UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





———————


FORM 10-Q


———————








X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended: June 30, 2011orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from: _____________ to _____________



Commission File Number:  000-27131





TRANSFER TECHNOLOGY INTERNATIONAL CORP.


(Exact name of registrant as specified in its charter)





DELAWARE

88-0381258(State or Other Jurisdiction

(I.R.S. Employerof Incorporation)

Identification No.)


2240 Twelve Oaks Way, Suite 101-1, Wesley Chapel, Florida  33544


(Address of Principal Executive Office) (Zip Code)




(813) 388-6891


(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 wasrequired to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
X
Yes

NoIndicate 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.Large accelerated filer



Accelerated filerNon-accelerated filer



Smaller reporting company
XIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes
X
NoThe registrant has 240,663,748 shares of common stock outstanding at August 22, 2011.





- 1 -





PART I – FINANCIAL INFORMATION





Item 1.                 Financial Statements.








TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


JUNE 30, 2011 AND 2010








PageCondensed Consolidated Balance Sheets as of June 30, 2011and December 31, 2010 (unaudited)
3Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010 (unaudited)
4Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (unaudited)
5Notes to Condensed Consolidated Financial Statements
6 through 18









- 2 -





TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSASSETSJune 30,


December 31,2011


2010(Unaudited)CURRENT ASSETSCash

$
390


$
1,189Other assets


2,191



2,1912,581



3,380FIXED ASSETSEquipment, net of accumulated depreciation of $2,418 and $2,015, respectively


401



803TOTAL ASSETS

$
2,982


$
4,183LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIESAccounts payable

$
67,241


$
56,769Accrued expenses


738,452



1,126,233Derivative liability


296,521



292,480Convertible notes and notes payable


546,800



468,333Related party loans


101,200



102,600Total current liabilities


1,750,214



2,046,415STOCKHOLDERS'  DEFICITCommon stock, par value $.001 per share;250,000,000 shares authorized  in  2011 and 2010 and 231,163,748 and116,163,748 outstanding at June 30, 2011 and December 31, 2010, respectively


231,164



116,164Additional paid-in capital


46,408,962



45,775,161Accumulated deficit


(48,387,358
)


(47,933,557
)Total stockholders' deficit


(1,747,232
)


(2,042,232
)TOTAL LIABILITIES AND STOCKHOLDERS'  DEFICIT

$
2,982


$
4,183











- 3 -




TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010(Unaudited)FOR THE THREE MONTHS ENDED JUNE 30,


FOR THE SIX MONTHS ENDED JUNE 30,2011


2010


2011


2010(Restated)





(Restated)REVENUESNet sales

$
20,107


$
23,677


$
23,940


$
27,733Cost of sales


9,817



11,282



12,065



13,048Gross Profit  (Loss)


10,290



12,395



11,875



14,685COSTS AND EXPENSESSelling, general and administrative


143,071



130,522



302,350



361,884Total costs and expenses


143,071



130,522



302,350



361,884LOSS BEFORE OTHER INCOME (LOSS)


(132,781
)


(118,127
)


(290,475
)


(347,199
)OTHER INCOME (LOSS)Interest expense


97,684



(42,042
)


(48,528
)


(74,084
)Other expense


(114,798
)


(25,000
)


(114,798
)


(145,000
)Total other income (loss)


(17,114
)


(67,042
)


(163,326
)


(219,084
)(LOSS) BEFORE PROVISON FOR INCOME TAX


(149,895
)


(185,169
)


(453,801
)


(566,283
)PROVISION FOR INCOME TAX


-



-



-



-NET  LOSS

$
(149,895
)

$
(185,169
)

$
(453,801
)

$
(566,283
)NET  LOSS PER COMMON SHARE - BASIC AND DILUTED

$
(0.00
)

$
(0.01
)

$
(0.00
)

$
(0.02
)WEIGHTED AVERAGE OUTSTANDING SHARESOF COMMON STOCK - BASIC AND DILUTED


161,597,814



30,824,740



139,006,289



30,911,287
  
  - 4 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010(Unaudited)FOR THE SIX MONTHS ENDED JUNE 30,2011


2010(Restated)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss


(453,801
)


(566,283
)Adjustments to reconcile net loss tonet cash used in operating activities:Depreciation and amortization


403



403Accretion of debt discount


333



-Stock issued for services


748,800



36,150Changes in Certain Assets and LiabilitiesIncrease (decrease) accounts payable


10,473



340,249Increase (decrease) in accrued expenses


(387,782
)


(38,038
)Increase (decrease) in derivative liability


4,041



-Net cash  (used in)  operating activities


(77,533
)


(227,519
)CASH FLOWS FROM INVESTING ACTIVITIES


-



-CASH FLOWS FROM FINANCING ACTIVITIESProceeds from officer loans


-



3,300Payments on officer loans


(1,400
)


-Proceeds from convertible and promissory notes payable


78,134



224,000Net cash provided by financing activities


76,734



227,300NET INCREASE (DECREASE) IN CASH


(799
)


(219
)CASH  - BEGINNING OF PERIOD


1,189



962CASH - END OF PERIOD

$
390


$
743SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash Paid during the Year:Interest Expense

$
-


$
-Income Taxes

$
-


$
-





- 5 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010


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 $48,387,358 as of June 30, 2011 and $47,933,557 as of December 31, 2010. 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.








- 6 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010


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.





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 rollforward 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


- 7 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010





Recent Accounting Pronouncements (Continued)





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.





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 nonemployees 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.









- 8 -








TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010




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.





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:




June 30,


June 30,2011


2010NET  LOSS

$
(453,801
)

$
(566,283
)WEIGHTED AVERAGE OUTSTANDING SHARESOF COMMON STOCK - BASIC AND DILUTED


139,006,289



30,911,287





For the six months ended June 30, 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. There were 4,250,000 warrants at June 30, 2011 and 6,600,538 warrants at June 30, 2010.





- 9 -





TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010





Note 4 – Equipment





Equipment is summarized as follows:




June 30, 2011


December 31, 2010Computers and equipment

$
2,819


$
2,819Less:  accumulated depreciation


2,418



2,016Computers and equipment - Net

$
401


$
803


Depreciation expense for the six months ended June 30, 2011 and 2010 was $403 and $403, 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.





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.





June 30, 2011


December 31, 2010Various unsecured convertible note payables, with varying  interest  rates between 10% - 18%, due on demand and in default.

$
286,800


$
228,333Various unsecured convertible note payable, 10% interest rate, due on January 2011.


200,000



180,000Various unsecured promisory notes, with varying  interest  rates between 10% - 12%, due on June and  October 2010.


60,000



60,000Total Convertible Notes and Notes Payable

$
546,800


$
468,333





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.





- 10 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010


Note 7 – Related Party Loans




March 31, 2011


December 31, 2010May 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


$
50,000July 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



15,000September 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



5,000November 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.


3,600



3,600March 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.


26,500



28,000May 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.


1,100



1,000Total Related Party Loans

$
101,200


$
101,600





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.





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.  To date, to the knowledge of the Company, no legal action has been taken to enforce the judgment.





- 11 -











TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010
 
 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





- 12 -











TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010
 
 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 six months ended June 30, 2011 and the year ended December 31, 2010. At June 30, 2011 and December 31, 2010 the Company had an accumulated deficit approximating $48,387,358 and $47,933,557.





The Company has recorded full valuation allowance on its deferred tax assets as of June 30, 2011 and December 31, 2010. 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 June 30, 2011 and December 31, 2010. The Company had 231,163,748 and 116,163,748 shares of common stock issued and outstanding as of June 30, 2011 and December 31, 2010 respectively.





- 13 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010


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.





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 $.0074per 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.





The following table summarizes our warrants as of March 31, 2011.








Year Of Issuance
Warrant Type

Warrant Shares
Exercise Price
Expiration Date2010

Class A warrants

1,000,000

1,250,000

1,000,000

0.02

0.02

0.03

Oct. 14, 2011

April 24, 2012

Sep. 29, 2012Class B warrants

1,000,000

0.06

Sep. 29, 2013Total warrants outstanding

4,250,000








- 14 -




















TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010
  Note 11 - Restatement of Financial Statements


Subsequent to the preparation of the 2009 financial statements and the three quarters ending September 30, 2010, Transfer Technology International Corp. determined there were adjustments to its financial statements for the fiscal year ended December 31, 2009 and the two quarters ending June 30, 2010, that would better and more efficiently present its financial condition as of that date and for the year then ended. The following statements demonstrate the adjustments that were made.





ASSETSPreviouslyReported





RestatedJune 30, 2010


Change


June 30, 2010CURRENT ASSETSCash

$
742


$
-


$
742Other assets


2,191



-



2,1912,933



-



2,933FIXED ASSETSEquipment, net of accumulated depreciation of $1,612 respectively


1,207



-



1,207TOTAL ASSETS

$
4,140


$
-


$
4,140LIABILITIES AND STOCKHOLDERS'  DEFICITCURRENT LIABILITIESAccounts payable

$
126,803


$
(29,105
)

$
97,698Accrued expenses


789,279



168,637



957,916Convertible notes and notes payable


1,093,142



25



1,093,167Settlement liabilities


410,107



(410,107
)


-Related party loans


78,500



-



78,500Total current liabilities


2,497,831



(270,550
)


2,227,281STOCKHOLDERS'  DEFICITCommon stock, par value $.001 per share; 250,000,000 shares authorized  in 2010 and 2009 respectively and30,642,975 and 29, 867,975 shares issued and outstanding at June 30, 2010 and December 31, 2009 respectively;


30,911



-



30,911Treasury stock, 448,311 shares and 199,611 shares at June 30, 2010, and December 31, 2009 respectively


(51,172
)


51,172



-Additional paid-in capital


44,829,223



(161,533
)


44,667,690Accumulated deficit


(47,302,653
)


380,911



(46,921,742
)Total stockholders' deficit


(2,493,691
)


270,550



(2,223,141
)TOTAL LIABILITIES AND STOCKHOLDERS'  DEFICIT

$
4,140


$
-


$
4,140








- 15 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010


CONSOLIDATED STATEMENTS OF OPERATIONSPreviouslyReported





RestatedJune 30, 2010


Change


June 30, 2010REVENUESNet sales

$
27,342


$
391


$
27,733Cost of sales


12,658



390



13,048Gross Profit  (Loss)


14,684



1



14,685-COSTS AND EXPENSESSelling, general and administrative


306,162



55,722



361,884Reserve for doubtful account


-



-



-Total costs and expenses


306,162



55,722



361,884-LOSS BEFORE OTHER INCOME (LOSS)


(291,478
)


(55,721
)


(347,199
)OTHER INCOME (LOSS)Interest expense


(81,942
)


7,858



(74,084
)Change in Anti-Dilution Shares Payable


-



-



-Other


(145,000
)


-



(145,000
)-Total other income (loss)


(226,942
)


7,858



(219,084
)--(LOSS) BEFORE PROVISON FOR INCOME TAX


(518,420
)


(47,863
)


(566,283
)-PROVISION FOR INCOME TAX


-



-



---NET  LOSS

$
(518,420
)

$
(47,863
)

$
(566,283
)NET  LOSS PER COMMON SHARE - BASIC AND DILUTED

$
(0.02
)

$
(0.00
)

$
(0.02
)WEIGHTED AVERAGE OUTSTANDING SHARESOF COMMON STOCK - BASIC AND DILUTED


31,036,176



(124,889
)


30,911,287








- 16 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010





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;





·
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 June 30, 2011:








Total


(Level 1)


(Level 2)


(Level 3)Assets


-



-



-



-Total assets measured at fair value


-



-



-



-Derivative Liability


296,521



-



-



296,521Total liabilities measured at fair value


296,521



-



-



296,521





- 17 -








TRANSFER TECHNOLOGY INTERNATIONAL CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 30, 2011 AND 2010


The table below presents our assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at June 30, 2011. 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 LiabilityBalance 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 June 30, 2011


(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 as of the date of issuance and has determined that there are no additional events to disclose.







- 18 -


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 and six month periods ended June 30, 2011, the Company had top line revenues from business operations in the amounts of $20,107 and $23,940.   During the same periods for the prior year, the Company had top-line revenues from business operations in the amounts of $23,677 and $27,733 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.  During the six month period ended June 30, 2010, the Company realized net cash of $227,300 through financing activities and $76,734 during the six month period ended June 30, 2011.  The decrease reflects the ongoing and increased difficulty in raising money in the U.S. capital markets.  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.





Six month periods ended June 30, 2010 and 2011





During the six month period ended June 30, 2010, the Company incurred $361,884 in general administrative expenses and a net loss of $566,283.  Of that amount, $36,553 was in the form of non-cash adjustments such as stock issued to directors and executive officers for services rendered and stock issued to vendors and consultants for compensation.  Changes in certain assets and liabilities such as accounts payable and accrued expenses were $302,211.  Accordingly, net cash used in operating activities was $227,519 for the six months ended June 30, 2010.  The operations of the Company were sustained by proceeds from the sale of our common stock and proceeds from notes.





During the six months ended June 30, 2011, the Company incurred $302,350 in general administrative expenses, down $59,534 from the six months ended June 30, 2010.  The net loss for the six months was $453,801.  Due to lack of business revenue and the ability to raise money through the sale of equity capital, during the six months ended June 30, 2011, 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.  Of the expense amount, $164,258 was in the form of non-cash adjustments, and changes in certain assets and liabilities were $182,470.  Accordingly, net cash used in operating activities was $77,533.





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.





- 19 -


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.





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.  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.





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.





- 20 -


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.





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.





- 21 -




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.





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.





- 22 -


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.





- 23 -




Item 4.
(Removed and Reserved).







Item 5.
Other Information.




None.







Item 6.
Exhibits.







31.1
Certification of CEO and CFO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002.32.1
Certification of CEO and CFO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.










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


Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer





Date:  August 22, 2011


- 24 -