depreciation and amortization   401    202 
Accretion of debt discount   333    333 
Stock issued for services   —      10,600 
Stock issued to executives for compensation   —      60,500 
Stock issued to vendors and consultants for compensation   —      5,450 
    —      —   
Debt inducement expense   —      50,000 
           
Changes in Certain Assets and Liabilities          
Increase (Decrease) accounts payable   10,473    12,782 
Increase (Decrease) in stock payable   —      23,724 
Increase in accrued expenses   (387,782)   77,297 
Increase (Decrease) in derivative liability   4,041    120,809 
Net cash (used in) operating activities   (77,533)   (68,759)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds of treasury stock   —      179,975 
Proceeds from sale of stock for cash   —      84,000 
Proceeds from related party loan, net   —      3,300 
Repurchase and cancellation of stock   —      —   
Payments on officer loans   (1,400)   —   
Proceeds from convertible and promissory note payable   78,134    —   
           
Net cash provided by financing activities   76,734    70,634 
           
NET INCREASE (DECREASE) IN CASH   (799)   1,875 
           
CASH - BEGINNING OF PERIOD   390    1,189 
           
CASH - END OF PERIOD  $390   $3,064 

  

 F-3

 

 

TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 - Organization

 

Transfer Technology International Corp. (the “Company”) was previously known as Inverted Paradigms Corporation (“Inverted Paradigms” or the “Company”) was incorporated in the State of Nevada on December 18, 1997. On September 29, 2003, the Company completed a re- incorporation merger into a Delaware Corporation thus changing the state of incorporation from Nevada to Delaware. The Company is in the process of seeking new technology.

 

On March 17, 2009 the Company announced the creation of its wholly owned subsidiary Organic Products International Corp. (OPI). The decision to launch OPI is based on the development of three market ready products, and licensing agreements that provide a base of product offerings.

 

In November, 2009, the Company formed a new subsidiary called Xterminate, Inc., a Florida corporation, which launched their eco-friendly termite control business. The Company applies oil for termite control purposes.

 

The condensed consolidated unaudited financial statements included herein have been prepared by Transfer Technology International Corporation (the “Company”), formerly Inverted Paradigms Corporation and Subsidiaries without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2010 audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

 

The management of the Company believes that the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations, changes in stockholders’ equity (deficit), and cash flows for the periods presented.

 

Note 2 - Basis of Presentation - Going Concern

 

The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses since February 16, 1999 (date of inception), which losses have caused an accumulated deficit of $48,357,818 as of March 31, 2012 and $ 44,751,303 as of December 31, 2011. This factor, among others, raises substantial doubt about the Company’s ability to continue as a going concern.

 

Management has been able, thus far, to finance the losses through a series of private placements and convertible notes payable. The Company is continuing to seek other sources of financing and attempting to explore alternate ways of generating revenues through partnerships with other businesses. Conversely, the seeking of new technology is expected to result in operating losses for the foreseeable future. There are no assurances that the Company will be successful in achieving its goals.

 

In view of these conditions, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and future plans to raise capital provide an opportunity to continue as a going concern.

 

Note 3 - Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Transfer Technology International, Corporation and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.

 

 F-4

 

Use of 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 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 those estimates.

 

Fair Value of Financial Instruments

 

The carrying amount of financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses, debt and other liabilities, approximate fair value due to their short maturities.

 

Revenue Recognition

 

Revenue is recognized when persuasive evidence of an arrangement exists, services are rendered, pricing is fixed or determinable and collectability is reasonably assured.

 

Recent Accounting Pronouncements

 

In August 2010, the FASB issued ASU No 2010-22, Accounting for Various Topics. Technical Corrections to SEC Paragraphs- An announcement made by the staff of US Securities and Exchange Commission. This Update makes changes to several of the SEC guidance literature within the Codification. Some of the changes relate to (1) Oil and Gas Exchange Offers, (2) Accounting for Divestiture of a Subsidiary or Other Business Operations, (3) Replaces “Push Down” basis accounting references with “New” basis of accounting to be used in the acquired companies financial statements, (4) Fees paid to an investment banker in connection with an acquisition or asset purchase, when the investment banker is also providing interim financing or underwriting services must be allocated between the related service and debt issue costs. The amendments in this Update are effective immediately. The Company doesn’t expect this guidance to have a significant impact on its financials since there are no changes to accounting that were not already being applied by the Company.

 

In July 2010, the FASB issued ASU No 2010-20, Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This Update requires additional disclosures for financing receivables, excluding short-term trade accounts receivables and or receivables measured at fair value. The new disclosures are designed to allow a user to better evaluate a company’s credit risk in the portfolio of financing receivables, how the risk is analyzed and in allowing for credit losses and the reason for the changes in the allowance for credit losses. Some of the additional disclosures required are to provide a roll forward of allowance for credit losses by portfolio segment basis, credit quality of indicators of financing receivables by class of financing receivables, the aging of financing receivables by class of financing receivable, significant purchases and sales of financing receivables by portfolio segment, amongst other requirements. The amendments in this Update are effective for reporting periods ending on or after December 15, 2010 for disclosures as of the end of the reporting period and disclosures related to activity are effective for reporting periods beginning on or after December 15, 2010 for public entities. For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011. Comparative disclosures for earlier reporting periods are encouraged, but not required. The Company doesn’t expect this guidance to have a significant impact on its financials since it doesn’t have any finance receivables. The receivables are short-term trade receivables.

 

In February 2010, the FASB issued ASU No 2010-10, Consolidation (Topic 810) – Amendments for Certain Investment Funds. This update provides for the deferral of the consolidation requirements under Topic 810 for a reporting entity’s interest in an entity 1) that has all the attributes of an investment company or 2) for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies. The amendments are effective as of the first annual period that begins after November 15, 2009, and for interim periods within that period. The Company will adopt this Update on January 1, 2010 and it didn’t have a significant impact on the financials since the Company has no interest in investment type companies.

 

 F-5

 

 

In February 2010, the FASB issued ASU No 2010-08, Technical Corrections to Various Topic. This update provides clarifications, eliminates inconsistencies and outdated provisions within the guidance. None of the provisions fundamentally change US GAAP, but certain clarifications regarding hedging and derivatives may cause a change in the application of that Subtopic. The amendments are effective for the first reporting beginning after issuance – June 30, 2010 for the Company. The amendments were reviewed and no items of significance were noted. As such, this update is not expected to have a significant impact on the Company’s financial statements.

  

In January 2010, the FASB issued ASU No 2010-06, Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements. This update provides amendment to the codification regarding the disclosures required for fair value measurements. The key additions area as follows: 1) Disclose transfer in and out of Level 1 and 2, 2) Activity in Level 3 should show information about purchases, sales, settlements, etc on a gross basis rather than as net basis, and 3) Additional disclosures about inputs and valuation techniques. The new disclosure requirements are effective for interim and annual periods beginning after December 31, 2009, except for the gross disclosures of purchases, etc which is effective for periods beginning after December 15, 2010. The Company will adopt this Update on January 1, 2010 and doesn’t expect it will have a significant impact on the financials since there aren’t many items recorded at fair value, but additional disclosures about inputs and valuation techniques will be made.

 

In January 2010, the FASB issued ASU No 2010-04, Accounting for Various Topics – Technical Corrections to SEC Paragraphs. This update provides updates/corrections to various topics of the codification with regards to the SEC’s position on various matters. There is no new guidance, but adjustments to the SEC’s position on already issued updates. Some of the main topics covered are as follows: 1) Requirements for using push down accounting in an acquisition 2) appropriate balance sheet presentation of unvested, forfeitable equity instruments are issued to non employees as consideration for future services – these are to be treated as not issued and no entry recorded until the instruments are earned. 3) intangible assets arising from insurance contracts acquired in a business combination. The corrections are applicable for 2009 since the updates relate to already issued guidance. The main issue that may impact the Company is the accounting for unvested, forfeitable equity instruments. The Company will evaluate and determine if there are any contracts with non-employees for which equity instruments are granted and ensure they are accounted for in accordance with the update.

 

Income Taxes

 

The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

  

Deferred Income Taxes

 

Deferred income taxes reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related assets or liabilities for financial reporting, or according to the expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting. Valuation allowances are established against deferred tax assets if it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment date.

 

 F-6

 

 

Income Tax Uncertainties

 

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on the two-step process prescribed by applicable accounting principles. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period. The Company recognizes interest and penalties as incurred in finance income, (expense), net in the Consolidated Statements of Operations.

 

Net Loss Per Share Information

 

Basic and diluted loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. The Company’s common stock warrants have been excluded from the diluted loss per share computation since their effect is anti-dilutive.

 

The following is a reconciliation of the computation for basic and diluted EPS:

 

   December 31, 2011  December 31, 2010
NET LOSS   (1,317,641.00)   (1,532,141.00)
           
WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK - BASIC AND DILUTED   161,597,814    42,038,284 

 

For the years ended December 31, 2011 and 2010 options and warrants were not included in the computation of diluted EPS because inclusion would have been anti-dilutive. Stock options were not included since none have been granted.

 

For the three months ended March 31, 2012 and 2011 options and warrants were not included in the computation of diluted EPS because inclusion would have been anti-dilutive. Stock options were not included since none have been granted. There were 4,250,000 warrants at March 31, 2012 and 4,726,500 warrants at March 30, 2011.

Note 4 - Equipment

 

   March 31, 2012  March 31, 2011
Computers and equipment  $2,819   $2,819 
Less: accumulated depreciation   2418    2016 
Computers and equipment - Net  $401   $803 

 

Depreciation expense for the three months ended March 31, 2012 and 2010 was $401 and $803 respectively.

 

Note 5 - Commitments

 

The Company leases an office suite for its Tampa, Florida headquarters. The terms of the lease extends until February 28, 2012. The Company is required to pay a base rent of $17,595 for the twelve months period ending February 28, 2012. The total expected lease payments through December 31, 2011 is $8,798 and for the two months ended February 28, 2012 is $2,933 for the total of $11,730.

 

 F-7

 

 

The Company also leases 600 square feet of office space for its termite control operation. Lease payments are $1,500 per month. The lease is on a month to month basis.

 

Note 6 - Convertible Notes and Notes Payable

 

Various notes are in default and continue to accrue interest. The Company has the option, and it is managements’ intent to convert all past due convertible notes to common stock in 2010 and 2011. The conversion price shall be based upon one half the average closing share price of the stock for the 10 prior days before conversion or .25 cents, whichever is greater.

 

   March 31, 2012  December 31, 2011
Various unsecured convertible note payables, with varying interest rates between 10% - 18%, due on demand and in default  $286,800   $286,800 
           
Various unsecured convertible note payable, 10% interest rate, due on January 2011   200,000    200,000 
           
Various unsecured promisory notes, with varying interest rates between 10% - 12%, due on June and October 2010   60,000    60,000 
           
Total Convertible Notes and Notes Payable  $546,800   $546,800 

 

During the year ended December 31, 2010, the Company converted debt totaling $768,724, which included $126,224 of accrued interest into 55,389,090 shares of common stock. The debt was held by 32 convertible note holders. The debt was converted at the rate of $0.13 per share. The convertible notes originally established a conversion price of $0.25 per share. On August 26, 2010, the board of directors repriced the conversion rate to $0.13 per share given the depressed value of the Company’s stock. In accordance with generally accepted accounted principles, the Company recognized approximately $50,000 of debt inducement expense in connection with this transaction.

 

 F-8

 

 

Note 7 - Related Party Loans

 

   March 31,
2012
  December 31, 2010
May 2009 – Unsecured promissory note payable for $ 50,000, bearing interest at a fixed rate of 8%. The maturity date is past and all principal and interest is due on demand.  $50,000   $50,000 
           
July 2009 – Unsecured promissory note payable for $ 15,000, bearing interest at a fixed rate of 10%. The maturity date is past and all principal and interest is due on demand.  $15,000   $15,000 
           
September 2009 – Unsecured promissory note payable for $ 5,000, bearing interest at a fixed rate of 10%. The maturity date is past and all principal and interest is due on demand.  $5,000   $5,000 
           
November 2009 – Unsecured Promissory note payable for $ 1,200, bearing interest at a fixed rate of 10%. The maturity date is November 2010 at which time all principal and interest are due.  $ —      $ —    
           
December 2009 – Unsecured Promissory note payable for $ 4,000, bearing interest at a fixed rate of 10%. The maturity date is December 2010 at which time all principal and interest are due.  $ —      $ —    
           
March 2010 – Unsecured Promissory note payable for $ 3,600, non interest bearing note. The maturity date is March 2011 at which time all principal and interest are due.  $3,200   $3,200 
           
March 2010 – Unsecured convertible note payable for $30,000 bearing interest at a fixed rate of 10%. The maturity date is March 2011 at which time all principal and interest are due.  $28,000   $28,000 
           
May 2010 – Unsecured Promissory note payable for $ 1,000, non interest bearing note. The maturity date is May 2011 at which time all principal and interest are due.        1,000 
Total Related Party Loans  $101,200   $101,200 

  

Note 8 - Contingent Liabilities

 

Lawsuit by Gary Harrison

 

In the first quarter of 2009 a dispute arose with Gary Harrison regarding his consulting responsibilities with the Company. In a settlement of the matter, the Company agreed to pay Mr. Harrison $67,857 together with interest that accrues at 8% per annum. The payment came due on January 25, 2010. The Company was unable to make the payment and the parties agreed upon a six month extension of the payment due date to July 25, 2010. The Company was unable to make payment on July 25, 2010. This amount has been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities.

 

 F-9

 

 

On September 28, 2010, Mr. Harrison filed a lawsuit against the Company in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Civil Division, Division J, Case Number 10019528. The suit seeks to collect $67,857 pursuant to the settlement agreement together with post default interest at the rate of 18% per annum. The suit was served upon the Company on November 11, 2010. The Company had until December 1, 2010, to answer the complaint. Due to a lack of funding, the Company was not able to retain legal counsel for the purpose of answering the complaint within the allotted time. On April 5, 2011, the court entered a default judgment against the Company in the amount of $88,949.80. To date, to the knowledge of the Company, no legal action has been taken to enforce the judgment.

 

Lawsuit by Brown and Goldfarb, LLC

 

Effective January 1, 2010, the Company entered into an agreement with Brown and Goldfarb, LLC, wherein the Company was granted an exclusive license to sell a therapeutic device for thermally assisted urinary function. On April 28, 2010, the Company was sued by Brown and Goldfarb, LLC in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, Division K, Case Number 10008285, for failure to pay cash advance fees of $40,000 and issue 250,000 shares of Company common stock required by the Agreement. The parties settled the lawsuit by the Company agreeing to pay $10,000 on September 30, 2010 and $15,000 on July 30, 2010.

 

The Company was unable to make the first payment and as a result, default judgment was entered against the Company in the amount of $50,000 on July 13, 2010. Brown and Goldfarb has agreed to not execute on their judgment if they receive payment of $25,000. So far the Company has only been able to pay $5,000. The Company has accrued $50,000 to reflect the liability to the Company as a result of the default judgment. At the present time the parties are negotiating a settlement whereby the Company will pay an additional $5,000 and the rest of the payment will be in stock. Until the Company has the requisite $5,000, this arrangement cannot be finalized.

 

Default on Buy Back Agreements

 

In February, 2009, the Company was contacted by three investors requesting the Company buy back their investments. The Company agreed to do so. The combined investment price was $235,000 and was to be paid by the Company over time on monthly payments. The Company was only able to make the first two payments and has now been in default on the agreements for two years. The Company has accrued for the settlements in the accompanying Consolidated Balance Sheet. However, no legal action has been brought to enforce the agreements and the investors have not contacted the Company in over a year.

 

Claims by two additional Shareholders

 

On August 21, 2010, a convertible note issued by the Company came due in favor of Mr. Michael Buckley in the amount of $200,000. Interest was discounted at the inception of the note so the $200,000 is the full amount due. Mr. Buckley has opted to not convert the note and is demanding payment in cash from the Company. The Company is unable to make payment. Mr. Buckley has hired legal counsel who has contacted the Company. Mr. Buckley has a perfected security interest in all of the assets of the Company. The perfected security interest was put in place by making UCC-1 filings with the states of Florida and Delaware on October 27, 2010, and October 29, 2010, respectively and by filing an assignment of patents with respect to the two patents owned by Company, with the United States Patent and Trademark Office on November 4, 2010. If the Company is not successful in paying this obligation or otherwise working out a solution to the satisfaction of Mr. Buckley, Mr. Buckley will be in a position to take over all of the assets of the Company potentially shutting down all business operations. In July, 2011, the Company received court documentation whereby Mr. Buckley is foreclosing on the patent rights belonging to the Company that are subject to Mr. Buckley’s lien. An additional note in the amount of $100,000 payable to Michael Buckley has also recently come due so a combined amount of $300,000 is now owed to Mr. Buckley by the Company. Management is working diligently with Mr. Buckley to work out a solution for these receivables.

 

In July, 2010, a convertible note issued by the Company came due in favor of Mr. Louis Fiorica in the amount of $10,000. Mr. Fiorica has decided to not convert the note and is demanding payment of $10,000 plus interest. The Company is not in a position to make payment. To date, no legal action has been taken by Mr. Fiorica against the Company

 

 F-10

 

 

Note to John Cawood

 

Ninety days ago, a note payable by the Company to Mr. John Cawood in the amount of $100,000 became due and payable. At the present time the Company does not have means to repay the note. The Company has not been contacted by Mr. Cawood or any party representing Mr. Cawood regarding this note.

 

Lawsuit by Margaret Wisniewski

 

On December 4, 2008, Margaret Wisniewski purchased from the Company a One-year Convertible Promissory Note in the amount of $50,000. Mrs. Wisniewski has now filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, State of Florida seeking a return of her investment. The complaint alleges the investment constituted exploitation of a vulnerable adult. The Company did not have the funding necessary to defend the suit and the Company’s default has been entered with the court but no default judgment has been entered. Opposing counsel has agreed to not enter default judgment at this time but rather negotiate an agreement whereby the Company will pay the amounts owed. These amounts have been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities. Management has recently reached out to opposing counsel for the purpose of settling this dispute through the issuance of stock.

 

Note 9 - Income Taxes

 

Income Taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes related to differences between the basis of assets and liabilities for financial and income tax reporting will either be taxable or deductible when the assets or liabilities are recovered or settled. The difference between the basis of assets and liabilities for financial and income tax reporting are not material therefore, the provision for income taxes from operations consist of income taxes currently payable.

 

There was no provision for income tax for the three months ended March 31, 2012 and the year ended December 31, 2011. At March 31, 2012 and December 31, 2011 the Company had an accumulated deficit approximating $45,821,447 and $ 44,751,303.

 

The Company has recorded full valuation allowance on its deferred tax assets as of March 31, 2012 and December 31, 2011. These assets were primarily derived from net operating losses, which The Company will more than likely than not be able to utilize.

 

Note 10 - Stockholders’ Deficit

 

The Company had 250,000,000 authorized shares of common stock as of March 31, 2012 and December 31, 2011. The Company had 249,963,747 and 249,963,747 shares of common stock issued and outstanding as of March 31, 2012 and December 31, 2011 respectively.

 

2012

No shares were issued in the first quarter of 2012

 

2011

 

No shares were issued in the first quarter of 2011

 

During the quarter ended June 30, 2011, the Company issued 2,500,000 shares of common stock for consultants. The common stocks were issued at a price of $.0005 per share.

 

During the quarter ended June 30, 2011, the Company issued 500,000 shares of common stock for employee’s compensation. The common stocks were issued at a price of $.0068 per share.

 

During the quarter ended June 30, 2011, the Company issued 90,000,000 shares of common stock for executive compensation, accrued payroll and stock payable for employment agreement. The common stocks were issued at a price of $.0068 per share.

 

 F-11

 

 

During the quarter ended June 30, 2011, the Company issued 7,000,000 shares of common stock for consultants. The common stocks were issued at a price of $.0013 per share.

 

During the quarter ended June 30, 2011, the Company issued 15,000,000 shares of common stock for a legal settlement. The common stocks were issued at a price of $.0021 per share.

 

2010

 

During the quarter ended March 31, 2010, the Company issued 350,000 shares of common stock for executive compensation. The common stocks were issued at a price of $.03 per share.

 

During the quarter ended March 31, 2010, the Company issued 170,000 shares of common stock for directors compensation. The common stocks were issued at a price of $.03 per share.

 

During the quarter ended March 31, 2010, the Company issued 50,000 shares of common stock for employees compensation. The common stocks were issued at a price of $.03 per share.

 

During the quarter ended March 31, 2010, the Company issued 635,000 shares of common stock for consultants compensation. The common stocks were issued at a price of $.03 per share.

 

There were no transactions of the common stock during the quarter ended June 30, 2010.

 

Year Of Issuance  Warrant Type  Warrant Shares  Exercise Price  Expiration Date
             
2010   Class A warrants   1,000,000    0.02   Oct. 14, 2011
        1,250,000    0.02   24-Apr-12
        1,000,000    0.03   Sep. 29, 2012
                  
    Class B warrants   1,000,000    0.06   Sep. 29, 2013
Total warrants outstanding       4,250,000         

The following table summarizes our warrants as of March 31, 2012.

 

Note 11 - Restatement of Financial Statements

 

None

 

Note 12 - Fair Value Measurements

 

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured at fair value on a recurring basis. ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

 F-12

 

 

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at March 31, 2012:

 

   Total  Level (1)  Level (2)  Level (3)
             
             
Total assets  measured at fair value   0    0    0    0 
                     
Derivative Liability   291065    0         291065 
                     
Total liabilities measured at fair value   291065    0    0    291065 

 

The table below presents our assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 31, 2012. We classify financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model.

 

Derivative Valuation  Liability
Balance at December 31, 2010   (292,480)
Total gains or losses (realized and unrealized) Included in net loss   —   
Valuation adjustment   —   
Purchases, issuances, and settlements, net   (4,041)
Transfers to Level 3   —   
Balance at December 31, 2010   (296,521)

 

Note 13 - Subsequent Events

 

On August 21, 2010, a convertible note issued by the Company came due in favor of Mr. Michael Buckley in the amount of $200,000. Mr. Buckley has a perfected security interest in all of the assets of the Company. In July, 2011, the Company received court documentation whereby Mr. Buckley is foreclosing on the patent rights belonging to the Company that are subject to Mr. Buckley’s lien.

 

On August 9, 2011, the Company registered its 2011 Supplemental Stock Option Plan with the Securities and Exchange Commission on Form S-8. The registration registered options for the issuance of 15,000,000 common shares. It also registered 15,000,000 common shares underlying those options.

 

Between August 9, 2011 and August 15, 2011, the Company issued an aggregate of 9,500,000 common shares to employees and consultants of the Company for compensation for services rendered to the Company. The shares were issued pursuant to the Company’s 2011 Supplemental Stock Option Plan. The plan was registered with the Securities and Exchange Commission on August 9, 2011, on Form S-8.

 

The Company has evaluated subsequent events pursuant to ASC 855 and has determined that there are no additional events to disclose.

 

 F-13

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Results of Operations

 

Due to insufficient progress in prior business operations, approximately four years ago the Company liquidated its business assets and launched a new business plan. Its business assets had been comprised of software known as Silent Sword which protected computers from viruses and spyware. The Company had not been successful in marketing the software at levels sufficient to make further development of the software commercially viable. At the time of transfer on October 4, 2007, the software was not being carried on the books of the Company. The software was transferred in exchange for the acquirer’s agreement to invest $150,000 in the Company’s common stock.

 

To launch its new business plan, the Company hired a new CEO with experience in its new direction. The industry is described by the Company as technology transfer. The Company changed its name to Transfer Technology International Corp. to reflect involvement in this industry. The Company’s intent was to acquire new or underused technologies through the acquisition of licenses and then design commercialization strategies in conjunction with business partners who could facilitate market penetration. The Company has to date realized no revenues from its transfer technology operation.

 

In a different vein, the Company has acquired the rights to be a reseller of certain organic products and engage in pest control application services. These two activities have created revenue streams for the Company, albeit in a minor way at this time. Management believes, however, that these business activities have potential for the Company. During the three month period ended March 31, 2012, the Company had top line revenues from business operations in the amounts of $2,470 and 2,180. During the same periods for the prior year, the Company had top-line revenues from business operations in the amounts of $3,665 and 2,290 respective. The increase in revenues during the second fiscal quarters of the years as compared to the first fiscal quarters, is indicative of the seasonality of the pest control business.

 

Capital Resources

 

Current business operations have been funded by financing activities including borrowing money and the sale of notes and equity capital. Even though management believes operating revenues may be generated through the sale of organic products and pest control services, management plans on continuing meeting it cash obligations in the foreseeable future through the continued sale of its common stock in private placements. Other sources of capital to the Company include bridge financings from shareholders.

 

Three month period ended March 31, 2012

 

Due to lack of business revenue and the ability to raise money through the sale of equity capital, during the three months ending in March, 2012, the Company had to cut back business operations and economize in every way possible to keep the Company operational, thereby resulting in the decreased expense.

 

Management estimates cash expenditures in the future will total approximately $35,000 per month. Accordingly, going forward, the Company needs approximately $105,000 per quarter to stay solvent. As mentioned earlier, these cash needs must be met in the near term through the sale of equity capital and eventually through revenues from its business operations.

 

Liquidity

 

In the past, the Company funded its business operations through the sale of convertible notes and equity capital. During the spring and summer of 2009, it became more difficult than it had been in the past to raise operating capital in this manner as a result of the downturn in the nation’s capital markets generally. In addition, as our stock price fell with the fall of the economy, it was more difficult to raise money through the sale of equity capital. Nevertheless, the Company continues its efforts to raise money through the sale of convertible notes.

 

The Company had also anticipated that it would be generating revenue by mid 2010 through the commercialization of technologies then owned or subsequently acquired by the Company. However, various delays pushed back commercialization of potential products and an inability to raise large amounts of capital delayed our ability to acquire and commercialize other technologies.

 

 2

 

 

Our current plans for addressing liquidity concerns is to continue raising money through the sale of convertible notes and to generate revenue through marketing our organic products and operating our termite eradication unit. If we are not successful in raising sufficient capital and achieving sufficient operating revenues, the Company will cease to exist as a going concern.

 

CONTINGENT LIABILITIES

 

The following is a discussion of various circumstances that could become material liabilities for the Company. The discussion is comprehensive as other liabilities that management considers more remote in nature could also arise.

 

Lawsuit by Gary Harrison

 

In the first quarter of 2009 a dispute arose with Gary Harrison regarding his consulting responsibilities with the Company. In a settlement of the matter, the Company agreed to pay Mr. Harrison $67,857 together with interest that accrues at 8% per annum. The payment came due on January 25, 2010. The Company was unable to make the payment and the parties agreed upon a six month extension of the payment due date to July 25, 2010. The Company was unable to make payment on July 25, 2010. This amount has been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities.

On September 28, 2010, Mr. Harrison filed a lawsuit against the Company in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Civil Division, Division J, Case Number 10019528. The suit seeks to collect $67,857 pursuant to the settlement agreement together with post default interest at the rate of 18% per annum. The suit was served upon the Company on November 11, 2010. The Company had until December 1, 2010, to answer the complaint. Due to a lack of funding, the Company was not able to retain legal counsel for the purpose of answering the complaint within the allotted time. On April 5, 2011, the court entered a default judgment against the Company in the amount of $88,949.80. To date, to the knowledge of the Company, no legal action has been taken to enforce the judgment.

 

Lawsuit by Brown and Goldfarb, LLC

 

Effective January 1, 2010, the Company entered into an agreement with Brown and Goldfarb, LLC, wherein the Company was granted an exclusive license to sell a therapeutic device for thermally assisted urinary function. On April 28, 2010, the Company was sued by Brown and Goldfarb, LLC in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, Division K, Case Number 10008285, for failure to pay cash advance fees of $40,000 and issue 250,000 shares of Company common stock required by the Agreement. The parties settled the lawsuit by the Company agreeing to pay $10,000 on September 30, 2010 and $15,000 on July 30, 2010.

 

The Company was unable to make the first payment and as a result, default judgment was entered against the Company in the amount of $50,000 on July 13, 2010. Brown and Goldfarb has agreed to not execute on their judgment if they receive payment of $25,000. So far the Company has only been able to pay $5,000. The Company has accrued $50,000 to reflect the liability to the Company as a result of the default judgment. At the present time the parties are negotiating a settlement whereby the Company will pay an additional $5,000 and the rest of the payment will be in stock. Until the Company has the requisite $5,000, this arrangement cannot be finalized.

 

Default on Buy Back Agreements

 

In February, 2009, the Company was contacted by three investors requesting the Company buy back their investments. The Company agreed to do so. The combined investment price was $235,000 and was to be paid by the Company over time on monthly payments. The Company was only able to make the first two payments and is now in default on the agreements. One of the investors who was to receive $70,000 has now contacted the Company through his lawyer and is taking the position that he was not given all appropriate rights when he made his investment and is demanding payment in full of the $70,000 plus interest. The Company is adamantly taking the position that the investment was made properly. However, the Company is in default on the three Buy Back Agreements and is subject to the liability as a result thereof. The Company has accrued for the settlements in the accompanying Consolidated Balance Sheet.

 

 3

 

 

Payment Demand by two Noteholders

 

On August 21, 2010, a convertible note issued by the Company came due in favor of Mr. Michael Buckley in the amount of

$200,000. The note is secured by the assets of the Company. Interest was discounted at the inception of the note so the $200,000 is the full amount due. Mr. Buckley has opted to not convert the note and is demanding payment in cash from the Company. The Company is unable to make payment. Mr. Buckley has hired legal counsel who has contacted the Company. If the Company is not successful in paying this obligation to the satisfaction of Mr. Buckley, Mr. Buckley will be in a position to take over all of the assets of the Company potentially shutting down all business operations. An additional note in the amount of $100,000 payable to Michael Buckley has also recently come due so a combined amount of $300,000 is now owed to Mr. Buckley by the Company. In July, 2011 the Company received copies of court documents whereby Mr. Buckley has commenced foreclosure on the patent rights owned by the Company.

 

In July, 2010, a convertible note issued by the Company came due in favor of Mr. Louis Fiorica in the amount of $10,000. Mr. Fiorica has decided to not convert the note and is demanding payment of $10,000 plus interest. The Company is not in a position to make payment. To date, no legal action has been taken by Mr. Fiorica against the Company.

 

Note to John Cawood

 

Approximately ninety days ago, a note payable by the Company to Mr. John Cawood in the amount of $100,000 became due and payable. At the present time the Company does not have means to repay the note. The Company has not been contacted by Mr. Cawood or any party representing Mr. Cawood regarding this note.

 

Lawsuit by Margaret Wisniewski

 

On December 4, 2008, Margaret Wisniewski purchased from the Company a One-year Convertible Promissory Note in the amount of $50,000. Mrs. Wisniewski has now filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, State of Florida seeking a return of her investment. The complaint alleges the investment constituted exploitation of a vulnerable adult. The Company did not have the funding necessary to defend the suit and the Company’s default has been entered with the court but no default judgment has been entered. Opposing counsel has agreed to not enter default judgment at this time but rather negotiate an agreement whereby the Company will pay the amounts owed. These amounts have been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities. Management has recently reached out to opposing counsel for the purpose of settling this dispute through the issuance of stock.

 

Forward-Looking Statements

 

We may have made forward-looking statements, within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, in this Annual Report on Form 10-K, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions.

 

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. You should understand that many important factors, in addition to those discussed elsewhere in this Annual Report on Form 10-K, could cause our results to differ materially from those expressed in the forward- looking statements. These factors include, without limitation, the rapidly changing industry and regulatory environment, our limited operating history, our ability to implement our growth strategy, our ability to integrate acquired companies and their assets and personnel into our business, our fixed obligations, our dependence on new capital to fund our growth strategy, our ability to attract and retain quality personnel, our competitive environment, economic and other conditions in markets in which we operate, increases in maintenance costs and insurance premiums and cyclical and seasonal fluctuations in our operating results. TTIN, unless legally required, undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 4

 

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements and do not anticipate entering into any off-balance sheet arrangements that would have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

The Registrant is not required to provide the information called for in this Item 3 due to its status as a Smaller Reporting Company.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures had not been effective at the reasonable assurance level to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

The Company made no changes during our most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the exchange Act.

  

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Lawsuit by Gary Harrison

 

In the first quarter of 2009 a dispute arose with Gary Harrison regarding his consulting responsibilities with the Company. In a settlement of the matter, the Company agreed to pay Mr. Harrison $67,857 together with interest that accrues at 8% per annum. The payment came due on January 25, 2010. The Company was unable to make the payment and the parties agreed upon a six month extension of the payment due date to July 25, 2010. The Company was unable to make payment on July 25, 2010. This amount has been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities.

 

On September 28, 2010, Mr. Harrison filed a lawsuit against the Company in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Civil Division, Division J, Case Number 10019528. The suit seeks to collect $67,857 pursuant to the settlement agreement together with post default interest at the rate of 18% per annum. The suit was served upon the Company on November 11, 2010. The Company had until December 1, 2010, to answer the complaint. Due to a lack of funding, the Company was not able to retain legal counsel for the purpose of answering the complaint within the allotted time. On April 5, 2011, the court entered a default judgment against the Company in the amount of $88,949.80, which amount has been recognized as a liability in the financial statements. To date, to the knowledge of the Company, no legal action has been taken to enforce the judgment.

 5

 

 

Satisfied Judgment in favor of Marilyn Simmons

 

On January 27, 2010, TTIN was sued by Marilyn Simmons who had invested $90,000 with the Company. The suit claimed the investment was not suitable for her and was fraudulent. TTIN disagreed with the claims and believes the suit could have been successfully defended. However, TTIN did not have the money to retain legal counsel to defend the suit and in March, 2010, Simmons obtained a default judgment against TTIN in the amount of $97,786. The Company paid $12,800 toward the judgment and on or about July 25, 2011, settled the balance of the judgment by issuing 15,000,000 shares of common stock in payment. On August 10, 2011 the Company received a duly executed Satisfaction of Judgment to be filed with the court.

 

Lawsuit by Brown and Goldfarb, LLC

 

Effective January 1, 2010, the Company entered into an agreement with Brown and Goldfarb, LLC, wherein the Company was granted an exclusive license to sell a therapeutic device for thermally assisted urinary function. On April 28, 2010, the Company was sued by Brown and Goldfarb, LLC in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, Division K, Case Number 10008285, for failure to pay cash advance fees of $40,000 and issue 250,000 shares of Company common stock required by the Agreement. The parties settled the lawsuit by the Company agreeing to pay $10,000 on September 30, 2010 and $15,000 on July 30, 2010. The Company was unable to make the first payment and as a result, default judgment was entered against the Company in the amount of $50,000 on July 13, 2010. Brown and Goldfarb has agreed to not execute on their judgment if they receive payment of $25,000. So far the Company has only been able to pay $5,000. The Company has accrued $50,000 to reflect the liability to the Company as a result of the default judgment. At the present time the parties are negotiating a settlement whereby the Company will pay an additional $5,000 and the rest of the payment will be in stock. Until the Company has the requisite $5,000, this arrangement cannot be finalized.

 

Lawsuit by Margaret Wisniewski

 

On December 4, 2008, Margaret Wisniewski purchased from the Company a One-year Convertible Promissory Note in the amount of $50,000. Mrs. Wisniewski has now filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, State of Florida seeking a return of her investment. The complaint alleges the investment constituted exploitation of a vulnerable adult. The Company did not have the funding necessary to defend the suit and the Company’s default has been entered with the court but no default judgment has been entered. Opposing counsel has agreed to not enter default judgment at this time but rather negotiate an agreement whereby the Company will pay the amounts owed. These amounts have been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities. Management has recently reached out to opposing counsel for the purpose of settling this dispute through the issuance of stock.

 

Foreclosure of Patent Rights

 

On August 21, 2010, a convertible note issued by the Company came due in favor of Mr. Michael Buckley in the amount of $200,000. The note is secured by the assets of the Company. In July, 2011, the Company received court documentation whereby Mr. Buckley is foreclosing on the patent rights belonging to the Company that are subject to Mr. Buckley’s lien.

 

Item 1A. Risk Factors.

 

Not Required.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

There have been no unregistered sales of equity securities during the quarter ended June 30, 2011, other than sales previously reported on Form 8-K.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

 6

 

 

Item 4. (Removed and Reserved)

 


Item 5. Other Information.

 
None.

 

 7

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  

  Transfer Technology International Corp.
   
   By: /s/ Chris Trina
    Chris Trina
hief Executive Officer, Chief Financial Officer and Chief Accounting Officer

 

Date:  September 21, 2018

  

 8