PINX:TAKD TransAKT Ltd Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

or

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________________ to __________________________

Commission File Number 000-50392

TRANSAKT LTD.
(Exact name of registrant as specified in its charter)

Nevada N/A
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

No.3, Lane 141, Sec. 3, Beishen Rd., Shenkeng Township, Taipei County 222, Taiwan (R.O.C.) N/A
(Address of principal executive offices) (Zip Code)

403-290-1744
(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[   ] YES     [   ] NO

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
[ ] YES [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
[   ] YES     [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
400,193,572
common shares issued and outstanding as of August 14, 2012


PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statement

Our unaudited interim financial statements for the three and six month periods ended June 30, 2012 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 company’s audited financial statements and the Form 10-K for the year ended December 31, 2011.

2


TRANSAKT LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012


CONTENTS

Page

FINANCIAL STATEMENTS  
     
  Condensed Consolidated Balance Sheets F-1
     
  Condensed Consolidated Statements of Operations F-2
     
  Condensed Consolidated Statements of Cash Flows F-3
     
  Notes to Financial Statements F-4 -F- 7


TRANSAKT LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December 31, 
     2012     2011   
ASSETS   (Unaudited)        
Current Assets            
     Cash and cash equivalents $  1,148,299   $  871,682  
     Restricted cash   648,471     603,089  
     Accounts receivable, net   1,843,742     1,747,862  
     Inventory   1,615,890     1,151,933  
     Other receivable, net   9,323     9,212  
     Prepaid expenses   1,251,939     258,278  
     Deferred income taxes   -     4,512  
Total Current Assets   6,517,664     4,646,568  
             
Property & Equipment, net   965     1,652  
             
Deposits   27,703     24,681  
             
Total Assets $  6,546,332   $  4,672,901  
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current Liabilities            
     Accounts payable and accrued expenses $  1,984,718   $  502,160  
     Bank loans   1,420,465     1,964,533  
     Loan payable to related party   55,098     62,835  
               Total Current Liabilities   3,460,281     2,529,528  
             
Stockholders' Equity            
     Common stock, 700,000,000 shares authorized for issuance,
        $0.001 par value, 235,193,572 and 195,339,005 shares issued
        and outstanding at June 30, 2012 and December 31, 2011



235,194
 


195,339


     Preferred stock, 200,000,000 shares authorized for issuance,
        $0.001 par value, 0 share issued and outstanding


-
 

-

     Additional paid-in capital   5,615,869     4,460,087  
     Other comprehensive income   54,014     61,706  
     Accumulated deficit   (2,819,026   (2,573,759 )
     Total Stockholders' Equity   3,086,051     2,143,373  
             
Total Liabilities and Stockholders' Equity $  6,546,332   $  4,672,901  

The Accompanying Notes Are an Integral Part of the Financial Statements.

F-1



TRANSAKT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011
(UNAUDITED)

    Six Months Period Ended     Three Months Period Ended  
    June 30, 2012     June 30, 2011     June 30, 2012     June 30, 2011  
                         
Sales, net $  4,650,387   $  6,338,335   $  1,937,704   $  2,854,581  
Cost of sales   4,398,428     5,838,302     1,905,751     2,649,329  
Gross profit   251,959     500,033     31,953     205,252  
Selling, general and administrative expenses   492,317     620,947     234,874     380,415  
Loss from operations   (240,358 )   (120,914 )   (202,921 )   (175,163 )
Other income (expense)                        
     Interest income   1,728     1,573     1,393     1,252  
     Other income (expense)   -     6,294     -     (4,650 )
     Currency exchange gain (loss)   14,355     67,241     1,461     77,175  
     Interest expense   (20,992 )   (32,106 )   (16,390 )   (23,683 )
                               Total other income (expenses)   (4,909 )   43,002     (13,536 )   50,094  
Loss before income taxes   (245,267 )   (77,912 )   (216,457 )   (125,069 )
Provision for income taxes expense (benefit)   -     (12,673 )   (4,608 )   (111 )
Loss before extraordinary item   (245,267 )   (65,239 )   (211,849 )   (124,958 )
Extraordinary item                        
     Gain from extinguishment of debt                        
       (less of applicable income taxes of $0)   -     7,263     -     -  
Net loss $  (245,267 ) $  (57,976 ) $  (211,849 ) $  (124,958 )
                         
Loss per share:                        
Basic and diluted income (loss) per share                        
     Loss before extraordinary item $  (0.00 ) $  (0.00 ) $  (0.00 ) $  (0.00 )
     Extraordinary item $  -   $  0.00   $  -   $  -  
     Net loss $  (0.00 ) $  (0.00 ) $  (0.00 ) $  (0.00 )
                         
Weighted average number of shares outstanding:                        
Basic and diluted   205,193,156     109,202,793     254,901,874     114,611,481  
                         
Other Comprehensive Income (Loss)                        
Net loss $  (245,267 ) $  (57,976 ) $  (211,849 ) $  (124,958 )
Foreign currency translation adjustment   (7,692 )   12,660     (65,008 )   53,881  
Comprehensive income (loss) $  (252,959 ) $  (45,316 ) $  (276,857 ) $  (71,077 )

The Accompanying Notes Are an Integral Part of the Financial Statements.

F-2


TRANSAKT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011
(UNAUDITED)

    Six Months Period Ended  
    June 30, 2012     June 30, 2011  
Cash flows from operating activities            
     Net income (loss) $  (245,267 ) $  (57,976 )
     Adjustments to reconcile net income (loss) to net cash used in operating activities:            
     Gain on debt extinguishment   -     7,263  
     Deferred tax   4,608     (12,673 )
     Depreciation expense   705     317  
     Amortization of debt discount attributable to convertible debentures   -     10,000  
     Changes in assets and liabilities:            
                   (Increase) in accounts receivable   (75,365 )   (1,926,457 )
                   Decrease (Increase) in inventory   (454,036 )   325,701  
                   (Increase) in prepaid expense   (1,012,901 )   (176,990 )
                   (Increase) in deposits   (3,058 )   (14,181 )
                   Increase in accounts payable and accrued expenses   1,487,960     1,025,011  
                   (Decrease) in other payable   -     (3,926 )
                                     Net cash used in operating activities   (297,354 )   (823,911 )
Cash flows from investing activities            
     Decrease (Increase) in restricted cash   (38,413 )   41,797  
                                     Net cash provided by (used in) investing activities   (38,413 )   41,797  
Cash flows from financing activities            
     Proceeds from bank loans   677,984     1,874,810  
     Repayment of bank loans   (1,250,965 )   (1,834,994 )
     Due to related party   22,067     93,318  
     Repayment of amount due to related party   (29,848 )   (209,190 )
     Sale of common stock   1,186,409     765,275  
                                     Net cash provided by financing activities   605,647     689,219  
Effect of exchange rate changes on cash and cash equivalents   6,737     (5,659 )
Net increase (decrease) in cash and cash equivalents   276,617     (98,554 )
Cash and cash equivalents            
     Beginning   871,682     1,131,339  
     Ending $  1,148,299   $  1,032,785  
             
Supplemental disclosure of cash flows            
     Cash paid during the year for:            
           Income tax $  4,608   $  -  
           Interest expense $  23,976   $  32,106  
     Non-cash transactions:            
           Issuance of common stock to settle convertible debentures $  -   $  30,000  
           Conversion of related party notes payable into common stock $  -   $  582,064  

The Accompanying Notes Are an Integral Part of the Financial Statements.

F-3



TRANSAKT LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2012

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 Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

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 Halee International Co. Ltd. (HTT), entered into a Share Exchange Agreement in which TransAKT Ltd. acquired 100% of Taiwan Halee 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.

F-4


Principles of Consolidation

The consolidated financial statements include the accounts of TransAKT Holdings Limited and its wholly owned subsidiaries Taiwan Halee International Co. Ltd. and TransAKT Taiwan Limited, collectively referred to within as the 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.

Statement of Cash Flows

In accordance with generally accepted accounting principles (GAAP), cash flows from the Company’s 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.

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.

Allowance for Doubtful Accounts

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Allowance for doubtful debts amounted to $184,525 and $182,315 as at June 30, 2012 and December 31, 2011, respectively.

Inventory

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. The Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. As of June 30, 2012 and December 31, 2011, inventory consisted only of finished goods.

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.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. The amended guidance changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. The Company adopted the provisions of this ASU in the first quarter of 2012 and does not believe the adoption will have a material impact on its condensed consolidated financial statements.

F-5


In September 2011, the FASB issued ASU 2011-08, "Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment”, which modifies the impairment test for goodwill. Under the new guidance, an entity is permitted to make a qualitative assessment of whether it is more likely than not that the reporting unit’s fair value is less than the carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit's fair value is more likely than not greater than its carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. The Company adopted the provisions of this ASU in the first quarter of 2012 and does not believe the adoption will have a material impact on its condensed consolidated financial statements.

NOTE 2 - RELATED PARTY TRANSACTIONS

The Company’s officers and shareholders have advanced funds to the Company for working capital purpose. The Company has not entered into any agreement on the repayment terms for these advances. As of June 30, 2012, there were $55,098 advances outstanding.

NOTE 3 - LOANS PAYABLE

The Company has loan payable amounting to $1,420,465 as of June 30, 2012 from several commercial banks in Taiwan. The loans are partially secured by certificate of deposits for $648,471 and accounts receivable. The loans payable at June 30, 2012 comprised of the following:

          Interest        
Nature   Due on     per Annum     Amount  
Secured note payable from a bank   12/27/2012     3.22%     169,500  
Secured note payable from a bank   8/9/2012     6.00%     119,730  
Secured note payable from a bank   9/8/2012     2.89%     342,900  
Secured note payable from a bank   11/18/2012     2.21%     183,427  
Secured note payable from a bank   9/3/2012     1.71%     228,188  
Secured note payable from a bank   10/1/2012     2.39%     101,276  
Secured note payable from a bank   11/10/2012     4.00%     275,444  
    Total         $  1,420,465  
    Current portion           1,420,465  
    Long-term portion         $  -  

NOTE 4 - PRIVATE PLACEMENT OF CONVERTIBLE NOTES

On May 29, 2009, the Company issued $30,000 convertible promissory notes due May 29, 2011 with interest at 12% per annum due upon maturity. The note is convertible at any time after the first anniversary after the closing date, at the holder’s option, into shares of the Company’s common stock at a price of $0.02 per share. At maturity, any accrued and unpaid interest, is payable to the holder.

F-6


In accordance with ASC 470-20, the Company recognized an embedded beneficial conversion feature present in the note. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The Company recognized and measured an aggregate of $15,000 of the proceeds, which is equal to the intrinsic value of the embedded beneficial conversion feature, to additional paid-in capital and a discount against the note. The debt discount attributed to the beneficial conversion feature is amortized over the note’s maturity period (two years) as interest expense. The Company recorded the intrinsic value of the embedded beneficial conversion feature ($15,000) to debt discount which was amortized to interest expense over the term of the note.

On February 22, 2011, the Company entered into a Subscription Agreement- Debt Settlement with the holders of the above convertible notes. Based on the agreement, the holders subscribed 2,000,000 shares of common stock and apply the indebtedness of the convertible notes in payment of the subscription proceeds. Therefore, the embedded beneficial conversion feature of notes is extinguished. In accordance with ASC 470-20, the amount of the reacquisition price to be allocated to the repurchased beneficial conversion features shall be measured using the intrinsic value of that conversion feature at the extinguishment date. The residual amount would be allocated to the convertible security. The Company recognized and measured $10,000 of the intrinsic value of the embedded beneficial conversion feature at the extinguishment date to additional paid-in capital. The gain on extinguishment of the convertible debt security in the amount of $7,263 is recorded as extraordinary item, in accordance with ASC 470-50.

NOTE 5 – COMMON STOCK

On May 17, 2012, the Company issued an aggregate of 39,854,567 shares of common stock at a price of $0.03 per share, pursuant to the closing of a private placement, for aggregate gross proceeds of approximately $1,200,000.

On June 25, 2012, the Company amended its articles of incorporation to increase the authorized number of shares of common stock from 300,000,000 to 700,000,000 shares of common stock, par value of $0.001 per share.

NOTE 6 – SUBSEQUENT EVENTS

On May 3, 2012, the Company entered into a definitive agreement under which TransAKT Ltd. (“TransAKT, the “Purchaser”), a Nevada company. TransAKT will acquire substantially all assets of Vegfab Agricultural Technology Co. Ltd. (“Vegfab”) for the sum of US$5,500,000 pursuant to an Asset Purchase and Sale Agreement (the “Purchase Agreement”) with the purchaser. The purchase price is being paid by the delivery to Vegfab of: (i) US$1,000,000 in cash; and (ii) 150,000,000 common voting shares issued by TransAKT Ltd., with a deemed value of US$0.03 per share.

On July 26, 2012, the parties elected at closing to instead proceed with an acquisition of the 100% equity of Vegfab.

******

F-7


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

This annual 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 industry’s 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 annual 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", "our" and "our company" mean TransAKT Holdings Limited and its wholly owned subsidiaries Taiwan Halee International Co. Ltd. and TransAKT Taiwan Limited.

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 Halee 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 current business is 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 May 3, 2012, we entered into a definitive agreement under which TransAKT will acquire substantially all assets of Vegfab Agricultural Technology Co. Ltd. (“Vegfab”, the “Seller”), a Taiwanese company, for the sum of US$5,500,000 pursuant to an Asset Purchase and Sale Agreement (the “Purchase Agreement”) with the Seller. The purchase price is being paid by the delivery to Vegfab of: (i) US$1,000,000 in cash; and (ii) 150,000,000 common voting shares issued by TransAKT Ltd., with a deemed value of US$0.03 per share. Vegfab is a manufacturer of highly innovative agricultural equipment used to grow a large variety of vegetables and fruit using simulated sunlight from LED lamps in proprietary a hydroponic system. Vegfab’s product line includes systems for commercial production, and a home growing system which allows families to grow safe, clean vegetables and fruit in their own homes.

On July 26, 2012, the parties elected at closing to instead proceed with an acquisition of the 100% equity of Vegfab.

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. We currently offer a range of telecommunications products including VoIP equipment and advanced multi-line cordless phone systems.

We sustained operating losses of $245,267 and generated operating income of $57,976 during the six month periods ended June 30, 2012 and 2011, respectively, and incurred an accumulated deficit of $2,819,026 and $2,573,759 as of June 30, 2012 and December 31, 2011, respectively. In addition, we expect to incur an operating loss in the 2012 fiscal year.

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 have now completed development of our initial products and have entered into the sales and distribution phase. Our current business is the design, development, production and distribution of mobile wireless equipment, and other telecommunications solutions for business and individual consumers, including VoIP solutions in Taiwan. In 2012, our business will include the design, and distribution of telecommunications equipment, including specialized VoIP compatible phone systems and multi-line cordless telephone systems, and the distribution of name brand telecommunications equipment including Panasonic, Sanyo, Siemens, etc. in Taiwan. We currently rely exclusively on third parties for the manufacture of products that we design or distribute.

We currently generate revenues, at least in part, through the distribution of name brand products in Taiwan. Our management believes that this provides us with an insider’s view of some of the latest developments and trends in technology and design. It also may provide us with relationships that can be utilized for globalizing some of our new products. For example, we have formed a partnership with SANYO to develop a Wi-Fi phone and a GSM/Wi-Fi dual mode phone.

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We do not rely on a single revenue base or third parties for revenue generation. We also have kept our marketing, allowances or rebates to a minimum. Our management believes that these factors will allow us to effectively compete in the industry and minimize our costs, thereby allowing us to focus on intellectual property development.

The VoIP industry is relatively young and several of the more well-known players have much greater resources than we do. They have used their resources to get their name out to the public and become leaders in the industry. Some of the more well-known companies are Vonage, Packet 8, and Net 2 Phone. Our current share of the global VoIP market is negligible.

Our main focus is on telecommunications equipment, including VoIP hardware and multi-line cordless telephone systems. We also plan to distribute other name-brand telecommunications equipment in Taiwan, China and other regions throughout Asia. These areas are marked by strong competition and rapid change. The following summarizes our current competitors.

Cash Requirements

We had negative cash flow from operations of $(297,354) for the period ended June 30, 2012. 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, we will need a minimum of $3,000,000 to sustain operations and market our products effectively.

Results of Operations for the Three Months Ended June 30, 2012 and 2011

Our operating results for the three months ended June 30, 2012 and 2011 are summarized as follows:



  Three Months ended
June 30, 2012
($)
    Three Months ended
June 30, 2011
($)
 
Operating Revenues   1,937,704     2,854,581  
Operating Costs and expenses   2,140,625     3,029,744  
Income (loss) from Operations   (202,921 )   (175,163 )
Other Income (Expenses)   (13,536 )   50,094  
Provision for Income Taxes expense (benefit)   4,608     (111 )
Income (loss) before extraordinary item   (211,849 )   (124,958 )
Extraordinary item   -     -  
Net Income (loss)   (211,849 )   (124,958 )
             
Net Income (loss) per share (basic and diluted)   0.00     (0.00 )

Revenues and Cost of Sales

Revenues for the three months ended June 30, 2012 decreased by $916,877 to $1,937,704 compared to $2,854,581 for the same period in 2011. The decreased sales volume in telecommunications equipment, including specialized VoIP compatible phone systems and multi-line cordless telephone systems, was primarily due to the overall economic downturn in 2012. Cost of sales for the three months ended June 30, 2012 totaled $1,905,751 or approximately 98.35% of net sales compared to $2,649,329 or approximately 92.81% for the three months ended June 30, 2011. Gross profit as a percentage of net sales was 1.65% for the three month ended June 30, 2012, compared to 7.19% in the same period of 2011. The decrease in gross profit percentage was due to increase in sales discount in current period.

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Operating Expenses

Operating expenses for the three months ended June 30, 2012 totaled $234,874 or approximately 12.12% of net sales compared to $380,415 or approximately 13.33% for the three months ended June 30, 2011, a decrease of $145,411. The decrease in operating expenses was primarily due to a decrease in professional fees and salary expense.

Income (Loss) from Operations

Loss from operations for the three months ended June 30, 2012 totaled $(202,921) or approximately (10.47)% of sales compared to a loss of $(175,163) or approximately (6.14)% of sales for the three months ended June 30, 2011, an increase of $(27,758). The increase in loss from operations was primarily due to decreased sales amount and gross profit, which partially offset by the decreased operating expenses.

Other Income (expenses)

Other income (expenses) decreased approximately $63,630 to $(13,536) for the three months ended June 30, 2012 from $50,094 for the same period in 2011. The decrease in net other income was primarily due to a decrease in currency exchange gain, which is partially offset by the decrease in interest expense.

Net Income (Loss)

Net loss for the three months ended June 30, 2012 totaled $(211,849) compared to $(124,958) for the three months ended June 30, 2011, an increase of $(86,891). The increase in net loss was primarily due to the reasons described above.

Results of Operations for the Six Months Ended June 30, 2012 and 2011

Our operating results for the six months ended June 30, 2012 and 2011 are summarized as follows:



  Six Months ended
June 30, 2012
($)
    Six Months ended
June 30, 2011
($)
 
Operating Revenues   4,650,387     6,338,335  
Operating Costs and expenses   4,890,745     6,459,249  
Income (loss) from Operations   (240,358 )   (120,914 )
Other Income (Expenses)   (4,909 )   43,002  
Provision for Income Taxes expense (benefit)   -     (12,673 )
Income (loss) before extraordinary item   (245,267 )   (65,239 )
Extraordinary item   -     7,263  
Net Income (loss)   (245,267 )   (57,976 )
             
Net Income (loss) per share (basic and diluted)   (0.00 )   (0.00 )

Revenues and Cost of Sales

Revenues for the six months ended June 30, 2012 decreased by $1,687,948 to $4,650,387 compared to $6,338,335 for the same period in 2011. The change in revenue and sales volume in telecommunications equipment, including specialized VoIP compatible phone systems and multi-line cordless telephone systems, was primarily due to the overall economic downturn in 2012. Cost of sales for the six months ended June 30, 2012 totaled $4,398,428 or approximately 94.58% of net sales compared to $5.838.302 or approximately 92.11% for the six months ended June 30, 2011. Gross profit as a percentage of net sales was 5.42% for the three month ended June 30, 2012, compared to 7.89% in the same period of 2011. The decrease in gross profit percentage was due to increase in sales discount in current period.

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Operating Expenses

Operating expenses for the six months ended June 30, 2012 totaled $492,317 or approximately 10.59% of net sales compared to $620,947 or approximately 9.80% for the six months ended June 30, 2011, a decrease of $128,630. The decrease in operating expenses was primarily due to a decrease in salary, which is partially offset by an increase in professional fees.

Income (Loss) from Operations

Loss from operations for the six months ended June 30, 2012 totaled $(240,358) or approximately (5.17)% of sales compared to a loss of $(120,914) or approximately (1.91)% of sales for the six months ended June 30, 2011, an increase of $(119,444). The increase in loss from operations was primarily due to decreased sales amount and gross profit, which partially offset by the decreased operating expenses.

Other Income (expenses)

Other income decreased approximately $47,911 to $(4,909) for the six months ended June 30, 2012 from $43,002 for the same period in 2011. The decrease in net other income was primarily due to a decrease in currency exchange gain and a decrease in other income, which was partially offset by the decreased interest expense.

Extraordinary item

A gain from extinguishment of convertible debenture of $7,263 was recorded in the six month period ended June 30, 2011.

Net Income (Loss)

Net loss for the six months ended June 30, 2012 totaled $(245,267) compared to $(57,976) for the six months ended June 30, 2011, an increase of $(187,291). The increase in net loss was primarily due to the reasons described above.

Liquidity and Capital Resources

Our financial position as at June 30, 2012 and December 31, 2011 and the changes for the periods then ended are as follows:

Working Capital

    As at     As at  
    June 30, 2012     December 31, 2011  
Current Assets $  6,517,664   $  4,646,568  
Current Liabilities $  3,460,281   $  2,529,528  
Working Capital (Deficiency) $  3,057,383   $  2,117,040  

Our working capital surplus increased from $2,117,040 at December 31, 2011 to $3,057,383 at June 30, 2012 primarily as a result of increases in cash and cash equivalents, restricted cash, accounts receivable, inventory, and prepayments, and decreases in bank loan and loan from shareholders, which is partially offset by increases in accounts payable and accrued expenses

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Cash Flows            
    Six Months     Six Months  
    Ended     Ended  
    June 30, 2012     June 30, 2011  
Net cash provided by (used in) Operating Activities $  (297,354 ) $  (823,911 )
Net cash provided by (used in) Investing Activities $  (38,413 ) $  41,797  
Net cash provided by (used in) Financing Activities $  605,647   $  689,219  
Increase (Decrease) in Cash and Cash Equivalents during the Period $  276,617   $  (98,554 )
Cash, Beginning of Period $  871,682   $  1,131,339  
Cash, End of Period $  1,148,299   $  1,032,785  

Operating Activities

Net cash flow used in operating activities during the six months ended June 30, 2012 was $(297,354), a decrease of $526,557 compared to $(823,911) net cash used in operating activities during the six months ended June 30, 2011. The decrease in the cash used in operating activities was primarily due to current period loss, increases in account receivable, inventory, prepaid expenses and deposits, and an increase in accounts payable and accrued expenses.

Investing Activities

Cash used in investing activities during the six months ended June 30, 2012 was $(38,413), which was an increase of $80,210, compared to $41,797 net cash provided by investing activities during the six months ended June 30, 2011. The increase in the cash used in investing activities was primarily due to an increase in restricted cash.

Financing Activities

Cash provided by financing activities during the six months ended June 30, 2012 was $605,647, which was an decrease of $83,572, compared to $689,219 net cash provided by financing activities during the six months ended June 30, 2011. The increase in the cash used in investing activities was primarily due to the proceed from sale of common stock, which is partially offset by a repayment of amount due from related party, and a net decrease in bank loan.

We estimate our operating expenses and working capital requirements for the next 12 months to be as follows:

Estimated Net Expenditures During the Next Twelve Months

Cost of Sales $  1,535,000  
General, Administrative Expenses   1,400,000  
Interest Expense   65,000  
Total $  3,000,000  

We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.

The continuation of our business is dependent upon obtaining further financing, a successful program of exploration and/or development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements.

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There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Cash on hand as of June 30, 2012 was $1,148,299.

We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.

Critical Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of TransAKT Holdings Limited and its wholly owned subsidiaries Taiwan Halee International Co. Ltd. and TransAKT Taiwan Limited, collectively referred to within as the Company. All material intercompany accounts, transactions and profits have been eliminated in consolidation.

Exchange Gain (Loss):

The transactions of TransAKT Holdings Limited, Taiwan Halee International Co. Ltd. and TransAKT Taiwan Limited were denominated in foreign currency and were recorded in Taiwan Dollar (TWD) and Canadian Dollar (CAD) 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 accompanying consolidated financial statements have been translated and presented in United States Dollars ($), while the Company’s functional currency is the Taiwan and Canadian dollar.

The accounts of TransAKT Holdings Limited, Taiwan Halee International Co. Ltd. and TransAKT Taiwan Limited were maintained, and its financial statements were expressed, in CAD and TWD. 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 TWD and CAD into U.S. dollar are recorded in stockholders’ equity as part of accumulated other comprehensive income.

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

The Company’s revenue recognition policies are in compliance with Staff Accounting Bulletin (SAB) 104. Revenues are recognized when finished products are shipped to unaffiliated customers and both title and the risks and rewards of ownership are transferred and collectibility is reasonably assured.

The Company’s revenues are recorded upon confirmed acceptance after inspection by the customers of the Company.

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Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements.

Inflation

Our opinion is that inflation has not had, and is not expected to have, a material effect on our operations.

Going Concern

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 company’s 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.

The ability of our company to continue research and development projects and realize the capitalized value of proprietary technologies and related assets is dependent upon future commercial success of the technologies and raising sufficient funds to continue research and development as well as to effectively market its products. Through June 30, 2012, our company has not realized commercial success of the technologies, nor have they raised sufficient funds to continue research and development or to market its products.

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) Expanding our company’s operations into China, expanding product lines and recruiting a strong sales team to significantly increase sales revenue and profit in 2012; (3) Our company plans to continue actively seeing 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.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.

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As of the end of the period covered by this report, our management, with the participation of our chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer), carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, and the material weaknesses outlined in our Management Report on Internal Control Over Financial Reporting, our management concluded that our disclosure controls and procedures were not effective.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer), we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2012 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of June 30, 2012, we determined that there were control deficiencies that constituted material weaknesses, as described below:

1.

We do not have an audit committee or a financial expert on our board of directors – While not being legally obligated to have an audit committee, it is management’s view that such a committee, including a financial expert member, is an utmost important entity level control over our financial statements. Currently, our board of directors acts in the capacity of the audit committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.

   
2.

We did not implement appropriate information technology controls – As of June 30, 2012, we retain copies of all financial data and material agreements; however, there is no formal procedure or evidence of normal backup of our data or off-site storage of the data in the event of theft, misplacement or loss due to unmitigated factors.

Accordingly, we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls.

As a result of the material weaknesses described above, management has concluded that we did not maintain effective internal control over financial reporting as of June 30, 2012 based on criteria established in Internal Control—Integrated Framework issued by COSO.

KCCW Accountancy Corp., an independent registered public accounting firm, was not required to and has not issued a report concerning the effectiveness of our internal control over financial reporting as of June 30, 2012.

Continuing Remediation Efforts to Address Deficiencies in our Internal Control Over Financial Reporting

Once we are engaged in a business of merit and have sufficient personnel available, then our board of directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:

1.

Our board of directors will nominate an audit committee and audit committee financial expert.

   
2.

We will implement formal procedures to ensure that appropriate backup of off-site storage of our data is implemented.

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Changes in Internal Control

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2012 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

Risks Related to our Business

Risks Relating to Our Stock

We have a history of operating losses which may affect our ability to continue operations.

We sustained operating losses of $(245,267) for the period ended June 30, 2012. If we are unable to achieve profitability or to raise sufficient capital to carry out our business plan, we may not be able to continue operations.

We have a limited operating history and are still proving the viability of our products and business model, and thus, we may be unable to sustain operations and you may lose your entire investment.

Since inception, we have been primarily focused on research and development. In April 2003, our products became commercially available and in 2006, we significantly changed our product line. We are still adding to our product line and are in the process of proving the viability of our products and business model. If our business model proves unsuccessful or our products prove unviable, we may not be able to sustain operations and our ability to raise additional funding may be jeopardized.

Our competition has greater resources than we do and can respond more quickly to changes in our industry which could adversely affect our ability to compete.

Communications-based businesses are intensely competitive and involve a high degree of risk. Public acceptance of our products may never reach the magnitude required for us to achieve commercial profitability.

Many of our existing competitors, as well as a number of potential new competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than us. These factors may allow them to respond more quickly than us to new or emerging technologies and changes in customer requirements. It may also allow them to devote greater resources than we can to the development, promotion and sale of their products and services. Such competitors may also engage in more extensive research and development, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential employees, strategic partners, advertisers and Internet publishers. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to increase the quality and commercial viability of their products or services.

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Volatility of global economic conditions may affect our ability to raise capital and our product costs which may affect our ability to continue operations.

Our revenues, profitability, future growth, and the carrying value of our assets are substantially dependent on prevailing global economic conditions, generally, and on fluctuations in specific factors such as exchange rates, rates of inflation, governmental stability and the occurrence of economically disruptive events, such as war or natural or industrial disaster. Our ability to borrow and to obtain additional capital on attractive terms is also substantially dependent upon these factors. The negative impact of these factors on sales orders originating from an affected country would have an adverse effect on our borrowing capacity, revenues, profitability and cash flows from operations. For example, unfavorable changes in exchange rates can increase the cost of our products and reduce revenues, resulting in reduced profitability. In the event that our profitability is reduced and we are unable to maintain our profit margins, our ability to raise or to borrow capital may decrease. In addition, as has been recently experienced, general downturns in the technology sector worldwide have made fundraising difficult. Since the marketing of our products will require us to raise additional capital, such downturns may have an adverse affect on our ability to continue operations and to effectively market our products.

We are dependent on key personnel who have extensive knowledge of our products and business and thus, the loss of one or more of these individuals may adversely affect our business.

We are heavily dependent upon the expertise of our management and certain other key officers and directors who have extensive knowledge of our products and our operations, and the loss of one or more of these individuals could have a material adverse effect on our business. We do not maintain key-person insurance policies on any of our executive officers. Since we are a technology driven company, our future success also depends on our ability to continue to attract, retain, and motivate highly skilled employees in the telecommunications technology sector, and in the technology sector, generally. Competition for employees in our industry is intense. We may be unable to retain key employees or to attract, assimilate, or retain other highly qualified employees in the future. We currently have employment agreements with our key executive officers, engineers and other key employees. These contracts are for five year terms and include non-competition clauses.

If we are unable to respond to the rapid technological change in our industry, our products could become obsolete and we may be unable to compete, resulting in the termination of our operations.

The communications technology industry is characterized by rapid and significant technological change. Many communication applications have a short life cycle. For example, our former payment system technologies product lines became obsolete and reached their end-of-life. Furthermore, due to changes in governmental policy, the cellular phones that our products were designed to work with have become obsolete. Going forward, our main products will be in the areas of telecommunications equipment, including VoIP hardware, HTT’s USB Dongle designed for use with Skype, HTT’s SkyDECT, HTT’s EZDECT advanced multi-line cordless telephone systems, etc. We also plan to distribute other name-brand telecommunications equipment in Taiwan, China and other regions throughout Asia. Our future success will depend in large part on our ability to continue to respond to such changes. If we are unable to respond to such changes and/or new or improved competing technology is developed, our technology may be rendered non-competitive. In the event that we are unable to respond to these changes, our ability to raise capital to carry out our business plan may be severely restricted. In addition, our profitability may decrease as any existing inventory may need to be sold at a discount. In this event, our cash flow and liquidity would also be decreased.

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Government regulation could adversely affect our ability to sell our products.

Laws and regulations directly applicable to communications, commerce and advertising are becoming more prevalent. In addition, the growth and development of the communications industry may prompt calls for more stringent consumer protection laws, both in Canada and abroad, that may impose additional burdens on companies. Recently, the United States government mandated wireless number portability for all new cell phones allowing consumers to keep their existing phone numbers when changing carriers. The implementation of wireless number portability rendered several then popular cellular phone models obsolete. In the event that a phone model that our unit attaches to is rendered obsolete by regulations such as wireless number portability, our sales and inventory values would be adversely affected. In addition, to the extent that regulatory bodies impose restrictions on VoIP, our ability to compete with major telecommunication companies would be effected. The result would be decreased profitability, which may adversely affect our share price.

Government regulations could also potentially slow down our expansion plans. We may be required to obtain approval of our products from several regulatory agencies. Regulatory approval processes can be onerous and slow, and could adversely affect our ability to meet our financial projections. Further, compliance with different national standards may require additional capital investments and testing. If we are unable to obtain such financing or to obtain any necessary approvals, our business could be adversely impacted.

We will need additional funds in order to implement our intended projects and there is no assurance that such funds will be available as, if and when needed, which may adversely affect our operations.

We used cash flow from operations of $(297,354) for the period ended June 30, 2012, and used cash flow from operations of $(823,911) for the period ended June 30, 2011. 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, we will need a minimum of $3,000,000 to sustain operations and market our products effectively.

Failure to obtain such additional funds on terms and conditions that we deem acceptable may materially and adversely affect our ability to effectively market and distribute our products, resulting in decreased revenues which may also result in a decreased share price.

The market price of our common shares has been and will in all likelihood continue to be volatile, which may adversely affect the value of your investment.

The market price of our common shares has fluctuated over a wide range and it is likely that the price of our common stock will continue to fluctuate in the future. Announcements regarding acquisitions, the status of corporate collaborations, regulatory approvals or other developments by us or our competitors could have a significant impact on the market price of our common shares.

Our shares currently trade on the OTC Markets OTCQB (“OTCQB”) with limited activity. If this market is not sustained or we are unable to satisfy any future trading criteria that may be imposed by the Financial Industry Regulation Authority (“FINRA”) on our market makers or by the Securities and Exchange Commission (“SEC”) on us, there may not be any liquidity for our shares. What’s more, we have not generated any profit from the sale of our products to date. These factors could have a negative impact on the liquidity of any investment made in our stock.

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The value and transferability of our shares may be adversely impacted by the penny stock rules.

Holders of our common stock in the United States may experience substantial difficulty in selling their securities as a result of the “penny stock rules.” Our common stock is subject to the penny stock rules propagated by the U.S. Securities and Exchange Commission, which impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors. Accredited investors generally include institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of purchasers of our stock to sell their shares in the secondary market. It may also cause fewer broker-dealers to make a market in our stock.

The large number of shares eligible for future sale by existing shareholders may adversely affect the market price for our common shares.

Future sales of substantial amounts of our common shares in the public market, or the perception that such sales could occur, could adversely affect the market price of our common shares. At August 14, 2012, we had 400,193,572 common shares outstanding. On that date, we had no common shares reserved for issuance under our stock option plan; and no common shares reserved for issuance under the warrants issued pursuant to various private placements.

No prediction can be made as to the effect, if any, that sales of shares of our common stock or the availability of such shares for sale will have on the market prices of our common stock.

We have limited sales of products to date and no assurance can be given that our products will be widely accepted in the marketplace, which may adversely affect your investment.

Our future sales, and therefore, our cash flow, income, and ultimate success, are highly dependent on success in marketing our products and consumer acceptance of those products. If our products are not widely accepted or we are unable to market our products effectively, we may face reduced share prices, decreased profitability, and decreased cash flow.

There is a limited public market for our common shares at this time in the united states which may affect your ability to sell our stock.

Our shares currently trade on the OTCQB with limited trading. If this market is not sustained or we are unable to satisfy any future trading criteria that may be imposed on our market makers by the Financial Industry Regulations Authority (“FINRA”) or by the SEC on us, there may not be any liquidity for our shares. We have generated only limited revenue from the sale of our products to date. These factors could have a negative impact on the liquidity of any investment made in our stock.

You should not expect to receive dividends.

We have never paid any cash dividends on shares of our capital stock, and we do not anticipate that we will pay any dividends in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion of our business. Any future determination to pay cash dividends will be at the discretion of our board of directors, and will be dependent upon our consolidated financial condition, results of operations, capital requirements, and such other factors that our board of directors may deem relevant at that time.

15


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

On May 17, 2012, the Company issued an aggregate of 39,854,567 shares of common stock at a price of $0.03 per share, pursuant to the closing of a private placement, for aggregate gross proceeds of approximately $1,200,000. Proceeds from the private placement are to be used for our acquisition of Vegfab Agricultural Technology Co. Ltd. and general operating expenses.

Item 3. Default upon Senior Securities

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit  
Number Description
   
(3)

(i) Articles of Incorporation; and (ii) Bylaws

   
3.1

Articles of Amalgamation (incorporated by reference from our Form 20-F filed on September 16, 2003).

   
3.2

By-laws, as amended (incorporated by reference from our Form 20-F filed on September 16, 2003).

   
(10)

Material Contracts

   
10.1

Form of Loan Agreement and Promissory Note (incorporated by reference from our Form 20-F filed on September 16, 2003).

   
10.2

Distribution Agreement with Panasonic (Taiwan) (April, 2010) (incorporated by reference from our Form 20-F/A filed on January 21, 2011).

   
10.3

Manufacture and Distribution Agreement with Sanyo (April, 2010) (incorporated by reference from our Form 20-F/A filed on January 21, 2011).

   
10.4

Form of Promissory for Shareholder Loan. (April, 2010) (incorporated by reference from our Form 20- F/A filed on January 21, 2011).

   
10.5

Form of Subscription Agreement for Convertible Debenture (April, 2010) (incorporated by reference from our Form 20-F/A filed on January 21, 2011).

   
(14)

Code of Ethics

   
14.1

Code of Ethics (April, 2010) (incorporated by reference from our Form 20-F/A filed on January 21, 2011).

   
(21)

Subsidiaries of the Registrant

   
21.1

TransAKT Holdings Limited, a Turks and Caicos company.

   
(31)

Rule 13a-14(a)/15d-14(a) Certifications

   
31.1*

Certificate of Principal Executive Officer filed pursuant to Section 302 Certification under Sarbanes- Oxley Act of 2002

   
31.2

Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

16



(32)

Section 1350 Certifications

 

 

32.1*

Certificate of Principal Executive Officer filed pursuant to Section 906 Certification under Sarbanes- Oxley Act of 2002

 

 

32.2

Certificate of Principal Financial Officer filed pursuant to Section 906 Certification under Sarbanes- Oxley Act of 2002

* Filed herewith.

17


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

  TRANSAKT LTD.
  (Registrant)
   
   
Dated: August 14, 2012 /s/ James Wu
  James Wu
  President and Chief Executive Officer (Principal
  Executive Officer)
   
   
   
Dated: August 14, 2012 /s/ Taifen Day
  Taifen Day
  Chief Financial Officer (Principal Financial Officer and
  Principal Accounting Officer)

18


PINX:TAKD TransAKT Ltd Quarterly Report 10-Q Filling

TransAKT Ltd PINX:TAKD Stock - Get Quarterly Report SEC Filing of TransAKT Ltd PINX:TAKD stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

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PINX:TAKD TransAKT Ltd Quarterly Report 10-Q Filing - 6/30/2012
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