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, 2010orTRANSITION 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 45,562,065 shares of common stock outstanding at September 16, 2010.





- 1 -





PART I – FINANCIAL INFORMATION





Item 1.                 Financial Statements.




TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
 
 
 PageCondensed Consolidated Balance Sheets as of June 30, 2010and December 31, 2009 (unaudited)
3Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009 (unaudited)
4Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2010 and 2009 (unaudited)
5Notes to Condensed Consolidated Financial Statements
6 through 15
 
  - 2 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)ASSETSJune 30,


December 31,2010


2009CURRENT ASSETSCash

$
742


$
641Other assets


2,191



2,1912,933



2,832FIXED ASSETSEquipment, net of accumulated depreciation of $1,613 and $1,209 respectively


1,207



1,610TOTAL ASSETS

$
4,140


$
4,442LIABILITIES AND STOCKHOLDERS' DEFICITCURRENT LIABILITIESAccounts payable

$
126,803


$
143,267Accrued expenses


789,279



586,872Convertible notes and notes payable


1,093,142



869,167Settlement liabilities


410,107



266,857Related party loans


78,500



75,200Total current liabilities


2,497,831



1,941,363STOCKHOLDERS'  DEFICITCommon stock, par value $.001 per share;250,000,000 shares authorized  in  2010 and 2009and 30,911,286 and 30,136,286 shares issued and 30,642,975 and 29,867,975 outstandingat June 30, 2010 and December 31, 2009 respectively


30,911



30,136Additional paid-in capital


44,829,223



44,868,348Less: Cost of treasury stock, 268,311 shares at  June 30, 2010and December 31, 2009 respectively, at cost


(51,172
)


(51,172
)Accumulated deficit


(47,302,653
)


(46,784,233
)Total stockholders' deficit


(2,493,691
)


(1,936,921
)TOTAL LIABILITIES AND STOCKHOLDERS'  DEFICIT

$
4,140


$
4,442
 - 3 -
  TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 AND 2009FOR THE SIX MONTHS ENDED


FOR THE THREE MONTHS ENDEDJUNE 30,


JUNE 30,2010


2009


2010


2009REVENUESNet sales

$
27,342


$
82,977


$
23,676


$
44,348Cost of sales


12,658



-



11,282



-Gross Profit


14,684



82,977



12,394



44,348COSTS AND EXPENSESSelling, general and administrative


306,162



1,668,340



130,522



961,598Reserve for doubtful account


-



20,000



-



-Total costs and expenses


306,162



1,688,340



130,522



961,598LOSS BEFORE OTHER INCOME (LOSS)


(291,478
)


(1,605,363
)


(118,128
)


(917,250
)OTHER INCOME (LOSS)Interest expense


(81,942
)


(86,105
)


(48,504
)


(26,927
)Legal settlement


(145,000
)


(302,857
)


(25,000
)


-Other


-



(52,578
)


-



(52,578
)Total other income (loss)


(226,942
)


(441,540
)


(73,504
)


(79,505
)(LOSS) BEFORE PROVISON FOR INCOME TAX


(518,420
)


(2,046,903
)


(191,632
)


(996,755
)PROVISION FOR INCOME TAX


-



-



-



-NET  LOSS

$
(518,420
)

$
(2,046,903
)

$
(191,632
)

$
(996,755
)NET  LOSS PER COMMON SHARE - BASIC AND DILUTED

$
(0.02
)

$
(0.08
)

$
(0.01
)

$
(0.04
)WEIGHTED AVERAGE OUTSTANDING SHARESOF COMMON STOCK - BASIC AND DILUTED


31,036,176



25,250,595



30,911,286



27,062,298
   - 4 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 20092010


2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss


(518,420
)


(2,046,903
)Adjustments to reconcile net loss tonet cash used in operating activities:Depreciation and amortization


404



404Accreation of debt discount


10,000



-Stock issued to executives for compensation


10,500



675,541Stock issued to directors for services net


5,100



7,200Stock issued (Cancellation) to venders and consultants for compenstation - net


(55,450
)


244,652Stock issued to employee for services net


1,500



-Stock issued to shareholders as inducement for lock up agreement


-



52,578Interest resulting from beneficial conversion feature of  notes payable


-



24,417Changes in Certain Assets and Liabilities(Increase) in accounts receivable - other


-



(20,000
)Increase in reserve for doubtful accounts receivable - other


-



20,000Increase (Decrease) accounts payable


(16,465
)


2,895Increase in liability for stock to be issued


-



31,985Increase in settlement liability


143,250



266,857Increase in accrued expenses


202,407



42,362Net cash  (used in)  operating activities


(217,174
)


(698,012
)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuing restricted stock and stock to be issued


-



45,000Proceeds of treasury stock


-



(16,556
)Proceeds from convertible notes payable


213,975



454,500Proceeds from promissory notes


-



50,000Proceeds from bridge loan


-



30,000Proceeds from related party loan, net


3,300



-Net cash provided by financing activities


217,275



562,944NET INCREASE (DECREASE) IN CASH


101



(135,068
)CASH - BEGINNING OF PERIOD


641



144,641CASH - END OF PERIOD

$
742


$
9,573SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash Paid during the Year:Interest Expense

$
-


$
-
  - 5 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  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, 2009 audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed 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 $47,302,653 as of June 30, 2010 and $46,784,233 as of December 31, 2009. 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.
 - 6 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  Note 3 - Summary of Significant Accounting Policies
 Principles of Consolidation
 
 The condensed 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 cash, accounts payable, and other current liabilities approximate fair value because of the short maturity of those instruments.
  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.
 
 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.
 
 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.
  - 7 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  Note 3 - Summary of Significant Accounting Policies (CONTINUED)
 
 Net Loss Per Share Information (continued)
 
 The following is a reconciliation of the computation for basic and diluted EPS:
 June 30,


June 30,2010


2009NET  LOSS

$
(518,420
)

$
(2,046,903
)WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK - BASIC AND DILUTED


31,036,176



25,250,595
 For the six months ended June 30, 2010 and 2009 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 6,600,538 warrants at June 30, 2010 and 10,466,076 warrants at June 30, 2009.
  Note 4 – 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 June 30, 2011. The total expected lease payments through June 30, 2011 is $17,595 and for the eight months ended February 28, 2012 is  $11,730 for the total of $29,325.
 
 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.
 
  - 8 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
 Note 5 – 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. 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, 2010


December 31, 2009Various unsecured convertible note payables, with varying  interest  rates between 10% - 13%, due on demand and in default.

$
819,167


$
789,167Various unsecured convertible note payable, 10% interest rate, due on January 2011.


223,975



-Various unsecured promisory notes, with varying  interest  rates between 10% - 12%, due in October 2010.


50,000



80,000Total Convertible Notes and Notes Payable

$
1,093,142


$
869,167
 Note 6 – Related Party Loans
 June 30, 2010


December 31, 2009May 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.


-



15,000September 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.


-



5,000November 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.


-



1,200December 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.


-



4,000March 2010 – Unsecured Promissory note payable for $ 2,500, bearing interest at a fixed rate of 10%. The maturity date is March 2011 at which time all principal and interest are due.


500



-March 2010 – Unsecured convertible note payable for $30,000 bearing interest at a fixed rate of 10%. The maturity date is March 2011 at which time all principal and interest are due.


28,000



-Total Related Party Loans

$
78,500


$
75,200
  - 9 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
 Note 7 – Contingent Liabilities
 
 Settlement with Gary Harrison
 
 In the first quarter of 2009 a dispute arose with Gary Harrison regarding his consulting responsibilities with the Company.  In the final settlement, 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.  Management intends to propose a further extension of the due date.  This amount has been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities.
 
 Default 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.
 
 On April 9, 2010, TTIN entered into an agreement with Simmons (the “Stay Agreement”) wherein Simmons would stay any execution of the judgment if TTIN would pay her a total of $120,000.  TTIN must pay 7% of any money it raises for working capital purposes toward this obligation until paid in full.  During any calendar quarter that working capital is not raised, TTIN must pay at least $5,000 from other sources on this obligation.  No interest will accrue on the $120,000 and no fees will be added to the $120,000.  If TTIN defaults on the agreement, the stay will be lifted and Simmons will be able to execute on the judgment against the assets of TTIN.  As of the date this report on Form 10-Q was filed, the Company owes $10,000 under the stay agreement of which only $1,700 has been paid.  However, no legal action has been taken as of yet to lift the stay of execution.
 
 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 June 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.  This judgment has not been paid and remains outstanding.
 
 Stock Issuance to shareholder
 
 In January, 2009, SB Investment Trust, a shareholder and related party to the Company transferred free trading shares to a third party.  Sometime after that, the Company issued restricted shares to SB Investment Trust to replace the transferred shares to induce SB Investment Trust to transfer the free trading shares to three investor relation firms for services provided to the Company.  The Securities and Exchange Commission (“SEC”) takes the position that this type of transaction may violate Section 5 of the Securities Act of 1933.
 
 At the time of the transaction, Company management did not know the stock issuance violated any rule or regulation of the SEC.  When informed of the SEC’s position on such matters, management cancelled the stock that had been issued to the SB Investment Trust in 2010.  The shares transferred to the three investor relation firms have not been returned.
  - 10 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
 Note 7 – Contingent Liabilities (CONTINUED)
 
 Purchase of Company Shares
 
 Beginning in 2008 and from time to time, the Company became aware of certain shareholders who wanted to sell their stock.  Rather than have large sales in the market that could put downward pressure on the market price, the board of directors approved a plan whereby the Company could purchase those shares if it determined to do so.  The plan also allowed the Company to purchase its own shares in the open market.    The Company issued a press release on October 2, 2008, discussing the plan and its intent to purchase its own stock from time to time.  There were 20 non-market purchases of 1,725,351 common shares in the aggregate at a combined cost of $288,552 in 2008 through 2009.
 
 A tender offer is a means of buying a substantial portion of the outstanding stock of a company by making an offer to purchase all shares, up to a specified number, tendered by shareholders within a specified period at a fixed price.  The Company believes the relatively small number of shares it purchased at individually negotiated prices from a limited number of shareholders does not come under the purpose or the intent of tender offer regulation nor subject it to that regulation.
 
 
 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 and will defend any legal action if it is brought.  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 settlement as of June 30, 2010 and December 31, 2009, in the accompanying Condensed Consolidated Balance Sheet.
 
 Claims by two additional Shareholders
 
 The Company was contacted by an attorney representing two of the Company’s investors on April 30, 2010.  The attorney demanded the investments in the Company by the investors totaling $262,000 plus interest be paid by the Company immediately.  The $262,000 in investments was comprised of $160,000 in purchases of stock and/or warrants to purchase stock and $102,000 in convertible notes.  The attorney maintains the investors were not given all of their rights at the time of the investments.  The Company adamantly denies any such claims but is nevertheless under the burden of settling the dispute or potentially defending litigation that may be brought by the investors.
 
  - 11 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
 Note 7 – Contingent Liabilities (CONTINUED)
 
 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.  Management is seeking a solution to this dispute.  Other than filing the suit, Mrs. Wisniewski has yet to take further action with the court.
 
 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.  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.  To date, no legal action has been taken by Mr. Buckley against 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 8 – 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, 2010 and 2009. At June 30, 2010 and 2009 the Company had an accumulated deficit approximating $47,302,653 and $46,784,233.
 
 The Company has recorded full valuation allowance on its deferred tax assets as of June 30, 2010 and December 31, 2009. These assets were primarily derived from net operating losses, which The Company will more than likely than not be able to utilize.
 
 
 
  - 12 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
 Note 9 - Stockholders’ Deficit
 
 The Company had 250,000,000 authorized shares of common stock as of June 30, 2010 and December 31, 2009. The Company had 30,911,286 and 30,136,286 shares of common stock issued and 30,642,975 and 29,867,975 outstanding as of June 30, 2010 and December 31, 2009 respectively. The Company held 268,311 shares of common stock in treasury at June 30, 2010 and December 31, 2009 respectively. The par value of the shares was $.001 per share.
 
 2009
 
 During the quarter ended March 31, 2009, the Company issued 90,000 shares of common stock for directors’ fees. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended March 31, 2009, the Company issued 90,000 shares of common stock for executive compensation. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended March 31, 2009, the Company issued 1,061,666 shares of common stock for compensation to venders and consultants. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended March 31, 2009, the Company issued 150,000 shares of common stock for subscribers. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended March 31, 2009, the Company bought and held in treasury 43,235 shares of common stock. The common stocks were bought at prices ranging from $.15 to $.25 per share.
 
 During the quarter ended March 31, 2009, the Company bought and cancelled 39,217 shares of common stock. The common stocks were bought at $ .21 per share.
 
 During the quarter ended June 30, 2009, the Company issued 71,960 shares of common stock for directors’ fees. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended June 30, 2009, the Company issued 3,125,745 shares of common stock for executive compensation. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended June 30, 2009, the Company issued 36,000 shares of common stock for employee compensation. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended June 30, 2009, the Company issued 468,333 shares of common stock for compensation to venders and consultants. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended June 30, 2009, the Company issued 87,550 shares of common stock for subscribers. The common stocks were issued at a price of $.20 per share.
 
 During the quarter ended June 30, 2009, the Company bought and held in treasury 25,465 shares of common stock. The common stocks were bought at prices ranging from $.15 to $.25 per share.
 
 During the quarter ended June 30, 2009, the Company cancelled 291,665 shares of common stock previously issued to consultants. The stock was cancelled at $0.14 per share. As a result, The Company included $20,417 in beneficial interest expense in its consolidated statement of operations.
 
 During the quarter ended June 30, 2009, the Company issued 262,890 shares of common stock as an inducement to lock up shares.
  - 13 -
 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
  Note 9 – Stockholders’ Deficit (CONTINUED)
 
 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.
 
 During the quarter ended March 31, 2010, the Company was returned and cancelled 430,000 shares of common stock issued in 2009 for consultants compensation.
 
 There were no transactions of the common stock during the quarter ended June 30, 2010.
 
 The following table summarizes our warrants as of June 30, 2010:
  Year Of Issuance
Warrant Type

Warrant Shares
Exercise Price
Expiration Date2004

Notes payable warrants

50,000

0.92

None2008

Class A warrants

4,914,038

1.25

Various 20102009

Class B warrants

386,500

(B)

Various 20112010

Class A warrants

1,250,000

0.02

April 1, 2012Total warrants outstanding

6,600,538
 (B) 5 day average prior to exercise, discounted at 20%, or $1.25 per share, whichever is lower, with a floor of $0.75.
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 TRANSFER TECHNOLOGY INTERNATIONAL CORP. AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
  
  Note 9 – Stockholders’ Deficit (CONTINUED)
  
 The following table summarizes our warrants as of December 31, 2009:
  Year Of Issuance
Warrant Type

Warrant Shares
Exercise Price
Expiration Date2004

Notes payable warrants

50,000

0.92

None2008

Class A warrants

5,529,038

1.25

Various 20092008

Class B warrants

5,529,038

1.25

Various 201011,058,0762009

Class A warrants

386,500

(A)

Various 20102009

Class B warrants

386,500

(B)

Various 2011773,000Total warrants outstanding

11,881,076
 (A) 5 day average prior to exercise, discounted at 25%, or $0.50 per share, whichever is lower, with a floor of $0.20.
 
 (B) 5 day average prior to exercise, discounted at 20%, or $1.25 per share, whichever is lower, with a floor of $0.75.
 
 
 Note 10 - Subsequent Events
 
 On July 8, 2010, the Company issued 2,430,000 Rule 144 restricted shares of common stock to a total of 14 persons and/or entities.  The shares were issued as compensation, to employees and directors in exchange for services rendered to the Company, and to investors in exchange for investment proceeds and to vendors for payment .  The valuation of the consideration received by the Company ranged from par value of $0.001 to $0.02 per share depending upon the transaction.
 
 On or about September 3, 2010, the Company issued 7,100,000 Rule 144 restricted shares of common stock of the Company to a total of 5 persons and/or entities.  The shares were issued as compensation to consultants in exchange for services rendered to the Company and to investors in exchange for investment proceeds.  The valuation of the consideration received by the Company ranged from $0.01 to $0.02 per share depending upon the transaction.
 
 On or about September 3, 2010, the Company converted debt totaling $673,636 into 5,389,090 shares of common stock.  The debt was held by 31 convertible note holders.  The debt was converted at the rate of $0.125 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 $0.125 per share given the depressed value of the Company’s stock.
 
 See Note 7 for a discussion of subsequent events regarding contingent liabilities that have occurred since June 30, 2010.
  - 15 -
  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 three years 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.  The Company is now working toward commercializing these acquired technologies.  No revenues have been derived from these patents in 2009 or 2010.  As such, they have been impaired and have no carrying value as of June 30, 2010 and December 31, 2009 in the accompanying condensed consolidated financial statements.





In 2008, the Company also acquired the rights to be a reseller of certain organic products that enhance soil hydration and farm production.  During the six months ended June 30, 2009, the Company recognized $82,977 in revenues from sales of these products.  Later in 2009, the supplier of the organic products reorganized its distribution structure and the Company could not negotiate a contract with the supplier that was acceptable to the Company for ongoing sales.  Accordingly, the Company no longer sells these products and during the six months ended June 30, 2010, recognized $0 in revenue from this activity.





In June, 2009, we were introduced to a new organic product call Xt2000 Orange Oil used for termite eradication.  After becoming familiar with the product, management decided to add Xt2000 Orange Oil to its organic product line and to market the oil in the State of Florida.  In November, 2009, we went further into this market and formed a new subsidiary called Xterminate, Inc., a Florida corporation, which would take us directly into the eco-friendly pest control business of applying the oil for termite control purposes.  On March 1, 2010, we opened a freestanding, full service pest control operation at 5501 54th Ave. N., St. Petersburg, Florida.  By June 30, 2010, we had generated gross profit of $14,684 from this activity.





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Capital Resources





For the past three years, business operations have been funded by the sale of equity capital, convertible notes, promissory notes, and, to a small extent, revenues.  Even though management believes operating revenues may increase soon through the commercialization of acquired technologies and other business operations, management plans on continuing meeting it cash obligations in the foreseeable future through the continued sale of its common stock and convertible notes.  Other sources of capital to the Company include bridge financings from shareholders or from persons close to the Company.





Six month periods ended June 30, 2010 and  2009





Operating expenses for the six month periods ended June 30, 2010 and 2009, totaled $306,162 and $1,688,340 respectively.  The decrease of $1,382,178 or 82% was a result of the Company scaling back its spending in pursuing its business operations.  Because of an increase in difficulty raising operating capital, the Company was not able to develop the commercialization of its products as aggressively in the first six months of 2010 as it had in the first six months of 2009.  As mentioned earlier, gross profit for the six month periods ended June 30, 2010 and 2009, totaled $14,684 and $82,977 respectively.  This decrease was a result of the Company losing its organic soil enhancement product line.


Management continues to reduce cash expenditures through reduced operating activity due to cash constraints.  Cash needs in the future will be met in the near term through the sale of equity capital and convertible debt issuances.





Liquidity





For the past three years, the Company funded its business operations through the sale of convertible notes and equity capital.  Since the spring and summer of 2009, it has been more difficult than it had been before to raise operating capital in this manner and for approximately the last nine months, the Company has not been able to raise sufficient capital to pay its obligations in a timely manner.  On September 3, 2010, the Company had cash assets of approximately $9,900.  Nevertheless, the Company has persevered in its efforts to raise money to continue the operations of the Company and is meeting with some success.





The Company’s condensed 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 $47,302,653 as of June 30, 2010 and $46,784,233 as of December 31, 2009. 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.





Our current plans for addressing liquidity concerns is to continue raising money through the sale of equity capital and to generate revenue through marketing our pest control products.  We believe these sources of revenue will be sufficient to fund our business operations until such time as revenue from the sale of other technologies and products becomes available to us in late 2010.





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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.





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.





CRITICAL ACCOUNTING POLICY AND ESTIMATES





The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses its condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America as promulgated by the Public Company Accounting Oversight Board. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the condensed consolidated financial statements included in this quarterly report.








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.







- 18 -


Item 4.
Controls and Procedures.




Evaluation of disclosure controls and procedures





Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q.  In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.  In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.





Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2010, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and that such information is not accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.





Changes in internal control over financial reporting





Our management, with the participation of the chief executive officer and chief financial officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  However, as of the date of the filing of this report, management is in the process of making changes in our internal controls over financial reporting with the intent that disclosure controls and procedures will be effective in the future.








PART II – OTHER INFORMATION




Item 1.
Legal Proceedings.




See Note 7 to Financial Statements.




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, 2010, other than sales previously reported on Form 8-K.




Item 3.
Defaults Upon Senior Securities.




None.




Item 4.
Submission of Matters to a Vote of Security Holders.




None.




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.








- 19 -




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:  September 16, 2010








- 20 -