Item 1. Business
History
We were incorporated under the name “DP Charters” in Nevada on December 18, 1997. On April 18, 2002, we changed our name to “Nomadic Collaboration International, Inc.” Effective May 30, 2003, LGC Acquisition Company, a Delaware corporation and wholly owned subsidiary of Nomadic Collaboration International, Inc., a Nevada corporation, merged with and into LiquidGolf Corporation, a Delaware corporation, such that LiquidGolf Corporation was the surviving entity, and by virtue thereof, LiquidGolf corporation became a wholly owned subsidiary of Nomadic Collaboration. 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. As a result of the merger, the name of the Company changed to LiquidGolf Holding Corporation. Our business operations at this time became the sale of golf equipment.
On August 12, 2004, we determined to change the name of the Company from LiquidGolf Holding Corporation to Horizon Holding Corporation to reflect our business decision to diversity our business operations beyond the sale of golf equipment. As part of this effort, in January 2006, we purchased the Silent SwordTM software and all trademarks, service marks, and logos. On April 28, 2006 a majority of our stockholders approved changing the name of the Company from Horizon Holding Corporation to Inverted Paradigms Corporation to reflect our business direction of developing the Silent SwordTM software. Eventually we were not successful in achieving commercially viable operations in the sale of golf equipment or in the sale software. We discontinued the sale of golf equipment in August of 2006 and the sale of software in March of 2007. On October 2, 2007, we entered into an agreement with GAMI, LLC to purchase the Silent SwordTM software and thereafter consummated the sale.
In September, 2007, it was determined to focus business interests on researching, developing and commercializing innovative, leading-edge technologies. On September 7, 2007, Mr. Chris Trina was hired to be our CEO to pursue this business direction since he was experienced in this industry. Our name would eventually be changed to Transfer Technology International Corp. (“TTIN”) to reflect this business direction.
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Transfer Technology
TTIN’s goal is to build a large intellectual properties portfolio and develop effective commercialization strategies that will lay the groundwork for the company’s future growth and success. To execute this business plan, the company plans to: (1) identify, evaluate and acquire promising technologies; (2) assess the potential market for each technology and recruit likely business partners; and (3) capitalize on the technology potential through commercialization.
During the first quarter of 2008, TTIN acquired patents relating to two technologies. The first is a patented process for preventing flash rust on low carbon steel. The second patent is for a product that protects citrus groves from citrus canker, a disease that causes millions of dollars of crop damage each year. Both of these technologies address large markets and offer significant sales opportunities. A study by CCT Technologies estimates that rust damage costs U.S. businesses approximately $276 billion annually. Regarding citrus canker, the U.S. Department of Agriculture has spent more than $436 million since 2000 on citrus canker eradication efforts. In addition, the company is currently evaluating a third patent for possible acquisition.
TTIN plans to research, develop and commercialize innovative, leading-edge technologies through the acquisition of licenses and the design of effective commercialization strategies in conjunction with business partners who can facilitate market penetration. The company will also help clients identify and acquire development-stage technologies and processes that can enhance the client’s business in exchange for milestone and royalty payments.
In the first quarter of 2009, Transfer Technology formed a wholly owned subsidiary, Organic Products International Corp. (OPI). OPI is a marketing and distribution arm for Transfer Technology formed to handle our organic related products for sales, distribution and licensing.
Three-fold strategy for technology acquisition
The company seeks to identify technologies that represent a significant advance over existing technologies, address an established market and are socially responsible. TTIN plans to pursue technology licensing opportunities in the government, academic and private sectors:
1. TTIN intends to negotiate Cooperative Research and Development Agreements (CRADA) with the Department of Energy, Department of Agriculture and other federal agencies. As part of these agreements, the company will fund research and development of technologies discovered by scientists employed by these government agencies;
2. In the academia market, TTIN plans to target numerous “orphaned” inventions and technology improvements. Approximately 70 percent of university patents never find a practical application or a commercial market;
3. TTIN will also search for licensing opportunities in the private sector by evaluating new technologies and entering into licensing agreements with developers.
First two patents acquired in the first quarter of 2008:
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Flash Off rust preventative targets multi-billion dollar corrosion market
Flash Off rust preventative (U.S. patent number 7,008,910) inhibits flash rusting on low carbon steel. Applications for this product include structural steel, marine vessels, offshore structures, marine terminals, cranes, bridges, storage tanks, pipelines and potable water storage tanks. Rusting and corrosion adversely affect the performance of unprotected steel and may eventually result in structural failures. The U.S. Navy has conducted extensive tests of Flash Off that yielded favorable results. Sherwin Williams is currently evaluating Flash Off with its line of coatings.
A study titled “Corrosion Costs and Preventive Strategies in the United States” conducted by CCT Technologies with support from the Federal Highway Administration and National Association of Corrosion Engineers estimates total direct cost of corrosion damage at $276 billion annually.
Canker Kill product protects citrus groves
Canker Kill is an environmentally-friendly spray that protects citrus groves from a group of diseases commonly known as citrus canker. ABC Research Corporation lab tested Canker Kill and found it effective against the Xanthomonas bacteria. Field tests by Glades Crop Care Inc. indicated Canker Kill was more effective than traditional copper spray treatments and much better than leaving trees untreated. Canker Kill also reduces or stops the growth of spoilage-causing micro-organisms such as Gram-positive bacteria, Gram-negative bacteria, mold, yeast and spores. As a result, Canker Kill has potential applications in the food and beverage processing industries.
Citrus canker is a disease that causes lesions on the leaves, stems and fruit of citrus trees, including lime, orange and grapefruit. Eradicating canker is extremely costly and typically involves burning citrus orchard trees. Since 2000, the U.S. Department of Agriculture has spent $436 million compensating commercial citrus growers in Florida for losses resulting from citrus canker eradication efforts.
Growth outlook
The company plans to raise $6 million in capital, which will be used to commercialize Flash Off and Canker Kill and pursue additional technologies. By mid to late 2009, TTIN plans to build its presence in the technology transfer market, negotiate agreements with research partners and complete the acquisition of additional patents.
By year-end 2009, TTIN anticipates having technology transfer agreements covering 10 to 15 projects. In addition, the company expects to begin commercializing some products. In 2010, management expects TTIN to report revenue from investments in 10 to 25 research projects. Assuming these goals are achieved, management forecasts 2010 revenues of $4.5 million and operating profits of $1.5 million.
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Management team and Scientific Advisory Board
The company’s CEO Chris Trina was introduced to UTEK Corp., a leading technology transfer company, during his tenure as senior vice president of sales at GunnAllen Financial Inc. Mr. Trina was responsible for almost $1.5 million of an approximate $6 million private capital raise for UTEK. Schneider Securities took UTEK public in 2000. Early UTEK investors have benefited from the company’s growth from an initial market capitalization of $22 million in 2000 to over $100 million in 2008.
Intrigued by the UTEK business model and how well his private investors did, Mr. Trina followed the company’s development closely. After five years of watching and studying and being involved in UTEK, he decided to replicate many of UTEK’s successful strategies at TTIN while replacing those components of the UTEK plan that have proved less effective.
In addition, Mr. Trina has helped build a strong Scientific Advisory Board for evaluating new technologies. TTIN’s expert advisors include: Mrs. Valerie McDevitt, who serves as the Director of our Scientific Advisory Board, is the Director of Patents and Licenses at the University of South Florida; Dr. Sandy W. Shultz MD, who is the chief of radiology at Key West Regional Hospital; and Dr. David Silver who is a scientist at the applied physics lab at Johns Hopkins University.
Industry and Market opportunity
Technology transfers begin with the notion that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research efforts, but should instead seek to acquire or license relevant processes or patents from other companies. In addition, internally developed technologies not used by the company should be monetized through licensing, joint ventures or spin-offs.
The transfer technology market includes virtually every university, research facility, government agency and private enterprise worldwide where new technologies are researched. This market consists of literally thousands of facilities researching tens of thousands of new technologies across a broad spectrum of industries.
Stanford University alone filed more than 300 patents in 2004, and has spun off technologies that helped build well-known companies such as Google, Sun Microsystems, Netscape, Cisco Systems and Yahoo. Each year, the Massachusetts Institute of Technology executes almost 100 licenses. The Georgia Institute of Technology in Atlanta, the University of Wisconsin in Madison, and Carnegie Mellon University in Pittsburgh have dedicated considerable resources to building productive technology transfer businesses. Universities receive hundreds of millions of dollars in royalties each year from businesses that have licensed and commercialized their inventions through technology transfers.
TTIN is a development-stage technology transfer company focused on researching, developing and commercializing innovative, leading-edge technologies. The company identifies and acquires promising technologies, knowledge and/or capabilities developed by academia, governmental research or private enterprises, and utilizes these technologies to address unmet needs in the public and private sector through commercialization.
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Employees
At the present time TTIN has five full time employees and one part time employee.
Item 1A.
Item 1A. Risk Factors
Not required
Item 1B.
Item 1B. Unresolved Staff Comments
None
Item 2.
Item 2. Properties
All of our operations are based in our facility located at 2203 North Lois Avenue, Suite 704, Tampa, FL 33607. Our rent for this location is $3,122 per month. Our personal property consists of computer equipment and office furniture.
Item 3.
Item 3. Legal Proceedings
None.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of our security holders during the fourth quarter of the calendar year ended December 31, 2008.
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PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Trading Market
Our common stock is quoted in the Pink Sheets under the symbol “TTIN.PK”. The following table presents the range of high and low quotations during the past two years. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
When reading the above table, it should be noted that our common equity was reverse split on a 1 for 100 basis effective December 7, 2007. On April 1, 2009, the last trade of our stock was at the price of $0.17 per share.
Holders of our common stock
As of April 1, 2009, we have 640 registered shareholders.
Dividends
There are no restrictions in our Certificate of Incorporation or bylaws that restrict us from declaring dividends. However, we are prohibited from declaring dividends where, after giving effect to the distribution of the dividend:
1. We would not be able to pay our debts as they become due in the usual course of business; or
2. Our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We have not declared any dividends. We do not plan to declare any dividends in the foreseeable future.
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Item 6.
Item 6. Selected Financial Data.
Not required.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Due to insufficient progress in prior business operations, approximately seventeen months ago the Company liquidated its business assets and launched a new business plan. It hired a new CEO with experience in its new direction. The industry in which the Company is now engaged 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 commercializes new or underused technologies through the acquisition of licenses and through the design of effective commercialization strategies in conjunction with business partners who can facilitate market penetration. During the first quarter of 2008, the Company acquired patents relating to two technologies. The first is a patented process for preventing flash rust on low carbon steel. The second patent is for a product that protects citrus groves from citrus canker, a disease that causes millions of dollars of crop damage each year. In addition, the company is currently evaluating a third patent for possible acquisition.
The Company is now beginning the commercialization process for these acquired technologies. However, as of the date of this filing, a revenue stream from these technologies has not commenced. During the fiscal year ended December 31, 2008, the Company had no revenues from business operations.
In addition to the commercialization of our technologies, the Company has recently acquired the rights to be a reseller of certain organic products. The Company hired a COO who will be the thrust behind this effort. Since the Company is a reseller of products that are already developed and ready for market, the resale of the organic products has the potential to bring the Company immediate operational revenues. Though the revenues will likely start out slow, management believes this business activity has significant potential for the Company
Capital Resources
Current business operations have been funded by the sale of equity capital. During the fiscal year ended December 31, 2008, the Company raised $1,581,024 through the sale of its common stock and convertible notes. Even though management believes operating revenues may be generated soon through the commercialization of acquired technologies and the sale of organic products, 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 or from persons close to the Company.
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Fiscal year ended December 31, 2008
Because the Company’s new business direction is different from the business it was conducting during the first three fiscal quarters of 2007 and because the new business direction was just being implemented in the fourth fiscal quarter of 2007, comparisons between the fiscal year ended December 31, 2007 and the fiscal year ended December 31, 2008 are not helpful. Therefore this discussion will focus on the fiscal year ended December 31, 2008.
In this first year of the initiation of its new business direction, the Company incurred $2,268,202 in general administrative expenses. Of that amount, $362,500 was in the form of stock issued to directors for services rendered and $860,528 was in the form of stock issued to vendors and consultants for compensation. Accordingly, only approximately $1,045,174 of the general administrative expenses for the year ended December 31, 2008, was paid in cash. This was offset by no operating revenues. The operations of the Company were sustained by proceeds from the sale of our common stock.
Management estimates fixed cash expenditures in the future to total approximately $85,000 per month and variable monthly cash expenditures average $5,000 to $15,000 per month. Accordingly, going forward, the Company needs approximately $285,000 per quarter to stay solvent and to pursue it business plan. As mentioned earlier, these cash needs will be met in the near term through the sale of equity capital and eventually through revenues from its business operations.
Liquidity
As of April 2, 2009, we had cash on hand of approximately $85,002. This money is from the private sale of capital. This will meet the cash needs of the Company for approximately the next 30 days. Thereafter it will be necessary for us to have been successful in raising addition funds through the sale of equity capital or through the commercialization of technologies currently owned or acquired by the Company.
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 Quarterly Report on Form 10-Q, 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.
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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.
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 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not Required.
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Item 8.
Item 8. Financial Statements and Supplementary Data.
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
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BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
Lippincott Drive, Ste. J
Marlton, NJ 08053-4168
(856) 346-2828 Fax (856) 396-0022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
Tampa, FL
We have audited the accompanying consolidated balance sheets of Transfer Technology International Corp. (The “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ deficit and cash flows for each of the years in the two-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Transfer Technology International Corp., as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements as of December 31, 2008 and 2007 have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred substantial accumulated deficits and operating losses. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/s/ BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Bagell, Josephs, Levine & Company, L.L.C.
Marlton, New Jersey
April 3, 2009
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The accompanying notes are an integral part of these consolidated financial statements.
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The accompanying notes are an integral part of these consolidated financial statements.
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TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FKA INVERTED PARADIGMS CORPORATION)
CONSOLITATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
The accompanying notes are an integral part of these consolidated financial statements.
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The accompanying notes are an integral part of these consolidated financial statements.
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
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.
Name Change. On September 18, 2007 a majority of the stockholders approved changing the name of the Company from Inverted Paradigms Corporation to Transfer Technology International Corp.
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 $44,897,324 as of December 31, 2008. 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. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 3 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Transfer Technology International, Corporation and its one wholly owned subsidiary. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.
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.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company maintains cash and cash equivalents at financial institutions that are insured by the Federal Insurance Deposit Corporation up to $250,000. At December 31, 2008, The Company’s uninsured cash balances total $0.
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.
In June 2006, The FASB issued interpretation no. 48, Accounting for Uncertainty in Income Taxes- an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes (SFAS 109). This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 effective January 1, 2007. The adoption of this statement had no impact on the Company's financial position or results of operation.
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 3 - Summary of Significant Accounting Policies (CONTINUED)
Stock-Based Compensation
On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123(R)") which requires that the costs resulting from all share-based payment transactions be recognized in the financial statements at their fair values. The Company adopted SFAS No. 123(R) using the modified prospective application method under which the provisions of SFAS No. 123(R) apply to new awards and to awards modified, repurchased, or cancelled after the adoption date. Additionally, compensation cost for the portion of the awards for which the requisite service has not been rendered that are outstanding as of the adoption date is recognized in the Statement of Operations over the remaining service period after the adoption date based on the award's original estimate of fair value.
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:
For the years ended December 31, 2008 and 2007 options and warrants were not included in the computation of dilutes EPS because inclusion would have been anti-dilutive. There were 10,043,076 warrants at December 31, 2008 and 2,207,000 warrants at December 31, 2007.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, loan receivable, accounts payable, and other current liabilities approximate fair value because of the short maturity of those instruments.
Reclassification
Certain amounts in December 31, 2007 were reclassified to conform to the December 31, 2008 presentation. The reclassification had no effect on December 31, 2008 net loss.
Recent Accounting Pronouncements
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140.” SFAS No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, “Application of
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 3 - Summary of Significant Accounting Policies (CONTINUED)
Recent Accounting Pronouncements (continued)
Statement 133 to Beneficial Interests in Securitized Financial Assets,” and permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that began after September 15, 2006. The implementation of this pronouncement had no impact on the Company’s financial position or results of operations. In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140.” SFAS No. 156 requires an entity to recognize a servicing asset or liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract under a transfer of the servicer’s financial assets that meets the requirements for sale accounting, a transfer of the servicer’s financial assets to a qualified special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale or trading securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” and an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates. Additionally, SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, permits an entity to choose either the use of an amortization or fair value method for subsequent measurements, permits at initial adoption a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights and requires separate presentation of servicing assets and liabilities subsequently measured at fair value and additional disclosures for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective for transactions entered into after the beginning of the first fiscal year that began after September 15, 2006. The implementation of this pronouncement had no impact on the Company’s financial position or results of operations.
In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 was issued in order to eliminate the diversity in practice surrounding how public companies quantify financial statement misstatements. SAB 108 requires that registrants quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in a misstated amount that, when all relevant quantitative and qualitative factors are considered, is material. SAB108 must be implemented by the end of the Company's first fiscal year ending after November 15, 2007. The implementation of this pronouncement had no impact on the Company’s financial position or results of operations.
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 3 - Summary of Significant Accounting Policies (CONTINUED)
Recent Accounting Pronouncements (continued)
In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”), which clarifies the definition of fair value whenever another standard requires or permits assets or liabilities to be measured at fair value. Specifically, the standard clarifies that fair value should be based on the assumptions market participants would use when pricing the asset or liability, and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS No. 157 does not expand the use of fair value to any new circumstances, and must be applied on a prospective basis except in certain cases. The standard also requires expanded financial statement disclosures about fair value measurements, including disclosure of the methods used and the effect on earnings.
In February 2008, FASB Staff Position ("FSP") FAS No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP No. 157-2") was issued. FSP No. 157-2 defers the effective date of SFAS No. 157 to fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items within the scope of FSP No. 157-2 are nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods), and long-lived assets, such as property, plant and equipment and intangible assets measured at fair value for an impairment assessment under SFAS No. 144.
The partial adoption of SFAS No. 157 on January 1, 2008 with respect to financial assets and financial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis did not have a material impact on the Company's consolidated financial statements. See Note 12 for the fair value measurement disclosures for these assets and liabilities. The Company is in the process of analyzing the potential impact of SFAS No. 157 relating to its planned January 1, 2009 adoption of the remainder of the standard.
In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, which amends SFAS No. 87 “Employers’ Accounting for Pensions” (SFAS No. 87), SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS No. 88), SFAS No. 106 “Employers’ Accounting for Postretirement Benefits Other Than Pensions” (SFAS No. 106), and SFAS No. 132R “Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003)” (SFAS No. 132R). This Statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. SFAS No. 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives related to the change in measurement date provisions. The recognition of an asset and liability related to the funded status provision is effective for fiscal year ending after December 15, 2006 and the change in measurement date provisions is effective for fiscal years ending after December 15, 2008. The Company has no defined benefit pension plans at this time and therefore this pronouncement has no effect on the Company.
On January 1, 2008 (the first day of fiscal 2008), the Company adopted SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value, which are not otherwise currently required to be measured at fair value.
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 3 - Summary of Significant Accounting Policies (CONTINUED)
Recent Accounting Pronouncements (continued)
Under SFAS No. 159, the decision to measure items at fair value is made at specified election dates on an instrument-by-instrument basis and is irrevocable. Entities electing the fair value option are required to recognize changes in fair value in earnings and to expense upfront costs and fees associated with the item for which the fair value option is elected. The new standard did not impact the Company's Consolidated Financial Statements as the Company did not elect the fair value option for any instruments existing as of the adoption date. However, the Company will evaluate the fair value measurement election with respect to financial instruments the Company enters into in the future.
Note 4 - Equipment
Equipment is summarized as follows:
Depreciation expense for the year ended December 31, 2008 and December 31, 2007was $403 and $0 respectively.
Note 5 - Rent
The Company leases an office suite for its Tampa, Florida headquarters. The terms of the lease extend until June 30, 2010. The Company is required to pay a base rent of $35,070 for year 2009 and $17, 535 for the six months ending June 30, 2010. The total expected lease payments till June 30, 2010 total $ 52,605.e suite for its Tampa, Florida headquarters. The terms of the lease extend until June 30, 2010. The Company is required to pay a base rent of $35,070 for year 2009 and $17, 535 for the six months ending June 30, 2010. The total expected lease payments till June 30, 2010 total $ 52,605.
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 6a - Convertible Notes Payable
Notes payable are summarized as follows as of December 31, 2008:
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 6b - Notes Payable
Notes payable are summarized as follows as of December 31, 2007:
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 7 - 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 years ended December 31, 2008 and 2007.
At December 31, 2008 and 2007 the Company had an accumulated deficit approximating $44,897,300 and $41,290, 577. Due to changes in ownership during year 2007 the accumulated deficit available to offset future taxable income through 2028 are approximately $3,606,753 and $1,507,476 for the years 2008 and 2007 respectively
Note 8 - Stockholders’ Deficit
The Company had 250,000,000 authorized shares of common stock as of December 31, 2008 and 2007. The Company had 22,798,024 and 6,243,982 shares of common stock issued and 22,598,413 and 6,243,982 outstanding as of December 31, 2008 and 2007 respectively. The Company held 199,611 shares of common stock in treasury at December 31, 2008. The par value of the shares was $.001 per share. The shares have been retroactively restated to account for the reverse stock split effective December 7, 2007.
The Board of Directors declared a 100 to 1 reverse stock split on December effective December 7, 2007. The number of shares issued and outstanding has been reclassified to reflect the 100 to 1 reverse stock split.
During the year ended December 31, 2007 the company issued 1,622,541 shares of common stock for conversion of notes payable. The common stocks were issued at a market value of $.70 per share. The company included $419,789 in beneficial interest expense in its consolidated statement of operations. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. All share recipients were closely related to and well known by the Company and no money was raised.
During the year ended December 31, 2007 the company issued 88,382 shares of common stock for compensation expense. The common stocks were issued at an average market value of $.85 per share. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. All share recipients were closely related to and well known by the Company and no money was raised.
The company issued 850,000 shares of common stock for settlement of the outstanding amount of $350,000 in connection with entering into a settlement agreement on August 22, 2007. The shares were issued at $.80 per share for a total value of $680,000. The company included $330,000 in beneficial interest expense in its consolidated statement of operations. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. All share recipients were closely related to and well known by the Company and no money was raised.
During the year ended December 31, 2007 the company issued stock subscribers 2,556,583 shares of common stock at par value of $.001 per share. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering.
The company issued 750,000 shares of common stock for settlement of a $150,000 sale contract with Silent Sword. The shares were issued at $.20 per share for a total value of $150,000. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. All share recipients were closely related to and well known by the Company and no money was raised.
- 27 -
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 8 - Stockholders’ Deficit (CONTINUED)
On February 7, 2008 the Company issued an aggregate of 3,183,801 shares of common stock to a total of 23 persons and /or entities. The shares were issued in exchange for the cancellation of debt, payment of compensation and pursuant to the conversion of notes. The consideration received by the Company ranged from the par value of the stock to $0.25 per share, depending on the transaction. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. All share recipients were closely related to and well known by the Company and no money was raised.
On March 4, 2008 the Company issued an aggregate of 1,954,785 shares of common stock to a total of 16 persons and /or entities. The shares were issued in exchange for the cancellation of debt, payment of compensation and pursuant to the conversion of notes. The consideration received by the Company ranged from the par value of the stock to $0.25 per share, depending on the transaction. The issuance of the shares was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. All share recipients were closely related to and well known by the Company and no money was raised.
Beneficial interest was $249,358 for the quarter ended March 31, 2008.
On May 9, 2008 the Company issued 34,738 shares of common stock to 1 subscriber, who subscribed during the first quarter of 2008. This was previously shown on the balance sheet as “Liability for Stock to be Issued” in the amount of $15,750.
- 28 -
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 8 - Stockholders’ Deficit (CONTINUED)
(continued)
During the quarter ended June 30, 2008, the Company issued 1,423,124 shares of common stock for the conversion of notes payable. The common stocks were issued at a market value of $ .62 per share to $.92 per share. The Company included $ 981,737 in beneficial interest expense in its consolidated statement of operations.
During the quarter ended June 30, 2008, the Company issued 98,000 shares of common stock for directors’ fees. The common stocks were issued at a market value of $.45 per share to $.92 per share.
During the quarter ended June 30, 2008, the Company issued 595,416 shares of common stock for professional fees. The common stocks were issued at a price of $.45 per share to $.92 per share. The Company included $57,707 in beneficial interest expense in its consolidated statement of operations.
During the quarter ended June 30, 2008, the Company issued stock subscribers 765,319 shares of common stock. The common stocks were issued at a value of $ .13 per share to $.22 per share.
During the quarter ended September 30, 2008, the Company issued 1,767,038 units to subscribers. Each unit is comprised of one common stock, one A warrant, and one B warrant. The units were issued at a value of $.14 per share to $.30 per share.
During the quarter ended September 30, 2008, the Company issued 1,248,212 shares of common stock for professional fees. The common stocks were issued at a price of $.20 per share.
During the quarter ended September 30, 2008, the Company issued 150,000 shares of common stock for professional fees. The common stocks were issued at a price of $.20 per share.
During the quarter ended September 30, 2008, the Company issued 570,000 shares of common stock for executive compensation. The common stocks were issued at a price of $.20 per share.
During the quarter ended September 30, 2008 the Company issued 405,000 shares of common stock to 4 subscribers who subscribed during the second quarter of 2008. This was previously shown on the balance sheet as “Liability for Stock to be Issued” in the amount of $145,000.
Beneficial interest was $49,429 for the quarter ended September 30, 2008
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 8 - Stockholders’ Deficit (CONTINUED)
(continued)
During the quarter ended December 31, 2008, the Company issued 3,204,500 units to subscribers. Each unit is comprised of one common stock, one A warrant, and one B warrant. The units were issued at a value of $.14 per share to $.24 per share.
During the quarter ended December 31, 2008, the Company issued 1,836,078 shares of common stock for professional fees. The common stocks were issued at a price of $.20 per share. The Company included $19,088 in beneficial interest expense in its consolidated statement of operations.
During the quarter ended December 31, 2008, the Company issued 95,000 shares of common stock for directors’ fees. The common stocks were issued at a price of $.20 per share. The Company included $1,170 in beneficial interest expense in its consolidated statement of operations.
During the quarter ended December 31, 2008, the Company issued 500,000 shares of common stock for the conversion of notes payable. The common stocks were issued at a market value of $ .23 per share.
During the quarter ended December 31, 2008, the Company issued 62,500 shares of common stock for the settlement of accrued expenses payable. The common stocks were issued at a market value of $ .18 per share.
During the quarter ended December 31, 2008, the Company bought and held in treasury 199,611 shares of common stock. The common stocks were bought at prices ranging from $.13 to $ .25 per share.
During the quarter ended December 31, 2008, the Company bought and cancelled 1,339,469 shares of common stock. The common stocks were bought at prices ranging from $.05 to $ .25 per share.
- 30 -
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 8 - Stockholders’ Deficit (CONTINUED)
The following table summarizes our warrants as of December 31, 2008:
- 31 -
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 8 - Stockholders’ Deficit (CONTINUED)
The following table summarizes our warrants as of December 31, 2007:
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TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 9 - Settlement of Consulting Contract
During the year ended December 31, 2007 The Company settled a contract dispute in the amount of $400,000. The Company paid $50,000 in cash and issued shares for the remaining $350,000.
Note 10 - Restricted Stock-Based Compensation
On March 21, 2006, the Board of Directors adopted the Inverted Paradigms Corporation 2006 Restricted Stock Plan (the “2006 Plan”) and recommended that it be submitted to our stockholders for their approval at the 2006 Annual Meeting. The 2006 Plan was approved by the stockholders on April 28, 2006. The terms of the 2006 Plan provide for grants of restricted stock awards
Under the 2006 Plan, the total number of shares of restricted common stock that may be subject to the granting of Awards during the term of the 2006 Plan shall be equal to 6,000,000 shares. Shares with respect to which awards previously granted that are forfeited, cancelled or terminated are returned to the plan and may be reissued.
Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R, “Accounting for Stock-Based Compensation” (“SFAS No. 123R”), which requires stock-based compensation to be measured based on the fair value of the awards on the grant date. The Company elected the “modified prospective method” of transition as permitted by SFAS No. 123R. Under this transition method, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that were outstanding at the date of adoption, and accordingly, periods prior to adoption are not restated. The Company has not historically granted stock options to employees.
Note 11 - Subsequent Events
On January 27, 2009, The Company has issued an aggregate of 458,000 Rule 144 restricted shares of common stock of the Company to a total of 13 persons and/or entities. The shares were issued as compensation pursuant to certain consulting agreements, to certain persons in exchange for the cancellation of debt held against the Company, and to investors in exchange for investment proceeds. The valuation of the consideration received by the Company ranged from the par value of the stock to $0.20 per share depending upon the transaction. The issuance of the shares to consultants and debt holders was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. These share recipients are closely related to and well known by the Company. The shares issued in exchange for investment proceeds were exempt from the registration requirements of Section 5 of the Act under Section 4(2) of the Act pursuant to the safe harbor set forth in Rule 506 promulgated under the Act. In connection with the sale and issuance of the 506 shares, there was no general solicitation, appropriate disclosure information was distributed, all investors are accredited investors as defined in Rule 501 and the issuer filed its Form D with the Securities and Exchange Commission. All shares issued are restricted shares pursuant to Rule 144 promulgated under the Act.
On February 4, 2009, The Company has issued an aggregate of 352,833 Rule 144 restricted shares of common stock of the Company to a total of 11 persons and/or entities. The shares were issued as compensation pursuant to certain consulting agreements, to certain persons in exchange for the cancellation of debt held against the Company, and to investors in exchange for investment proceeds. The valuation of the consideration received by the Company ranged from the par value of the stock to $0.20 per share depending upon the transaction. The issuance of the shares to consultants and debt holders was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. These share recipients are closely related to and well known by the Company. The shares issued in exchange for investment proceeds were exempt from the registration requirements of Section 5 of the Act under Section 4(2) of the Act pursuant to the safe harbor set forth in Rule 506 promulgated under the Act. In connection with the sale and issuance of the 506 shares, there was no general solicitation, appropriate disclosure information was distributed, all investors are accredited investors as defined in Rule 501 and the issuer filed its Form D with the Securities and Exchange Commission. All shares issued are restricted shares pursuant to Rule 144 promulgated under the Act.
- 33 -
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 11 - Subsequent Events (CONTINUED)
On February 18, 2009 The Company bought back and cancelled 39,217 shares of common stock at a price of $.21 per share.
On March 17, 2009, The Company filed form S-8. This prospectus relates to the offer and sale of 4,000,000 shares of Transfer Technology International Corp., a Delaware corporation ("Company"), issuable upon the exercise of options issued to employees (“Employees”) and outside consultants ( "Outside Consultants") pursuant to the 2009 Stock Option Plan (the "Stock Option Plan") that has been approved by the Company.
Under the Stock Option Plan, two types of options may be issued. The first type are “incentive stock options” as defined in Section 422 of the Internal Revenue Code of 1986, as amended (“ISO’s”). ISO’s can and will be issued to Employees of the Company only.
The second type of options is “non-qualified stock options” (“NQSO’s”). NQSO’s can be issued to Outside Consultants as well as Employees.
The common stock issued pursuant to the exercise of ISO’s and/or NQSO’s, is not subject to any restriction on transferability, except with respect to resale restrictions applicable to shares of our common stock that are delivered to Consultants that are deemed to be our affiliates. Recipients of shares other than persons who are "affiliates" of Company within the meaning of the Securities Act of 1933 (the "Act") may sell all or part of the shares in any way permitted by law, including sales in the over-the-counter market at prices prevailing at the time of such sale. An affiliate is summarily, any director, executive officer or controlling shareholder of the Company or any one of its subsidiaries. An "affiliate" of Company is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). If a Consultant who is not now an "affiliate" becomes an "affiliate" in the future, he/she would then be subject to Section 16(b) of the Exchange Act. The common stock is listed on the Pink Sheets under the symbol "TTIN".
On March 17, 2009 announced today the creation of its wholly owned subsidiary Organic Products International Corp. 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 that will drive significant revenues for Transfer Technology International. Organic Products International will be marketing a cutting edge canker suppression formula for the citrus industry, two different rust inhibitor products, and a crop nutrient product.
- 34 -
TRANSFER TECHNOLOGY INTERNATIONAL CORP.
(FORMERLY KNOWN AS INVERTED PARADIGMS CORPORATION)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
Note 11 - Subsequent Events (CONTINUED)
On March 23, 2009, The Company has issued an aggregate of 580,833 Rule 144 restricted shares of common stock of the Company to a total of 13 persons and/or entities. The shares were issued as compensation pursuant to certain consulting agreements, to certain persons in exchange for the cancellation of debt held against the Company, and to investors in exchange for investment proceeds. The valuation of the consideration received by the Company ranged from the par value of the stock to $0.20 per share depending upon the transaction. The issuance of the shares to consultants and debt holders was exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued by the Company and did not involve any public offering. These share recipients are closely related to and well known by the Company. The shares issued in exchange for investment proceeds were exempt from the registration requirements of Section 5 of the Act under Section 4(2) of the Act pursuant to the safe harbor set forth in Rule 506 promulgated under the Act. In connection with the sale and issuance of the 506 shares, there was no general solicitation, appropriate disclosure information was distributed, all investors are accredited investors as defined in Rule 501 and the issuer filed its Form D with the Securities and Exchange Commission. All shares issued are restricted shares pursuant to Rule 144 promulgated under the Act.
On March 24, 2009, The Company announced our Board of Directors voted unanimously for George Merrell to become our new COO and the fourth board of directors member.
- 35 -
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A.
Item 9A. 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 as of December 31, 2008 that our disclosure controls and procedures were effective at the reasonable assurance level to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment. The internal controls for the Company are provided by executive management’s review and approval of all transactions. Our internal control over financial reporting also includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permits us to provide only management's report in this annual report.
- 36 -
Material Weaknesses
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected. Management did not identify any material weaknesses during its assessment of our internal control over financial reporting as of December 31, 2008.
Changes in Internal Control over Financial Reporting
Prior to the fiscal year ended December 31, 2008, management had identified a material weakness in our internal controls over financial reporting in that only one individual, our CEO Chris Trina, who, as an officer and director of the Company, had sole access and authority to receive cash and make cash disbursements. To remedy the weakness, management determined to take the following measures:
1.
Identify and/or retain a second employee or member of management who is appropriately trained who will also have duel control with respect to the receipt of cash and the making of cash disbursements; and
2.
Establish formal general accounting policies and procedures.
During the fiscal year ended December 31, 2008, we made arrangements for our CFO, Robert J. Calamunci to have independent access to and independent review authority for, all banking records for the purpose of reviewing as a second authority all cash transactions of the Company. Further, members of our staff who are not officers or directors of the Company have responsibility for preparing all financial record keeping relating to the collection and payment of invoices. In light of these changes, management, including our principal executive officer and principal financial officer have determined the aforementioned material weakness has been remedied.
Item 9(B). Other Information.
None.
- 37 -
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth the names, ages, and positions with TTIN for each of the directors and officers of TTIN.
Chris Trina
On September 7, 2007 the Board of Directors appointed Chris Trina President, Secretary, Director and Chief Executive Officer. Prior to joining TTIN, Mr. Trina was a Senior Investment Advisor with National Securities Corporation from November 2006 through March 2007. Mr. Trina was the President of Secure Financial Assets Group, a retail brokerage firm, from September 2005 through September 2006. From September 1997 to August 2005, Mr. Trina was the Senior Vice President of Sales at Gunnallen Financial, Inc. Since June 1997, Mr. Trina has been the President and sole stockholder of Windsor Financial Holdings, Inc, a private investment banking and insurance firm. Mr. Trina has twenty-one years Wall Street experience and received his Bachelor of Science degree for the University of South Florida in 1985.
Robert J. Calamunci
On April 28, 2008, Robert J. Calamunci, was appointed Chief Financial Officer and Principal Accounting Officer of TTIN. Mr. Calamunci holds the credentials of Certified Public Accountant as well as Certified Financial Planner™. Robert also holds a Masters Degree in Taxation from Pace University as well as a BBA in Accounting. Mr. Calamunci has numerous securities licenses; series 27, 24, 7, 65, 4, 9, and 10.
Mr. Calamunci currently is working for Zucker & Associates, LLP, a CPA firm in Marlboro, NJ. There he specializes in taxation as well as hedge fund accounting and broker/ dealer accounting. Mr. Calamunci has almost 30 years of experience in accounting and taxation while working for fortune 500 companies and broker / dealers in the securities industry.
Robert’s specific employment history for the past seven years is as follows:
Dec., 2007 - Present - Zucker & Associates, CPAs. Marlboro, NJ.
April, 2007 - Dec., 2007 - Self employed (accounting, etc.). Tinton Falls, NJ.
Mar, 2006 - April, 2007 - Refco Securities - CFO, NY, NY.
Aug., 2004 - Feb., 2006 - Utendahl Capital Partners' LP - CFO, NY, NY.
Aug., 2002 - July, 2002 - Self employed (accounting). Tinton Falls, NJ.
Apr., 2001 - July, 2002 - E Street Access - VP, Accounting, Marlboro, NJ.
- 38 -
George Merrell
Mr. Merrell has served as the Chief Operating Officer and as a Director of the Company since March 23, 2009. Prior to 2002, Mr. Merrell spent 20 years with the Dial Soap Corporation in a variety of executive level management positions including being a director of a production facility producing revenue of $225,000,000 annually. From 2002 to 2007, Mr. Merrell served as Operations Manager for Preservation Sciences, Inc. (“PSI”) in St. Petersburg, Florida, involving the manufacture of food grade liquid preservative, citrus canker suppressor, and rust inhibitor products. From 2008 to the present, Mr. Merrell has served as a consultant to TTI regarding the commercialization of the citrus canker suppressor and rust inhibitor products TTI acquired from PSI.
William Parsons
Mr. Parsons has served as a Director of the Company since August 2004. Mr. Parsons was a Partner with Arthur Anderson from 1992-2002. Mr. Parsons is currently an Executive Vice President and Partner with SENN-Delaney Leadership, where he has been since 2002. In addition, Mr. Parsons is the general partner of Parsons Partners. Mr. Parsons received his Bachelor of Science degree at Clarkson University and his Masters in Business Administration from UCLA.
Sandy W. Shultz, M.D.
Effective January 14, 2008, Sandy W. Shultz, M.D. was elected to the Board of Directors of TTIN. Dr. Shultz graduated from George Washington University School of Medicine where he served as senior class president. After completing his Internal Medicine internship at the Veterans Administration Medical Center, in Washington, D.C., Dr. Shultz completed a residency and became Chief Resident Department of Radiology at George Washington University. In 1985 and 1986 Dr. Shultz completed a Fellowship in Vascular and Interventional Radiology. Dr. Shultz has been published in medical journals on various topics. Dr. Shultz currently serves as Chief of Radiology at Key West Regional Hospital. Dr. Shultz has been married for thirty years. He and his wife, Shelley have three children and currently reside in Key West, Florida.
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TTIN’s officers and directors have not been involved, during the past five years, in any bankruptcy proceedings, conviction or criminal proceedings; have not been subject to any order, judgment, or decree, not subsequently reversed or suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and have not been found by a court of competent jurisdiction, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.
There have been no changes in the procedures by which security holders may recommend nominees to TTIN’s Board of Directors.
The Board of Directors does not currently have a standing audit committee.
TERM OF OFFICE
Our Directors are appointed for terms of one year to hold office until the next annual general meeting of the holders of our common stock, or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the officers and the directors described above.
Section 16(A) Beneficial Ownership Reporting Compliance
Based upon a review of Forms 3 and 4 and amendments thereto furnished to TTIN during the 2008 fiscal year, the following table details non-compliance with Section 16(a) of the Exchange Act of 1934.
Item 11.
Item 11. Executive Compensation
Summary Compensation Table
(1)
Mr. Trina is our current CEO and has a written employment contract with TTIN pursuant to which he receives a salary of $240,000 annually.
(2)
Mr. Weldon resigned as CEO of TTIN in September, 2007.
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DIRECTOR COMPENSATION
There are no standard arrangements pursuant to which directors are compensated for services rendered to TTIN. TTIN does compensate its directors from time to time with stock for services as directors. At the present time, directors receive 10,000 shares of restricted common stock on a monthly basis for their service on the board.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table provides certain information about persons or entities known to TTIN to be the beneficial owner of more than 5% of TTIN’s common shares.
(1) All ownership is direct ownership unless noted otherwise.
The following table provides certain information about the beneficial ownership of our common shares by our officers and directors individually and as a group.
(1) All ownership is direct ownership unless noted otherwise.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
There have been no transactions by the company within last two years where either the company as an issuer, or a director, officer or shareholder of the company, had an indirect or direct interest other than the purchase by TTIN of the rights to two patents. The rights were acquired from the SB Investment Trust in exchange for the issuance of 600,000 shares of common stock. The beneficiary of the SB Investment Trust is Susan Burns, the sister of Mr. Chris Trina, the CEO and director of TTIN. Further, Mr. Trina is the Trustee of the SB Investment Trust. In part because of the related nature of the purchase, the transaction was approved by the board of directors with Mr. Trina abstaining from the vote.
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Director Independence
We have four directors. Chris Trina and George Merrell are not considered independent directors. William Parsons and Sandy W. Shultz, M.D. are considered independent directors. The definition the Company uses to determine whether a director is independent is NASDAQ Rule 4200(a)(15). A copy of that rule is attached to this filing as Exhibit 99.
Item 14.
Item 14. Principal Accounting Fees and Services
(1)
Audit Fees - Audit fees billed to the Company by Bagell, Josephs, Levine & Company, L.L.C. for auditing the Company’s annual financial statements for 2007 and 2008 respectively.
(2)
Audit-Related Fees- Review fees billed to the Company by Bagell, Josephs, Levine & Company, L.L.C. for reviewing the Company’s quarterly financial statements for the quarter ended September 30, 2007 during the fiscal year ended December 31, 2007, and for reviewing the Company’s quarterly financial statements for the quarters ended March 31, 2008, June 30, 2008, and September 30, 2008 during the fiscal year ended December 31, 2008.
Item. 15. Exhibits
Exhibits
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant 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, Chief Executive Officer
Date: April 8, 2009
In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Chris Trina
Chris Trina, Director and
Principal Executive Officer
Date: April 8, 2009
By: /s/ Robert J. Calamunci
Robert J. Calamunci
Principal Financial Officer and
Principal Accounting Officer
Date: April 8, 2009
By: /s/ George Merrell
George Merrell, Director
Date: April 8, 2009
By: /s/ William Parsons
William Parsons, Director
Date: April 8, 2009
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