Item 1. Financial Statement
Our unaudited interim financial statements for the nine months
periods ended September 30, 2018 form part of this quarterly report. They are
stated in United States Dollars (US$) and are prepared in accordance with United
States generally accepted accounting principles. These interim unaudited
financial statements should be read in conjunction with the companys audited
financial statements and the Form 10-K for the year ended December 31, 2017.
TRANSAKT LTD. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
SEPTEMBER 30, 2018
|
3
TRANSAKT LTD.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
288,944
|
|
$
|
435,630
|
|
Prepayments
|
|
-
|
|
|
10,000
|
|
Total Assets
|
$
|
288,944
|
|
$
|
445,630
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accrued
expenses
|
$
|
21,430
|
|
$
|
35,656
|
|
Total Current Liabilities
|
$
|
21,430
|
|
$
|
35,656
|
|
|
|
|
|
|
|
|
Total liabilities
|
$
|
21,430
|
|
$
|
35,656
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
Common stock, 700,000,000
shares authorized for
issuance,
$0.001 par value, 133,506,570 shares issued
and
outstanding at September 30, 2018 and December 31, 2017, respectively
|
$
|
133,506
|
|
|
133,506
|
|
Additional paid-in
capital
|
|
24,265,011
|
|
|
24,265,011
|
|
Accumulated deficit
|
|
(22,493,079
|
)
|
|
(22,350,526
|
)
|
Other comprehensive
income
|
|
(437,924
|
)
|
|
(438,017
|
)
|
Stock
subscription receivable
|
|
(1,200,000
|
)
|
|
(1,200,000
|
)
|
Total Stockholders'
Equity
|
$
|
267,514
|
|
$
|
409,974
|
|
|
|
|
|
|
|
|
Total Equity
|
$
|
267,514
|
|
$
|
409,974
|
|
|
|
|
|
|
|
|
Total Liabilities and Equity
|
$
|
288,944
|
|
$
|
445,630
|
|
The accompanying notes are an integral part of the financial
statements
F-1
TRANSAKT LTD.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(UNAUDITED)
|
|
|
Nine Months
|
|
|
Nine Months
|
|
|
Three Months
|
|
|
Three Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales, net
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Cost of sales
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Selling, general and
administrative expenses
|
|
(142,395
|
)
|
|
(146,432
|
)
|
|
(42,864
|
)
|
|
(43,261
|
)
|
Loss from operations
|
|
(142,395
|
)
|
|
(146,432
|
)
|
|
(42,864
|
)
|
|
(43,261
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income/ (expense)
|
|
-
|
|
|
(13,333
|
)
|
|
-
|
|
|
-
|
|
Currency exchange gain
(loss)
|
|
(158
|
)
|
|
221
|
|
|
(50
|
)
|
|
(12
|
)
|
Total other income
(expenses)
|
|
(158
|
)
|
|
(13,112
|
)
|
|
(50
|
)
|
|
(12
|
)
|
Loss before income taxes
|
|
(142,553
|
)
|
|
(159,544
|
)
|
|
(42,914
|
)
|
|
(43,273
|
)
|
Provision for income taxes
expense (benefit)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net loss
|
|
(142,553
|
)
|
|
(159,544
|
)
|
|
(42,914
|
)
|
|
(43,273
|
)
|
Net gain (loss) attributable
to non- controlling interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to
TRANSAKT
|
$
|
(142,553
|
)
|
$
|
(159,544
|
)
|
$
|
(42,914
|
)
|
$
|
(43,273
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted income
(loss) common stockholders per share Net loss
|
$
|
(0.0011
|
)
|
$
|
(0.0014
|
)
|
$
|
(0.0003
|
)
|
$
|
(0.0003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
133,506,570
|
|
|
110,799,855
|
|
|
133,506,570
|
|
|
133,506,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(142,553
|
)
|
$
|
(159,544
|
)
|
$
|
(42,914
|
)
|
$
|
(43,273
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
93
|
|
|
(2,871
|
)
|
|
22
|
|
|
(2,582
|
)
|
Comprehensive income (loss)
|
|
(142,460
|
)
|
|
(162,415
|
)
|
|
(42,892
|
)
|
|
(45,855
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
attributable to the non-controlling interest
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Comprehensive income (loss)
attributable to TRANSAKT LTD.
|
$
|
(142,460
|
)
|
$
|
(162,415
|
)
|
$
|
(42,892
|
)
|
$
|
(45,855
|
)
|
F-2
TRANSAKT LTD.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(UNAUDITED)
|
`
|
|
Nine Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
Net loss available to common
stockholders
|
$
|
(142,553
|
)
|
$
|
(159,544
|
)
|
|
|
|
|
|
|
|
Adjustments to reconcile net
loss to net cash used in operating activities
|
|
|
|
|
|
|
Interest
expense
|
|
-
|
|
|
13,333
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
Decrease (Increase) in prepayments
|
|
10,000
|
|
|
10,000
|
|
Decrease (Increase) in deposits
|
|
-
|
|
|
(300,000
|
)
|
Increase
(Decrease) in accounts payable and accrued expenses
|
|
(14,226
|
)
|
|
(7,539
|
)
|
Net cash
used in operating activities
|
|
(146,779
|
)
|
|
(443,750
|
)
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
Net cash
used in investing activities
|
|
-
|
|
|
-
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
Proceeds
from issuance of Convertible Promissory Note
|
|
-
|
|
|
-
|
|
Due to
related party
|
|
-
|
|
|
-
|
|
Net cash
provided by financing activities
|
|
-
|
|
|
-
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
93
|
|
|
(2,871
|
)
|
Net increase (decrease) in
cash and cash equivalents
|
|
(146,686
|
)
|
|
(446,621
|
)
|
Cash and cash equivalents
|
|
|
|
|
|
|
Beginning
|
|
435,630
|
|
|
638,601
|
|
Ending
|
$
|
288,944
|
|
$
|
191,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non cash financing activities
|
|
|
|
|
|
|
Issuance of common stock to
settle convertible promissory note and its relevant accrued interest
|
|
-
|
|
|
1,050,666
|
|
|
|
|
|
|
|
|
Supplemental disclosure of
cash flows
|
|
|
|
|
|
|
Cash paid
during the year for:
|
|
|
|
|
|
|
Income tax
|
|
-
|
|
|
-
|
|
Interest
expense
|
$
|
-
|
|
$
|
-
|
|
The accompanying notes are an integral part of the financial
statements
F-3
TRANSAKT LTD.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
SEPTEMBER 30, 2018
|
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States (GAAP) for interim financial reporting and in
accordance with instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, the unaudited condensed consolidated financial
statements contained in this report reflect all adjustments that are normal and
recurring in nature and considered necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented. The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by GAAP. The
results of operations for the interim period are not necessarily indicative of
the results expected for the full year. These unaudited, condensed consolidated
financial statements, footnote disclosures and other information should be read
in conjunction with the financial statements and the notes thereto included in
the Companys Annual Report on Form 10-K for the year ended December 31,
2017.
Organization
TransAKT Ltd. (the Company) was incorporated under the laws
of the Province of Alberta on June 3, 1997. The Company completed the
acquisition of Green Point Resources Inc. on October 18, 2000 whereby it became
a publicly traded company listed on the Canadian Venture Exchange. In 2004 the
Company voluntarily delisted from the TSX Venture Exchange and retained a
listing on the Over the Counter Bulletin Board in the United States.
In October 2004 the Company purchased certain assets of IP
Mental Inc., a Taiwan based Voice over Internet Protocol (VoIP) company. The
company name was changed from TransAKT Corp. to TransAKT Ltd. on September 29,
2006. The Company designs and develops Voice over Internet Protocol (VoIP)
solutions and mobile payment terminals for the consumer electronics industry.
On November 15, 2006 TransAKT Ltd and the shareholders of
Taiwan Harlee International Co. Ltd. (HTT), entered into a Share Exchange
Agreement in which TransAKT Ltd. acquired 100% of Taiwan Harlee International
Co. Ltd.s outstanding common stock. HTT was incorporated under the laws of
Republic of China in 1985. HTT is engaged in designing, manufacturing and
distribution of Taiwan telecommunications equipment. The acquisition has been
accounted for as a reverse acquisition under the purchase method of accounting.
Accordingly, the merger of the two companies has been recorded as a
recapitalization of HTT, with HTT being treated as the continuing entity.
On August 12, 2010, the Company filed the Registration
Statement (Form S-4) in connection with the continuation of the Company from
Alberta to Nevada. Based upon the number of common shares of TransAKT Ltd., a
Nevada corporation (TransAKT Nevada), to be issued to the shareholders of
TransAKT Ltd., an Alberta corporation (TransAKT Alberta), on a one-for-one
basis upon completion of the Continuation and based on 102,645,120 shares of
common stock of TransAKT Ltd., an Alberta corporation, issued and outstanding as
of August 12, 2010.
On July 26, 2012, the Company acquired 100% equity of Vegfab
Agricultural Technology Co. Ltd. (the Vegfab), a company incorporated under
the laws of the Republic of China (ROC, Taiwan). Vegfab is mainly engaged in
selling agricultural equipment used to grow vegetables using simulated sunlight
from LED lamps in hydroponic systems.
F-4
On January 4, 2013, the Company entered into a Share Purchase
and Sale Agreement with a shareholder pursuant to which the Company sold to him
100% of all issued and outstanding securities of its wholly owned subsidiary
Taiwan Harlee International Corporation (HTT). In consideration of the sale of
HTT, the shareholder has transferred to the Company 45,000,000 previously issued
common voting shares of TransAKT with a deemed value of $0.04 per share or $1.8
million in the aggregate.
On October 30, 2013, Million Talented Ltd., a third party,
contributed $516 (equals to HKD 4,000) to obtain 40% ownership of TransAKT Bio
Agritech Ltd., formerly named as TransAKT (H.K) Ltd., (TransAKT H.K.).
TransAKT H.K. was incorporated in Hong Kong on November 20, 2007. It had no
operation until 2013. TransAKT H.K.'s primary business is conducting research
and development on new agricultural technology relating to the Companys
business. On May 6, 2015, the company acquired the remaining 40% of the TransAKT
Bio Agritech Ltd. From Million Talent Ltd. As such, the Company wholly owned its
subsidiary of TransAKT Bio Agritech Ltd. And it becomes our primary business
unit.
On June 30, 2015, our wholly owned subsidiary, TransAKT Taiwan
Ltd., entered into a Share Transfer Agreement among Vegfab Agricultural
Technology Co. Ltd. and a third party pursuant to which the third party acquired
100% of Vegfab Agricultural Technology Co. Ltd. in consideration of $100,000.
Vegfab Agricultural Technology Co. Ltd. was the sole material asset of TransAKT
Taiwan Ltd. and its parent company (and subsidiary of the Company), TransAKT
Holdings Ltd., a Turks and Caicos company. Subsequent to the sale of Vegfab
Agricultural Technology Co. Ltd., pursuant to a Share Purchase Agreement dated
June 30, 2015 with the Companys former President, Chief Executive Officer and
Director, the Company sold TransAKT Holdings Ltd. (and its subsidiary, TransAKT
Taiwan Ltd.) to the former (non-affiliated) officer and director in
consideration of $100,000. All intercompany debts between TransAKT Holdings Ltd.
and the formerly affiliated companies were cancelled as a result of the
transaction.
A 20 to 1 reversed stock split was approved by the Board of
Directors on November 9, 2015, by majority of shareholders on April 1, 2016, by
FINRA on June 20, 2016 and effective on June 23, 2016. The issued and
outstanding common stock was consolidated from 613,447,306 to 30,672,387 with
fractional share round up to 1 share.
Principles of Consolidation
The consolidated financial statements include the accounts of
TransAKT (BVI) Ltd. and its wholly owned subsidiary TransAKT Bio Agritech Ltd.,
collectively referred to within as the Company. All material intercompany
accounts, transactions, and profits have been eliminated in consolidation.
Going Concern
The Company has incurred a net loss attributable to common
stockholders of $142,553 and $159,544 during the nine months ended September 30,
2018 and 2017, respectively, and had an accumulated deficit of $22,493,079 and
$22,350,526 as of September 30, 2018 and December 31, 2017, respectively.
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. This basis
of accounting contemplates the recovery of the Companys assets and the
satisfaction of liabilities in the normal course of business. This presentation
presumes funds will be available to finance ongoing research and development,
operations and capital expenditures and permit the realization of assets and the
payment of liabilities in the normal course of operations for the foreseeable
future.
There was no assurances that there will be adequate financing
available to the Company and the consolidated financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
F-5
The Company has taken certain restructuring steps to provide
the necessary capital to continue its operations. These steps included: (1)
Tightly budgeting and controlling all expenses; (2)The Company plans to continue
actively seeking additional funding opportunities to improve and expand upon
their product lines.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles in the United States (GAAP) requires
management to make certain 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.
Revenue Recognition
Revenues are recognized when finished products are shipped to
customers and both title and the risks and rewards of ownership are transferred
and collectability is reasonably assured. The Companys revenues are recorded
upon confirmed acceptance after inspection by the customers of the Company.
Exchange Gain (Loss):
During the nine months ended September 30, 2018 and 2017, the
transactions of TransAKT Bio Agritech Ltd. were denominated in foreign currency
and were recorded in Hong Kong Dollar (HKD) at the rates of exchange in effect
when the transactions occur. Exchange gains and losses are recognized for the
different foreign exchange rates applied when the foreign currency assets and
liabilities are settled.
Translation Adjustment
The Company financial statements are presented in the U.S.
dollar ($), which is the Companys reporting currency, while its functional
currency is Hong Kong Dollar (HKD). Transactions in foreign currencies are
initially recorded at the functional currency rate ruling at the date of
transaction. Any differences between the initially recorded amount and the
settlement amount are recorded as a gain or loss on foreign currency transaction
in the consolidated statements of income. Monetary assets and liabilities
denominated in foreign currency are translated at the functional currency rate
of exchange ruling at the balance sheet date. Any differences are taken to
profit or loss as a gain or loss on foreign currency translation in the
statements of income.
In accordance with ASC 830, Foreign Currency Matters, the
Company translates the assets and liabilities into U.S. dollar ($) using the
rate of exchange prevailing at the balance sheet date and the statements of
operations and cash flows are translated at an average rate during the reporting
period. Adjustments resulting from the translation from HKD into U.S. dollar are
recorded in stockholders equity as part of accumulated other comprehensive
income.
Comprehensive Income
Comprehensive income includes accumulated foreign currency
translation gains and losses. The Company has reported the components of
comprehensive income on its statements of stockholders equity.
Advertising
No advertising costs as incurred during the quarter ended.
Income Taxes
The Company accounts for income taxes in accordance with ASC
740, Income Taxes, which requires that the Company recognize deferred tax
liabilities and assets based on the differences between the financial statement
carrying amounts and the tax basis of assets and liabilities,
using enacted tax rates in effect in the years the differences are expected to
reverse. Deferred income tax benefit (expense) results from the change in net
deferred tax assets or deferred tax liabilities. A valuation allowance is
recorded when, in the opinion of management, it is more likely than not that
some or all of any deferred tax assets will not be realized.
F-6
Statement of Cash Flows
In accordance with generally accepted accounting principles
(GAAP), cash flows from the Companys operations are based upon the local
currencies. As a result, amounts related to assets and liabilities reported on
the statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheet.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable and other receivables
arising from its normal business activities. The Company has a diversified
customer base. The Company controls credit risk related to accounts receivable
through credit approvals, credit limits and monitoring procedures. The Company
routinely assesses the financial strength of its customers and, based upon
factors surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit, and all highly liquid debt instruments with
original maturities of three months or less.
Fair Value of Financial Instruments
In the first quarter of fiscal year 2008, the Company adopted
Accounting Standards Codification subtopic 820-10, Fair Value Measurements and
Disclosures (ASC 820-10). ASC 820-10 defines fair value, establishes a
framework for measuring fair value, and enhances fair value measurement
disclosure. ASC 820-10 delays, until the first quarter of fiscal year 2009, the
effective date for ASC 820-10 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The adoption of
ASC 820-10 did not have a material impact on the Companys financial position or
operations.
Effective October 1, 2008, the Company adopted Accounting
Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures
(ASC 820-10) and Accounting Standards Codification subtopic 825-10, Financial
Instruments (ASC 825-10), which permits entities to choose to measure many
financial instruments and certain other items at fair value. Neither of these
statements had an impact on the Companys unaudited condensed consolidated
financial position, results of operations, or cash flows. The carrying value of
cash and cash equivalents, accounts payable and short-term borrowings, as
reflected in the balance sheets, approximate fair value because of the
short-term maturity of these instruments.
Stock-based Compensation
The Company records stock-based compensation expense pursuant
to ASC 718-10, "
Share Based Payment Arrangement
, which requires
companies to measure compensation cost for stock-based employee compensation
plans at fair value at the grant date and recognize the expense over the
employee's requisite service period. The Companys expected volatility
assumption is based on the historical volatility of Companys stock or the
expected volatility of similar entities. The expected life assumption is
primarily based on historical exercise patterns and employee post-vesting
termination behavior. The risk-free interest rate for the expected term of the
option is based on the U.S. Treasury yield curve in effect at the time of
grant.
F-7
Stock-based compensation expense is recognized based on awards
expected to vest, and there were no estimated forfeitures as the Company has a
short history of issuing options. ASC 718-10 requires forfeitures to be
estimated at the time of grant and revised in subsequent periods, if necessary,
if actual forfeitures differ from those estimates.
Net Loss Per Share
The Company has adopted Accounting Standards Codification
subtopic 260-10, Earnings Per Share (ASC 260-10) which specifies the
computation, presentation and disclosure requirements of earnings per share
information. Basic earnings per share have been calculated based upon the
weighted average number of common shares outstanding. Common equivalent shares
are excluded from the computation of the diluted loss per share if their effect
would be anti-dilutive.
Intangible Assets
Intangible assets include a patent. With the adoption of FASB
ASC Topic 350, Intangibles (formerly SFAS No. 142), intangible assets with a
definite life are amortized on a straight-line basis. The patent is being
amortized over its estimated life of 10 years. Intangible assets with a definite
life are tested for impairment whenever events or circumstances indicate that a
carrying amount of an asset (asset group) may not be recoverable. An impairment
loss would be recognized when the carrying amount of an asset exceeds the
estimated undiscounted cash flows used in determining the fair value of the
asset. The amount of the impairment loss to be recorded is calculated by the
excess of the assets carrying value over its fair value. Fair value is
generally determined using a discounted cash flow analysis. Costs related to
internally develop intangible assets are expensed as incurred.
Recent Accounting Pronouncements
The FASB issued an Accounting Standards Update (ASU) that helps
organizations address certain stranded income tax effects in accumulated other
comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act.
ASU No. 2018-02, Income StatementReporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income, provides financial statement preparers with an
option to reclassify stranded tax effects within AOCI to retained earnings in
each period in which the effect of the change in the U.S. federal corporate
income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is
recorded.
The ASU requires financial statement preparers to disclose:
|
A description of the accounting policy for
releasing income tax effects from AOCI;
|
|
|
|
Whether they elect to reclassify the stranded
income tax effects from the Tax Cuts and Jobs Act; and
|
|
|
|
Information about the other income tax effects
that are reclassified.
|
The amendments affect any organization that is required to
apply the provisions of Topic 220, Income StatementReporting Comprehensive
Income, and has items of other comprehensive income for which the related tax
effects are presented in other comprehensive income as required by GAAP.
The amendments are effective for all organizations for fiscal
years beginning after December 15, 2018, and interim periods within those fiscal
years. Early adoption is permitted. Organizations should apply the proposed
amendments either in the period of adoption or retrospectively to each period
(or periods) in which the effect of the change in the U.S. federal corporate
income tax rate in the Tax Cuts and Jobs Act is recognized.
FASB Adds SEC Guidance to the Codification on the Tax Cuts and
Jobs Act. The FASB has issued Accounting Standards Update (ASU) No. 2018-05,
Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. ASU 2018-05 amends
certain SEC material in Topic 740 for the income tax accounting implications of
the recently issued Tax Cuts and Jobs Act (Act).
F-8
ASU 2018-05 adds the following guidance, among other things, to
the FASB Accounting Standards Codification regarding the Act:
Question 1:If the accounting for certain income tax effects of the Act is not
completed by the time a company issues its financial statements that include the
reporting period in which the Act was enacted, what amounts should a company
include in its financial statements for those income tax effects for which the
accounting under Topic 740 is incomplete?
Answer
1:In a companys financial statements that include the reporting period in which
the Act was enacted, a company must first reflect the income tax effects of the
Act in which the accounting under Topic 740 is complete. These completed amounts
would not be provisional amounts. The company would then also report provisional
amounts for those specific income tax effects of the Act for which the
accounting under Topic 740 will be incomplete but a reasonable estimate can be
determined. For any specific income tax effects of the Act for which a
reasonable estimate cannot be determined, the company would not report
provisional amounts and would continue to apply Topic 740 based on the
provisions of the tax laws that were in effect immediately prior to the Act
being enacted. For those income tax effects for which a company was not able to
determine a reasonable estimate (such that no related provisional amount was
reported for the reporting period in which the Act was enacted), the company
would report provisional amounts in the first reporting period in which a
reasonable estimate can be determined.
Question 2: If an entity accounts for certain income tax effects of the Act
under a measurement period approach, what disclosures should be provided?
Answer
2: The staff believes an entity should include financial statement disclosures
to provide information about the material financial reporting impacts of the Act
for which the accounting under Topic 740 is incomplete, including:
a. Qualitative disclosures of the income tax effects of the Act
for which the accounting is incomplete;
b. Disclosures of items reported as provisional amounts;
c. Disclosures of existing current or deferred tax amounts for
which the income tax effects of the Act have not been completed;
d. The reason why the initial accounting is incomplete;
e. The additional information that is needed to be obtained,
prepared, or analyzed in order to complete the accounting requirements under
Topic 740;
f. The nature and amount of any measurement period adjustments
recognized during the reporting period;
g. The effect of measurement period adjustments on the
effective tax rate; and
h. When the accounting for the income tax effects of the Act
has been completed.
ASU 2018-05 is effective upon inclusion in the FASB
Codification.
FASB Releases ASU No. 2018-09. The FASB has released Accounting
Standards Update (ASU) No. 2018-09, Codification Improvements. ASU 2018-09
affects a wide variety of Topics in the Codification including:
F-9
Amendments to Subtopic 220-10,Income Statement Reporting Comprehensive
IncomeOverall.The guidance in paragraph 220-10-45-10B(b) states that taxes not
payable in cash are required to be reported as a direct adjustment to paid-in
capital. This requirement conflicts with other guidance in Topic 740,Income
Taxes, Subtopic 805-740,Business CombinationsIncome Taxes, and Subtopic
852-740,ReorganizationsIncome Taxes, which generally states that income taxes
and adjustments to those accounts upon a business combination or a bankruptcy
that is eligible for fresh-start reporting must be recognized in income. ASU No.
2018-09 clarifies the guidance in paragraph 220-10-45-10B by removing the
generic phrase taxes not payable in cash and adding guidance that is specific to
certain quasi-reorganizations.
Amendments to Subtopic 470-50,DebtModifications and Extinguishments.The
guidance in paragraph 470-50-40-2 requires that the difference between the
reacquisition price of debt and the net carrying amount of extinguished debt be
recognized in income in the period of extinguishment. The guidance in that
paragraph was not amended by FASB Statement No. 155, Accounting for Certain
Hybrid Financial Instruments, or FASB Statement No. 159,The Fair Value Option
for Financial Assets and Financial Liabilities; therefore, it does not
specifically address extinguishments of debt when the fair value option is
elected. ASU No. 2018-09 clarifies that:
1. When the fair value option has been elected on debt that is
extinguished, the net carrying amount of the extinguished debt equals its fair
value at the reacquisition date, and
2. Related gains or losses in other comprehensive income must
be included in net income upon extinguishment of the debt.
Amendments to Subtopic 480-10,Distinguishing Liabilities from EquityOverall.The
guidance in paragraph 480-10-25-15 prohibits the combination of freestanding
financial instruments within the scope of Subtopic 480-10 with noncontrolling
interest, unless the combination is required by Topic 815,Derivatives and
Hedging. The example in paragraphs 480-10-55-55 and 480-10-55-59 conflicts with
that guidance by stating that freestanding option contracts with the terms in
Derivative 2 should be accounted for on a combined basis with the noncontrolling
interest. The source of the example in paragraph 480-10-55-59 is from EITF Issue
No. 00-4, Majority Owners Accounting for a Transaction in the Shares of a
Consolidated Subsidiary and a Derivative Indexed to the Noncontrolling Interest
in That Subsidiary. Issue 00-4 was nullified by FASB Statement No.
150,Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, but a conforming amendment to the example in paragraph
480-10-55-59 was not made to align it with the guidance in Statement 150. The
amendment in this Update conforms the guidance in paragraphs 480-10-55-55 and
480-10-55-59 with the guidance in Statement 150.
Amendments to Subtopic 718-740,CompensationStock CompensationIncome Taxes.The
guidance in paragraph 718-740-35-2, as amended, is unclear on whether an entity
should recognize excess tax benefits (or tax deficiencies) for compensation
expense that is taken on the entitys tax return. The amendment to paragraph
718-740-35-2 in ASU No. 2018-09 clarifies that an entity should recognize excess
tax benefits (that is, the difference in tax benefits between the deduction for
tax purposes and the compensation cost recognized for financial statement
reporting) in the period when the tax deduction for compensation expense is
taken on the entitys tax return. This includes deductions that are taken on the
entitys return in a different period from when the event that gives rise to the
tax deduction occurs and the uncertainty about whether (1) the entity will
receive a tax deduction and (2) the amount of the tax deduction is resolved.
Amendments to Subtopic 805-740,Business Combinations Income Taxes.The
amendments to paragraph 805-740-25-13 removes a list of three methods for
allocating the consolidated tax provision to an acquired entity after
acquisition that is inconsistent with guidance in Topic 740. The three methods
for tax allocation described in paragraph 805-740-25-13 do not follow the broad
principles of being systematic, rational, and consistent with Topic 740. The amendment removes the allocation methods in paragraph
805-740-25-13 and conforms the guidance in Subtopic 805-740 with the guidance in
Topic 740.
F-10
Amendments to Subtopic 815-10,Derivatives and Hedging Overall.The amendment to
paragraphs 815-10-45-4 and 815-10-45-5 in ASU No. 2018-09 clarifies the
circumstances in which derivatives may be offset. Under certain specific
conditions, derivatives may be offset if three of the four criteria in paragraph
210-20-45-1 are met. One of the criteriathe intent to set offis not required
to offset derivative assets and liabilities for certain amounts arising from
derivative instruments recognized at fair value and executed with the same
counterparty under a master netting agreement.
Amendments to Subtopic 820-10,Fair Value Measurement Overall.The amendments to
paragraph 820-10-35-16D in ASU No. 2018-09 clarify the Boards decisions about
the measurement of the fair value of a liability or instrument classified in a
reporting entitys shareholders equity from the perspective of a market
participant that holds an identical item as an asset at the measurement date. A
technical inquiry questioned how transfer restrictions embedded in an asset
should affect the fair value of the corresponding liability or equity instrument
from the perspective of the issuer. The amendments correct the wording of
paragraph 820-10-35-16D to clarify how an entity should account for those
restrictions. The amendments are not intended to substantively change the
application of GAAP. However, it is possible that the amendments may result in a
change to existing practice for some entities.
The amendments to paragraphs 820-10-35-18D through 35-18F and
820-10-35- 18H through 35-18L revise the current guidance to allow portfolios of
financial instruments and nonfinancial instruments accounted for as derivatives
in accordance with Topic 815 to use the portfolio exception to valuation. The
amendments improve guidance by adding wording that explicitly states that a
group of financial assets, financial liabilities, nonfinancial items accounted
for as derivatives in accordance with Topic 815, or a combination of these items
that otherwise meet the criteria to do so are permitted to apply the portfolio
exception for measuring fair value of the group. This allows entities to measure
fair value on a net basis for those portfolios in which financial assets and
financial liabilities and nonfinancial instruments are managed and valued
together.
Amendments to Subtopic 940-405,Financial ServicesBrokers and
DealersLiabilities.Paragraph 940-405-55-1 contains incomplete guidance about
offsetting on the balance sheet. The current guidance focuses only on explicit
settlement dates as a determining criterion for offsetting when, in fact, an
entity should consider all the requirements in Section 210-20-45,Balance
SheetOffsettingOther Presentation Matters, to determine whether a right of
offset exists. There is similar guidance in paragraph 942-210-45-3. Paragraphs
940-405-55-1 and 942-210-45- 3 originated from two different AICPA Audit and
Accounting Guides and paraphrase the guidance in Subtopic 210-20, albeit each
slightly differently. The Board decided to amend both paragraphs so that the
industry Topic guidance refers to the complete guidance for offsetting.
Amendments to Subtopic 962-325,Plan AccountingDefined Contribution Pension
PlansInvestmentsOther.The amendment to Subtopic 962-325 removes the stable
value common collective trust fund from the illustrative example in paragraph
962-325-55-17 to avoid the interpretation that such an investment would never
have a readily determinable fair value and, therefore, would always use the net
asset value per share practical expedient. Rather, a plan should evaluate
whether a readily determinable fair value exists to determine whether those
investments may qualify for the practical expedient to measure at net asset
value in accordance with Topic 820.
Transition and Effective Date. The transition and effective
date guidance is based on the facts and circumstances of each amendment. Some of
the amendments in ASU No. 2018-09 do not require transition guidance and will be
effective upon issuance of ASU No. 2018-09. However, many of the amendments do
have transition guidance with effective dates for annual periods beginning after
December 15, 2018, for public business entities.
F-11
In addition, there are some conforming amendments in ASU No.
2018-09 that have been made to recently issued guidance that is not yet
effective that may require application of the transition and effective date
guidance in the original ASU. For example, there are conforming amendments to
Topic 820 and Subtopic 944-310, Financial ServicesInsuranceReceivables, that
are related to the amendments in Accounting Standards Update No. 2016-01,
Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities, which require application of the
transition and effective date guidance in that ASU.
F-12
NOTE 2 - RELATED PARTY TRANSACTIONS
Related party sales
There were no transactions between the Company and any related
party for the nine months ended September 30, 2018 and 2017, respectively.
Due to related parties
As of September 30, 2018 there was no payable due to related
parties.
NOTE 3 SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred
after September 30, 2018 up through the date the Company issued these financial
statements, and found no material subsequent events are required to be
disclosed.
******
F-13
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
may, should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.
In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars and all references to
common shares refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated,
the terms "we", "us" and "our" mean TransAKT Ltd., a Nevada corporation, and our
wholly owned subsidiary, TransAKT Bio Agritech Ltd. in Hong Kong (S.A.R).
General Overview
TransAKT Ltd. was incorporated in the Province of British
Columbia on December 10, 1996 as Green Point Resources Inc. On October 18, 2000,
we changed our name to Wildcard Wireless Solutions Inc. On June 30, 2001, we
filed Articles of Continuance in the Province of Alberta and became an Alberta
corporation. On that same day, we conducted an amalgamation with Wildcard
Communications Canada Inc., an Alberta corporation, our wholly-owned subsidiary,
wherein Wildcard Communications Canada was merged into Wildcard Wireless
Solutions Inc. On June 20, 2003, we changed our name to TransAKT Corp. We
changed our name from TransAKT Corp. to TransAKT Ltd. on July 12, 2006.
Effective December 2, 2010, following approval by our shareholders on November
17, 2010, we re-domesticated our company from the Province of Alberta, Canada
and became a Nevada corporation.
We have operated principally as a research and development
company since our inception. Initial seed capital has been directed toward areas
of product research and development, patent filings and administration. We
initially focused on the research, design, development and manufacturing of
mobile payment terminals. However, the sale of these payment terminals reached
its end-of life due to changes in cellular phone regulations and limited
acceptance in the marketplace.
In October 2004, we purchased the existing business and certain
assets of IP Mental Inc., a Taiwan-based Voice over Internet Protocol (VoIP)
hardware and software provider. On November 15, 2006, we acquired Taiwan Harlee
International Co. Ltd. (HTT), a Taiwan-based leading designer, manufacturer
and distributor of telecommunications equipment, including specialized
VoIP-compatible phone systems. These acquisitions were intended to enable us to
remain competitive in the marketplace. Our business was the design, development
and manufacturing of telecommunications equipment, including VoIP compatible
telephone systems and multi-line cordless telephone systems.
3
On November 15, 2006, we acquired HTT, for the sum of
$5,000,000. The purchase price was paid by the delivery to the shareholders of
HTT of: (i) $200,000 in cash; (ii) $300,000 in a promissory note from us due in
cash six months after closing; (iii) 50,000,000 of our common voting shares,
with a deemed value of $0.09 per share; and (iv) 5,000,000 of our common voting
shares issued to Mr. James Wu as performance-based compensation. Other than the
acquisitions of IP Mental Inc. and HTT, we have generally only had capital
expenditures on computer equipment, tools and dies, patents, and trademarks.
We have mainly financed our operations through the use of debt
and the issuance of equity in private placements. In October 2006, we repaid a
loan we took against inventory produced to fund our first commercial run of our
payment terminals. We settled the loan for $90,000 using funds raised from the
private placement of our shares. In the short-term and until our sales are
sufficient to fund operations, we will continue to finance our operations
through debt or equity financing.
On August 12, 2010, we filed a Form S-4 Registration Statement
in connection with the continuation of our company from Alberta to Nevada. We
registered 102,645,120 shares of common stock of TransAKT Ltd. (Nevada) which
were issued to the shareholders of TransAKT Ltd. (Alberta) on a one-for-one
basis to the number of shares held by them.
Effective June 25, 2012, the Nevada Secretary of State accepted
for filing a certificate of amendment, wherein, we amended our articles of
incorporation to increase the authorized number of shares of our common stock
from 300,000,000 to 700,000,000 shares of common stock, par value of $0.001 per
share. Our preferred stock remains unchanged.
On May 3, 2012, we entered into an Asset Purchase and Sale
Agreement with Vegfab Agricultural Technology Co. Ltd. (Vegfab), a Taiwanese
corporation, pursuant to which we intended to acquire the material assets of
Vegfab. Vegfab is in the business of manufacturing innovative indoor
agricultural equipment used to grow a large variety of vegetables and fruit
using simulated sunlight from LED lamps in a proprietary hydroponic system.
Vegfabs product line includes systems for commercial production and a home
growing system which allows families to grow safe and clean fruit and vegetables
in their own homes. Prior to completion of the transaction we and Vegfab elected
instead to proceed by way of a share purchase and, effective July 16, 2012, we
acquired all outstanding securities of Vegfab. In consideration of the Vegfab
securities, we had paid $1,000,000 in cash and issued 150,000,000 shares of our
common stock to the shareholders of Vegfab which constituted approximately 37.2%
of our common stock at the time of closing. As a result of the transaction
Vegfab became our wholly owned subsidiary and primary business unit. Vegfab has
since become engaged in the operation of a plant factory in Taiwan for the
production of pesticide-free vegetables.
Previously, we entered into a performance compensation
agreement dated June 15, 2006 with James Wu, our president and chief executive
officer, pursuant to which our company was required to pay Mr. Wu share
compensation of 10% of the value of any venture acquisition that Mr. Wu secured
for our company. As a result, in July 2012, we issued to Mr. Wu 18,333,333
shares of our companys common stock with respect to the acquisition of Vegfab.
On January 4, 2013, we entered into a share purchase and sale
agreement with Mr. Pan Yen Chu pursuant to which we sold to Mr. Pan 100% of all
issued and outstanding securities in our wholly owned subsidiary HTT. In
consideration of the sale of HTT, Mr. Pan has transferred to our company
45,000,000 previously issued common voting shares of our company with a deemed
value of $0.04 per share or $1.8 million in the aggregate. The transfer of
common shares was completed on January 7, 2013. In connection with the sale HTT,
the 45,000,000 common shares of our company received as consideration will be
returned to treasury. The 45,000,000 shares constitute approximately 11.5% of
our companys currently issued and outstanding common stock.
On October 30, 2013, Million Talent Ltd., a third party,
contributed $516 (equals to HKD 4,000) to obtain 40% ownership of TransAKT Bio
Agritech Ltd., formerly named as TransAKT (H.K) Ltd., (TransAKT H.K.).
TransAKT H.K. was incorporated in Hong Kong on November 20, 2007. It had no
operation until 2013. TransAKT H.K.'s primary business is conducting research
and development on new agricultural technology relating to the Companys business. On May 6, 2015, the Company acquired the
remaining 40% of the equity interest from Million Talent Ltd. As such, the
Company wholly owned its subsidiary of TransAKT BIO Agritech Ltd.
4
On June 30, 2015, our wholly owned subsidiary, TransAKT Taiwan
Ltd., entered into a Share Transfer Agreement among Vegfab Agricultural
Technology Co. Ltd. and a third party pursuant to which the third party acquired
100% of of Vegfab Agricultural Technology Co. Ltd. in consideration of $100,000.
Vegfab Agricultural Technology Co. Ltd. was the sole material asset of TransAKT
Taiwan Ltd. and its parent company (and subsidiary of the Company), TransAKT
Holdings Ltd., a Turks and Caicos company. Subsequent to the sale of Vegfab
Agricultural Technology Co. Ltd., pursuant to a Share Purchase Agreement dated
June 30, 2015 with the Companys former President, Chief Executive Officer and
Director, the Company sold TransAKT Holdings Ltd. (and its subsidiary, TransAKT
Taiwan Ltd.) to the former (non-affiliated) officer and director in
consideration of $100,000. All intercompany debts between TransAKT Holdings Ltd.
and the formerly affiliated companies were cancelled as a result of the
transaction.
A 20 to 1 reverse stock split was approved by the Board of
Directors on November 9, 2015, and by a majority of shareholders on April 1,
2016, by FINRA on June 20, 2016 and effective on June 23, 2016. The issued and
outstanding common stock was consolidated from 613,447,306 to 30,672,387 with
fractional shares rounded up to 1 whole share.
Our Current Business
We began operations in 1997 and commercialized our first
product line of wireless point-of-sale (WPOS) terminals in April 2003. With
the use of cellular phones, these terminals allow merchants to accept payments
anywhere, anytime. However, our WPOS terminals were discontinued due to changes
in cellular phone regulations and limited acceptance in the marketplace. In
October 2004, through the acquisition of the business and certain assets of IP
Mental Inc., we entered the VoIP business. On November 15, 2006, we acquired
Taiwan Harlee International Co. Ltd. (HTT), a Taiwan-based leading designer,
manufacturer and distributor of telecommunications equipment, including
specialized VoIP-compatible phone systems. These acquisitions were intended to
enable us to remain competitive in the VoIP marketplace by engaging in the
design, development, manufacturing and sale of telecommunications equipment,
including VoIP compatible telephone systems and multiline cordless telephone
systems.
Effective July 16, 2012, we acquired all outstanding securities
of Vegfab Agricultural Technology Co. Ltd. (Vegfab), a Taiwanese corporation,
With the acquisition of Vegfab we entered the business of manufacturing
agricultural equipment used to grow a large variety of vegetables and fruit
using simulated sunlight from LED lamps in a proprietary hydroponic system.
Vegfabs product line includes systems for commercial production and a home
growing system which allows families to grow safe and clean fruit and vegetables
in their own homes. Vegfab has since become engaged in the operation of a plant
factory in Taiwan for the production of pesticide-free vegetables.
Concurrently with our acquisition of Vegfab, our management
began planning our exit from the VoIP telecommunications business owing to
diminishing growth opportunities for our Company in that industry. Subsequently,
on January 4, 2013, we entered into a share purchase and sale agreement with Mr.
Pan Yen Chu pursuant to which we sold to Mr. Pan 100% of all issued and
outstanding securities in our wholly owned subsidiary HTT in consideration for
the cancellation and return to treasury of 45,000,000 previously issued common
voting shares of our company with a deemed value of $0.04 per share or $1.8
million in the aggregate. The transfer of common shares was completed on January
7, 2013. The 45,000,000 shares constitute approximately 11.5% of our companys
currently issued and outstanding common stock.
As a result of our sale of HTT and Vegfab Agricultural
Technology Co. Ltd., TransAKT BIO Aritech Ltd. has become our primary business
unit.
5
Subsequent to our sale of Vegfab, we continue to be engaged in
the sale and distribution of indoor agricultural equipment, including lighting,
irrigation and hydroponic growing systems. We seek to purchase inventory from
third party manufacturers and re-sell equipment to various indoor agricultural
operators located in Asia. Our primary target markets are Taiwan, Hong Kong,
Mainland China, and Singapore. However, we have not generated revenues
subsequent to the fiscal year ended December 31, 2015.
We incurred a net loss attributable to common stockholders of
$142,553 and $159,544 during the nine months ended September 30, 2018 and 2017,
respectively, and had an accumulated deficit of $22,493,079 and $22,350,526 as
of September 30, 2018 and December 31, 2017, respectively. In addition, we
expect to incur an operating loss in the 2018 fiscal year.
As at the date of this annual report, we are actively seeking
opportunities to diversify our business and to enhance shareholder value. In
particular, we are investigating potential opportunities to enter the Chinese
health food market, with an emphasis on traditional Chinese herbs known as
cordyceps. In that regard, we have recently identified and are in negotiations
with a potential joint-venture partner engaged in research, manufacture,
processing and sales of cordyceps. Importantly, however, there is no guarantee
that our negotiations will be successful or that we will successfully identify
or secure other opportunities to diversify our business.
Cash Requirements
We used cash in operations of $146,779 for the nine months
ended September 30, 2018. We continue to be dependent on the proceeds of equity
and non-equity financing to fund our operations. No assurances can be given that
our actual cash requirements will fall within our budget, that anticipated
revenues will be realized when needed, that lines of credit will be available to
us if required, or that additional capital will be available to us. We
anticipate that over the next twelve months, beginning January 1, 2018, we will
need a minimum of $250,000 to sustain our operations and market our products
effectively, and execute our business plan.
Our plan of operations for fiscal 2018 includes the following
budgeted expenditures:
12 Month Capital Requirements Forecast
|
USD
2
|
|
Beginning January 1, 2018
|
Salaries
|
$120,000
|
Accounting and Legal Expenses
|
$50,000
|
Public company reporting costs
|
$20,00
|
Selling, general and administrative expense
|
$5,000
|
Contingency
|
$55,000
|
Total
|
$250,000
|
|
1.
|
Based on 2018 average exchange rate of
$0.128
|
As of November 14, 2018, we will require additional financing
of approximately $250,000 to execute our business strategy for fiscal 2018. If
we are unable to raise sufficient financing, we intend to scale back our
business in order to accommodate available financing or revenue streams derived
from our current operations.
6
Results of Operations for the three Months Ended
September 30, 2018 and 2017
Our operating results for the three months ended September 30,
2018 and 2017 are summarized as follows:
|
|
Three Months ended
|
|
|
Three Months ended
|
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
($)
|
|
|
($)
|
|
Operating revenues
|
|
-
|
|
|
-
|
|
Operating costs and expenses
|
|
42,864
|
|
|
43,261
|
|
Loss from operations
|
|
(42,864
|
)
|
|
(43,261
|
)
|
Other expenses
|
|
(50
|
)
|
|
(12
|
)
|
Provision for income taxes
expense (benefit)
|
|
-
|
|
|
-
|
|
Net loss
|
|
(42,914
|
)
|
|
(43,273
|
)
|
Net loss attributable to
non-controlling interest
|
|
-
|
|
|
-
|
|
Net loss attributable to TRANSAKT
LTD.
|
|
(42,914
|
)
|
|
(43,273
|
)
|
|
|
|
|
|
|
|
Net loss per share (basic and
diluted)
|
|
(0.0003
|
)
|
|
(0.0003
|
)
|
Net Revenues and Cost of Sales
There were no revenues for the three months ended September 30,
2018 and 2017 respectively.
Operating Expenses
Operating expenses were $42,864 for the three months ended
September 30, 2018, compared to $43,261 for the three months ended September 30,
2017, representing a decrease of $397. The decrease in operating expenses was
primarily due to tightening our budget during the period.
Loss from Operations
Loss from operations was $42,864 for the three months ended
September 30, 2018, compared to $43,261 for the three months ended September 30,
2017, representing a decrease of $397 The decrease in operating loss was
primarily due to tightening our budget during the period.
Other Expenses
Other expenses were increased by $38 to $50 for the three
months ended September 30, 2018 from $12 for the same period in 2017.
Net Income (Loss) attributable to TRANSAKT LTD.
As a result of the above factors, we have net loss attributable
to the Companys common stockholders of approximately $42,914 for the three
months ended September 30, 2018 compared to approximately $43,273 for the three
months ended September 30, 2017, representing a decrease of $359 or
approximately 1%.
Results of Operations for the Nine Months Ended September
30, 2018 and 2017
Our operating results for the nine months ended September 30,
2018 and 2017 are summarized as follows:
7
|
|
Nine Months ended
|
|
|
Nine Months ended
|
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
($)
|
|
|
($)
|
|
Operating revenues
|
|
-
|
|
|
-
|
|
Operating costs and expenses
|
|
142,395
|
|
|
146,432
|
|
Loss from operations
|
|
(142,395
|
)
|
|
(146,432
|
)
|
Other income (expense)
|
|
(158
|
)
|
|
(13,112
|
)
|
Provision for income taxes
expense (benefit)
|
|
-
|
|
|
-
|
|
Net loss
|
|
(142,553
|
)
|
|
(159,544
|
)
|
Net loss attributable to
non-controlling interest
|
|
-
|
|
|
-
|
|
Net loss gain attributable to
TRANSAKT LTD.
|
|
(142,553
|
)
|
|
(159,544
|
)
|
|
|
|
|
|
|
|
Net loss per share (basic and
diluted)
|
|
(0.0011
|
)
|
|
(0.0014
|
)
|
Net Revenues and Cost of Sales
There were no revenues for the nine months ended September 30,
2018 and 2017 respectively.
Operating Expenses
Operating expenses were $142,395 for the nine months ended
September 30, 2018, compared to $146,432 for the nine months ended September 30,
2017, representing a decrease of $4,037. The decrease in operating expenses was
primarily due to tightening our budget during the period.
Loss from Operations
Loss from operations were $142,395 for the nine months ended
September 30, 2018, compared to $146,432 for the nine months ended September 30,
2017, representing a decrease of $4,037. The decrease in operating loss was due
to the budget reductions during the period.
Other Income or Expenses
Other expenses decreased by $12,954 to $158 for the nine months
ended September 30, 2018 from $13,112 for the same period in 2017.
Net Income (Loss) attributable to TRANSAKT LTD.
As a result of the above factors, we have net loss attributable
to the Companys common stockholders of $142,553 for the nine months ended
September 30, 2018 compared to loss of $159,544 for the nine months ended
September 30, 2017, representing a decrease of $16,991 or approximately 11%.
Liquidity and Capital Resources
Our financial position as of September 30, 2018 and December
31, 2017 and the changes for the periods then ended are as follows:
8
Working Capital
|
|
|
|
|
|
|
|
|
As of
|
|
|
As of
|
|
|
|
September 30,
2018
|
|
|
December 31, 2017
|
|
Current Assets
|
$
|
288,944
|
|
$
|
445,630
|
|
Current Liabilities
|
$
|
21,430
|
|
$
|
35,656
|
|
Working Capital
|
$
|
267,514
|
|
$
|
409,974
|
|
Our working capital decreased from $409,974 at December 31,
2017 to $267,514 at September 30, 2018, primarily as a result of the operating
loss during the period.
Cash Flows
|
|
|
|
|
|
|
|
|
Nine months
|
|
|
Nine months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
Net cash used in operating
activities
|
$
|
(146,779
|
)
|
$
|
(443,750
|
)
|
Net cash used in investing activities
|
$
|
-
|
|
$
|
-
|
|
Net cash provided by
financing activities
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
Cash and Cash Equivalents during the period
|
$
|
(146,686
|
)
|
$
|
(446,621
|
)
|
Cash and Cash Equivalents, beginning of
period
|
$
|
435,630
|
|
$
|
638,601
|
|
Cash and Cash Equivalents,
end of period
|
$
|
288,944
|
|
$
|
191,980
|
|
Operating Activities
Net cash flow used in operating activities during the nine
months ended September 30, 2018 was $146,779, representing a decrease of
$296,971 compared to net cash flow used in operating activities of $443,750
during the nine months ended September 30, 2017. The decrease in the cash used
in operating activities was primarily due to the deposit paid of $300,000 to a
potential investment in 2017.
Investing Activities
Net cash flow used in investing activities during the nine
months ended September 30, 2018 was $0, no change compared to net cash used in
investing activities during the nine months ended September 30, 2017.
Financing Activities
Net cash flow provided by financing activities during the nine
months ended September 30, 2018 was $0, no change compared to net cash provided
by financing activities during the nine months ended September 30, 2017.
Critical Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
TransAKT BIO Agritech Ltd., collectively referred to within as our company. All
material intercompany accounts, transactions, and profits have been eliminated
in consolidation.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles in the United States (GAAP) requires
management to make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
9
Revenue Recognition
Revenues are recognized when
finished products are shipped to customers and both title and the risks and
rewards of ownership are transferred and collectability is reasonably assured.
The Companys revenues are recorded upon confirmed acceptance after inspection
by the customers of the Company.
Exchange Gain (Loss):
During the nine months ended September 30, 2018 and 2017, the
transactions of TransAKT Bio Agritech Ltd. were denominated in foreign currency
and were recorded in Hong Kong Dollar (HKD) at the rates of exchange in effect
when the transactions occur. Exchange gains and losses are recognized for the
different foreign exchange rates applied when the foreign currency assets and
liabilities are settled.
Translation Adjustment
The Company financial statements are presented in the U.S.
dollar ($), which is the Companys reporting currency, while its functional
currency is Hong Kong Dollar (HKD). Transactions in foreign currencies are
initially recorded at the functional currency rate ruling at the date of
transaction. Any differences between the initially recorded amount and the
settlement amount are recorded as a gain or loss on foreign currency transaction
in the consolidated statements of income. Monetary assets and liabilities
denominated in foreign currency are translated at the functional currency rate
of exchange ruling at the balance sheet date. Any differences are taken to
profit or loss as a gain or loss on foreign currency translation in the
statements of income.
In accordance with ASC 830, Foreign Currency Matters, the
Company translates the assets and liabilities into U.S. dollar ($) using the
rate of exchange prevailing at the balance sheet date and the statements of
operations and cash flows are translated at an average rate during the reporting
period. Adjustments resulting from the translation from HKD into U.S. dollar are
recorded in stockholders equity as part of accumulated other comprehensive
income.
Comprehensive Income
Comprehensive income includes accumulated foreign currency
translation gains and losses. The Company has reported the components of
comprehensive income on its statements of stockholders equity.
Advertising
Advertising expenses consist primarily of costs of promotion
for corporate image and product marketing and costs of direct advertising. The
Company expenses all advertising costs as incurred.
Income Taxes
The Company accounts for income taxes in accordance with ASC
740, Income Taxes, which requires that the Company recognize deferred tax
liabilities and assets based on the differences between the financial statement
carrying amounts and the tax basis of assets and liabilities, using enacted tax
rates in effect in the years the differences are expected to reverse. Deferred
income tax benefit (expense) results from the change in net deferred tax assets
or deferred tax liabilities. A valuation allowance is recorded when, in the
opinion of management, it is more likely than not that some or all of any
deferred tax assets will not be realized.
Statement of Cash Flows
In accordance with generally accepted accounting principles
(GAAP), cash flows from the Companys operations are based upon the local
currencies. As a result, amounts related to assets and liabilities reported on
the statement of cash flows will not necessarily agree with changes in the
corresponding balances on the balance sheet.
10
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk are accounts receivable and other receivables
arising from its normal business activities. The Company has a diversified
customer base. The Company controls credit risk related to accounts receivable
through credit approvals, credit limits and monitoring procedures. The Company
routinely assesses the financial strength of its customers and, based upon
factors surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts
receivable credit risk exposure beyond such allowance is limited.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit, and all highly liquid debt instruments with
original maturities of three months or less.
Fair Value of Financial Instruments
In the first quarter of fiscal year 2008, the Company adopted
Accounting Standards Codification subtopic 820-10, Fair Value Measurements and
Disclosures (ASC 820-10). ASC 820-10 defines fair value, establishes a
framework for measuring fair value, and enhances fair value measurement
disclosure. ASC 820-10 delays, until the first quarter of fiscal year 2009, the
effective date for ASC 820-10 for all non-financial assets and non-financial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The adoption of
ASC 820-10 did not have a material impact on the Companys financial position or
operations.
Effective October 1, 2008, the Company adopted Accounting
Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures
(ASC 820-10) and Accounting Standards Codification subtopic 825-10, Financial
Instruments (ASC 825-10), which permits entities to choose to measure many
financial instruments and certain other items at fair value. Neither of these
statements had an impact on the Companys unaudited condensed consolidated
financial position, results of operations, or cash flows. The carrying value of
cash and cash equivalents, accounts payable and short-term borrowings, as
reflected in the balance sheets, approximate fair value because of the
short-term maturity of these instruments.
Stock-based Compensation
The Company records stock-based compensation expense pursuant
to ASC 718-10, "
Share Based Payment Arrangement
, which requires
companies to measure compensation cost for stock-based employee compensation
plans at fair value at the grant date and recognize the expense over the
employee's requisite service period. The Companys expected volatility
assumption is based on the historical volatility of Companys stock or the
expected volatility of similar entities. The expected life assumption is
primarily based on historical exercise patterns and employee post-vesting
termination behavior. The risk-free interest rate for the expected term of the
option is based on the U.S. Treasury yield curve in effect at the time of grant.
Stock-based compensation expense is recognized based on awards
expected to vest, and there were no estimated forfeitures as the Company has a
short history of issuing options. ASC 718-10 requires forfeitures to be
estimated at the time of grant and revised in subsequent periods, if necessary,
if actual forfeitures differ from those estimates.
Net Loss Per Share
The Company has adopted Accounting Standards Codification
subtopic 260-10, Earnings Per Share (ASC 260-10) which specifies the
computation, presentation and disclosure requirements of earnings per share
information. Basic earnings per share have been calculated based upon the
weighted average number of common shares outstanding. Common equivalent shares
are excluded from the computation of the diluted loss per share if their effect
would be anti-dilutive.
11
Intangible Assets
Intangible assets include a patent. With the adoption of FASB
ASC Topic 350, Intangibles (formerly SFAS No. 142), intangible assets with a
definite life are amortized on a straight-line basis. The patent is being
amortized over its estimated life of 10 years. Intangible assets with a definite
life are tested for impairment whenever events or circumstances indicate that a
carrying amount of an asset (asset group) may not be recoverable. An impairment
loss would be recognized when the carrying amount of an asset exceeds the
estimated undiscounted cash flows used in determining the fair value of the
asset. The amount of the impairment loss to be recorded is calculated by the
excess of the assets carrying value over its fair value. Fair value is
generally determined using a discounted cash flow analysis. Costs related to
internally develop intangible assets are expensed as incurred.
Recent Accounting Pronouncements
The FASB issued an Accounting Standards Update (ASU) that helps
organizations address certain stranded income tax effects in accumulated other
comprehensive income (AOCI) resulting from the Tax Cuts and Jobs Act.
ASU No. 2018-02, Income StatementReporting Comprehensive
Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income, provides financial statement preparers with an
option to reclassify stranded tax effects within AOCI to retained earnings in
each period in which the effect of the change in the U.S. federal corporate
income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is
recorded.
The ASU requires financial statement preparers to disclose:
|
A description of the accounting policy for
releasing income tax effects from AOCI;
|
|
|
|
Whether they elect to reclassify the stranded
income tax effects from the Tax Cuts and Jobs Act; and
|
|
|
|
Information about the other income tax effects
that are reclassified.
|
The amendments affect any organization that is required to
apply the provisions of Topic 220, Income StatementReporting Comprehensive
Income, and has items of other comprehensive income for which the related tax
effects are presented in other comprehensive income as required by GAAP.
The amendments are effective for all organizations for fiscal
years beginning after December 15, 2018, and interim periods within those fiscal
years. Early adoption is permitted. Organizations should apply the proposed
amendments either in the period of adoption or retrospectively to each period
(or periods) in which the effect of the change in the U.S. federal corporate
income tax rate in the Tax Cuts and Jobs Act is recognized.
FASB Adds SEC Guidance to the Codification on the Tax Cuts and
Jobs Act. The FASB has issued Accounting Standards Update (ASU) No. 2018-05,
Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff
Accounting Bulletin No. 118. ASU 2018-05 amends certain SEC material in Topic
740 for the income tax accounting implications of the recently issued Tax Cuts
and Jobs Act (Act).
ASU 2018-05 adds the following guidance, among other things, to
the FASB Accounting Standards Codification regarding the Act:
Question 1:If the accounting for certain income tax effects of the Act is not
completed by the time a company issues its financial statements that include the
reporting period in which the Act was enacted, what amounts should a company
include in its financial statements for those income tax effects for which the
accounting under Topic 740 is incomplete?
12
Answer
1:In a companys financial statements that include the reporting period in which
the Act was enacted, a company must first reflect the income tax effects of the
Act in which the accounting under Topic 740 is complete. These completed amounts
would not be provisional amounts. The company would then also report provisional
amounts for those specific income tax effects of the Act for which the
accounting under Topic 740 will be incomplete but a reasonable estimate can be
determined. For any specific income tax effects of the Act for which a
reasonable estimate cannot be determined, the company would not report
provisional amounts and would continue to apply Topic 740 based on the
provisions of the tax laws that were in effect immediately prior to the Act
being enacted. For those income tax effects for which a company was not able to
determine a reasonable estimate (such that no related provisional amount was
reported for the reporting period in which the Act was enacted), the company
would report provisional amounts in the first reporting period in which a
reasonable estimate can be determined.
Question 2: If an entity accounts for certain income tax effects of the Act
under a measurement period approach, what disclosures should be provided?
Answer
2:The staff believes an entity should include financial statement disclosures to
provide information about the material financial reporting impacts of the Act
for which the accounting under Topic 740 is incomplete, including:
a. Qualitative disclosures of the income tax effects of the Act
for which the accounting is incomplete;
b. Disclosures of items reported as provisional amounts;
c. Disclosures of existing current or deferred tax amounts for
which the income tax effects of the Act have not been completed;
d. The reason why the initial accounting is incomplete;
e. The additional information that is needed to be obtained,
prepared, or analyzed in order to complete the accounting requirements under
Topic 740;
f. The nature and amount of any measurement period adjustments
recognized during the reporting period;
g. The effect of measurement period adjustments on the
effective tax rate; and
h. When the accounting for the income tax effects of the Act
has been completed.
ASU 2018-05 is effective upon inclusion in the FASB
Codification.
FASB Releases ASU No. 2018-09. The FASB has released Accounting
Standards Update (ASU) No. 2018-09, Codification Improvements. ASU 2018-09
affects a wide variety of Topics in the Codification including:
Amendments to Subtopic 220-10,Income Statement Reporting Comprehensive
IncomeOverall.The guidance in paragraph 220-10-45-10B(b) states that taxes not
payable in cash are required to be reported as a direct adjustment to paid-in
capital. This requirement conflicts with other guidance in Topic 740,Income
Taxes, Subtopic 805-740,Business CombinationsIncome Taxes, and Subtopic
852-740,ReorganizationsIncome Taxes, which generally states that income taxes
and adjustments to those accounts upon a business combination or a bankruptcy
that is eligible for fresh-start reporting must be recognized in income. ASU No.
2018-09 clarifies the guidance in paragraph 220-10-45-10B by removing the
generic phrase taxes not payable in cash and adding guidance that is specific to
certain quasi-reorganizations.
13
Amendments to Subtopic 470-50,DebtModifications and Extinguishments.The
guidance in paragraph 470-50-40-2 requires that the difference between the
reacquisition price of debt and the net carrying amount of extinguished debt be
recognized in income in the period of extinguishment. The guidance in that
paragraph was not amended by FASB Statement No. 155, Accounting for Certain
Hybrid Financial Instruments, or FASB Statement No. 159,The Fair Value Option
for Financial Assets and Financial Liabilities; therefore, it does not
specifically address extinguishments of debt when the fair value option is
elected. ASU No. 2018-09 clarifies that:
1. When the fair value option has been elected on debt that is
extinguished, the net carrying amount of the extinguished debt equals its fair
value at the reacquisition date, and
2. Related gains or losses in other comprehensive income must
be included in net income upon extinguishment of the debt.
Amendments to Subtopic 480-10,Distinguishing Liabilities from EquityOverall.The
guidance in paragraph 480-10-25-15 prohibits the combination of freestanding
financial instruments within the scope of Subtopic 480-10 with noncontrolling
interest, unless the combination is required by Topic 815,Derivatives and
Hedging. The example in paragraphs 480-10-55-55 and 480-10-55-59 conflicts with
that guidance by stating that freestanding option contracts with the terms in
Derivative 2 should be accounted for on a combined basis with the noncontrolling
interest. The source of the example in paragraph 480-10-55-59 is from EITF Issue
No. 00-4, Majority Owners Accounting for a Transaction in the Shares of a
Consolidated Subsidiary and a Derivative Indexed to the Noncontrolling Interest
in That Subsidiary. Issue 00-4 was nullified by FASB Statement No.
150,Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, but a conforming amendment to the example in paragraph
480-10-55-59 was not made to align it with the guidance in Statement 150. The
amendment in this Update conforms the guidance in paragraphs 480-10-55-55 and
480-10-55-59 with the guidance in Statement 150.
Amendments to Subtopic 718-740,CompensationStock CompensationIncome Taxes.The
guidance in paragraph 718-740-35-2, as amended, is unclear on whether an entity
should recognize excess tax benefits (or tax deficiencies) for compensation
expense that is taken on the entitys tax return. The amendment to paragraph
718-740-35-2 in ASU No. 2018-09 clarifies that an entity should recognize excess
tax benefits (that is, the difference in tax benefits between the deduction for
tax purposes and the compensation cost recognized for financial statement
reporting) in the period when the tax deduction for compensation expense is
taken on the entitys tax return. This includes deductions that are taken on the
entitys return in a different period from when the event that gives rise to the
tax deduction occurs and the uncertainty about whether (1) the entity will
receive a tax deduction and (2) the amount of the tax deduction is resolved.
Amendments to Subtopic 805-740,Business Combinations Income Taxes.The
amendments to paragraph 805-740-25-13 removes a list of three methods for
allocating the consolidated tax provision to an acquired entity after
acquisition that is inconsistent with guidance in Topic 740. The three methods
for tax allocation described in paragraph 805-740-25-13 do not follow the broad
principles of being systematic, rational, and consistent with Topic 740. The
amendment removes the allocation methods in paragraph 805-740-25-13 and conforms
the guidance in Subtopic 805-740 with the guidance in Topic 740.
Amendments to Subtopic 815-10,Derivatives and Hedging Overall.The amendment to
paragraphs 815-10-45-4 and 815-10-45-5 in ASU No. 2018-09 clarifies the
circumstances in which derivatives may be offset. Under certain specific
conditions, derivatives may be offset if three of the four criteria in paragraph
210-20-45-1 are met. One of the criteriathe intent to set offis not required
to offset derivative assets and liabilities for certain amounts arising from
derivative instruments recognized at fair value and executed with the same
counterparty under a master netting agreement.
14
Amendments to Subtopic 820-10,Fair Value Measurement Overall.The amendments to
paragraph 820-10-35-16D in ASU No. 2018-09 clarify the Boards decisions about
the measurement of the fair value of a liability or instrument classified in a
reporting entitys shareholders equity from the perspective of a market
participant that holds an identical item as an asset at the measurement date. A
technical inquiry questioned how transfer restrictions embedded in an asset
should affect the fair value of the corresponding liability or equity instrument
from the perspective of the issuer. The amendments correct the wording of
paragraph 820-10-35-16D to clarify how an entity should account for those
restrictions. The amendments are not intended to substantively change the
application of GAAP. However, it is possible that the amendments may result in a
change to existing practice for some entities.
The amendments to paragraphs 820-10-35-18D through 35-18F and
820-10-35- 18H through 35-18L revise the current guidance to allow portfolios of
financial instruments and nonfinancial instruments accounted for as derivatives
in accordance with Topic 815 to use the portfolio exception to valuation. The
amendments improve guidance by adding wording that explicitly states that a
group of financial assets, financial liabilities, nonfinancial items accounted
for as derivatives in accordance with Topic 815, or a combination of these items
that otherwise meet the criteria to do so are permitted to apply the portfolio
exception for measuring fair value of the group. This allows entities to measure
fair value on a net basis for those portfolios in which financial assets and
financial liabilities and nonfinancial instruments are managed and valued
together.
Amendments to Subtopic 940-405,Financial ServicesBrokers and
DealersLiabilities.Paragraph 940-405-55-1 contains incomplete guidance about
offsetting on the balance sheet. The current guidance focuses only on explicit
settlement dates as a determining criterion for offsetting when, in fact, an
entity should consider all the requirements in Section 210-20-45,Balance
SheetOffsettingOther Presentation Matters, to determine whether a right of
offset exists. There is similar guidance in paragraph 942-210-45-3. Paragraphs
940-405-55-1 and 942-210-45- 3 originated from two different AICPA Audit and
Accounting Guides and paraphrase the guidance in Subtopic 210-20, albeit each
slightly differently. The Board decided to amend both paragraphs so that the
industry Topic guidance refers to the complete guidance for offsetting.
Amendments to Subtopic 962-325,Plan AccountingDefined Contribution Pension
PlansInvestmentsOther.The amendment to Subtopic 962-325 removes the stable
value common collective trust fund from the illustrative example in paragraph
962-325-55-17 to avoid the interpretation that such an investment would never
have a readily determinable fair value and, therefore, would always use the net
asset value per share practical expedient. Rather, a plan should evaluate
whether a readily determinable fair value exists to determine whether those
investments may qualify for the practical expedient to measure at net asset
value in accordance with Topic 820.
Transition and Effective Date. The transition and effective
date guidance is based on the facts and circumstances of each amendment. Some of
the amendments in ASU No. 2018-09 do not require transition guidance and will be
effective upon issuance of ASU No. 2018-09. However, many of the amendments do
have transition guidance with effective dates for annual periods beginning after
December 15, 2018, for public business entities.
In addition, there are some conforming amendments in ASU No.
2018-09 that have been made to recently issued guidance that is not yet
effective that may require application of the transition and effective date
guidance in the original ASU. For example, there are conforming amendments to
Topic 820 and Subtopic 944-310, Financial ServicesInsuranceReceivables, that
are related to the amendments in Accounting Standards Update No. 2016-01,
Financial InstrumentsOverall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities, which require application of the
transition and effective date guidance in that ASU.
15
Subsequent Events
We have evaluated all events or transactions that occurred
after September 30, 2018 up through the date the Company issued these financial
statements.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that 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 that are
material to stockholders.
Inflation
Our opinion is that inflation has not had, and is not expected
to have, a material effect on our operations.
Going Concern
Our company has incurred a net loss attributable to common
stockholders of $142,553 and $159,544 during the nine months ended September 30,
2018 and 2017, respectively, and had an accumulated deficit of $22,493,079 and
$22,350,526 as of September 30, 2018 and December 31, 2017, respectively.
The accompanying consolidated financial statements have been
prepared assuming that our company will continue as a going concern. This basis
of accounting contemplates the recovery of our companys assets and the
satisfaction of liabilities in the normal course of business. This presentation
presumes funds will be available to finance ongoing research and development,
operations and capital expenditures and permit the realization of assets and the
payment of liabilities in the normal course of operations for the foreseeable
future.
There can be no assurances that there will be adequate
financing available to our company and the consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
Our company has taken certain restructuring steps to provide
the necessary capital to continue its operations. These steps included: (1)
Tightly budgeting and controlling all expenses; (2) Our company plans to
continue actively seeking additional funding opportunities to improve and expand
upon our product lines.
At this time, we cannot provide investors with any assurance
that we will be able to raise sufficient funding from the sale of our common
stock or through a loan from our directors, shareholders, or investors to meet
our obligations over the next twelve months. We do not have any further
arrangements in place for any future debt or equity financing.