WEB NEWS Comments & Business Outlook
Item 1.01 Entry into a Material Definitive Agreement
On July 15, 2016, TransAKT Ltd. (we", "us" "our”, the “Company”) entered into Securities Purchase Agreement with our President, Chief Executive Officer and Director, Ho Kang-Wing, pursuant to which we issued to Mr. Ho a Convertible Promissory Note (the “Note”) in consideration of $1,000,000 in cash proceeds. The Note bears interest at the rate of 8% per annum and may be prepaid in whole or in part without penalty before the maturity date of July 14, 2018. At the option of the Holder, the outstanding principal and accrued interest underlying Note may be converted from time, on or following the maturity date, into common shares of our Company at the price of $0.01 per share.
Notable Share Transactions
Item 8.01 Other Items
On November 9, 2015, the Board of Directors of TransAKT Ltd (we", "us" "our”, and the “Company”) approved, subject to shareholder consent, a consolidation of our current issued and outstanding common shares on the basis of 1 new common share for 20 old common shares (the “Reverse Stock Split”). Subsequently, on April 1, 2016, a majority of our shareholders approved the Reverse Stock Split, to be implemented at the discretion of the Board of Directors by April 1, 2017.
Following receipt of FINRA approval on June 20, 2016, the Reverse Stock Split will become effective at the open of business on June 23, 2016, and will result in the consolidation of our issued and outstanding common shares from 613,447,306 shares to 30,672,366 shares. No fractional shares will be issued in connection with the Reverse Stock Split; in the case of a fractional share, the fractional share will be rounded up.
Our new CUSIP will be 893459305. Our new stock symbol will be TAKDD. The “D” will be removed in 20 business days and the symbol will revert back to TAKD.
Comments & Business Outlook
TRANSAKT LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015 (UNAUDITED)
Three Months
Three Months
Ended
Ended
March 31, 2016
March 31, 2015
Sales, net
$
-
$
71,658
Cost of sales
-
86,536
Gross profit
-
(14,878
)
Selling, general and administrative expenses
78,195
129,143
Impairment loss on fixed assets
-
-
Impairment loss on goodwill
-
-
Loss from operations
(78,195
)
(144,021
)
Other income (expense)
Interest income
-
48
Interest expense
-
(38
)
Loss from investments
-
-
Loss from disposal of subsidiary
-
-
Currency exchange gain (loss)
(13
)
1,205
Gain on disposal of fixed assets
-
-
Other income
-
1,539
Total other income (expenses)
(13
)
2,754
Loss before income taxes
(78,208
)
(141,267
)
Provision for income taxes expense (benefit)
-
-
Net loss
(78,208
)
(141,267
)
Net gain (loss) attributable to non-controlling interest
-
(1,512
)
Net loss attributable to TRANSAKT LTD.
$
(78,208
)
$
(139,755
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
-
$
-
Weighted average number of shares outstanding:
Basic and diluted
613,447,306
568,447,306
Other Comprehensive Income (Loss)
Net loss
$
(78,208
)
$
(141,267
)
Foreign currency translation adjustment
(178
)
(39,666
)
Comprehensive income (loss)
(78,386
)
(180,933
)
Comprehensive income (loss) attributable to the non-controlling interest
-
1,512
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(78,386
)
$
(179,421
)
Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant.
Previous independent registered public accounting firm
TransAKT Ltd. (“we”, “us”, “our”, the “Company”) was notified that, effective April 30, 2016, our independent registered public account firm, AWC (CPA) Limited (“AWC”) has merged (the “Merger”) with Dominic K.F. Chan & Co (“DKFC”) and formed DCAW (CPA) Limited (“DCAW”), which is registered with the Public Company Accounting Oversight Board (PCAOB).
As a result of the Merger, AWC resigned as our independent registered public accounting firm on April 30, 2016.
The audit reports of AWC for the financial statements of our Company for the year ended December 31, 2015 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except to indicate that there was substantial doubt about our ability to continue as a going concern..
In connection with the audits of our financial statements for the fiscal year ended December 31, 2015 and through the date of this Current Report, there were: (i) no disagreements with AWC on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of AWC, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its reports, and (ii) no reportable events of the type described in Item 304(a)(1)(v) of Regulation S-K.
AWC was neither engaged as the principal accountant to audit our financial statements (or the financial statements of any subsidiary of our Company) for our fiscal year ended December 31, 2014, nor relied upon by our principal public accountant during that period.
New independent registered public accounting firm
On May 5, 2016, we engaged the successor entity of AWC, DCAW (CPA) Limited, as our independent registered public accounting firm. The engagement of DCAW was approved by our board of directors on May 5, 2016.
During our two most recent fiscal years and through May 5, 2016, neither our Company nor anyone on its behalf consulted with DCAW regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided that DCAW concluded was an important factor considered by our Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and its related instructions, or a reportable event as described in Item 304(a)(1)(v) of Regulation S-K.
AWC furnish us with a letter addressed to the Securities and Exchange Commission stating whether or not AWC agrees with the statements made therein. A copy of such letter, dated May 6, 2016, furnished by AWC is filed as Exhibit 16.1 to this Form 8-K.
Comments & Business Outlook
TRANSAKT LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
2015
2014
Sales, net
$
81,145
$
449,505
Cost of sales
72,145
2,292,885
Gross profit (loss)
9,000
(1,843,380
)
Selling, general and administrative expenses
644,187
1,743,835
Impairment loss on fixed assets
-
3,512,930
Impairment loss on goodwill
-
-
Loss from operations
(635,187
)
(7,100,145
)
Other income (expense)
Interest income
-
365
Interest expense
(38
)
(2,766
)
Loss on disposal of investments
(1,000,000
)
Gain on disposal of investments
1,283,275
-
Gain on written-off of non-controlling interest
12,930
-
Currency exchange gain (loss)
(13
)
1,680
Gain on disposal of fixed assets
-
6,590
Other income
36,099
3,083
Total other income (expenses)
332,253
8,952
Loss before income taxes
(302,934
)
(7,091,193
)
Provision for income taxes expense (benefit)
-
-
Net loss
(302,934
)
(7,091,193
)
Net loss attributable to non-controlling interest
-
(2,170
)
Net loss attributable to TRANSAKT LTD.
$
(302,934
)
$
(7,089,023
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
0
$
(0.01
)
Weighted average number of shares outstanding:
Basic and diluted
613,447,306
568,447,306
Other Comprehensive Income (Loss)
Net loss
$
(302,934
)
$
(7,091,193
)
Foreign currency translation adjustment
47,178
(475,058
)
Comprehensive income (loss)
(255,756
)
(7,566,251
)
Comprehensive income (loss) attributable to the non-controlling interest
-
(2,686
)
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(255,756
)
$
(7,563,565
)
Comments & Business Outlook
TRANSAKT LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014 (UNAUDITED)
Nine
Nine
Three
Three
Months
Months
Months
Months
Ended
Ended
Ended
Ended
September
September
September
September
30, 2015
30, 2014
30, 2015
30, 2014
Sales, net
$
81,145
$
334,459
$
-
$
112,855
Cost of sales
72,145
1,411,217
-
461,146
Gross profit
9,000
(1,076,758
)
-
(348,291
)
Selling, general and administrative expenses
166,510
662,290
58,455
172,076
Impairment loss on fixed assets
-
-
-
-
Impairment loss on goodwill
-
-
-
-
Loss from operations
(157,510
)
(1,739,048
)
(58,455
)
(520,367
)
Other income (expense)
Interest income
-
325
-
134
Interest expense
(38
)
(3,131
)
-
(721
)
Loss from investments
-
-
-
-
Gain (Loss) from disposal of subsidiary
(118,275
-
(401,550
)
-
Currency exchange gain (loss)
290
(897
)
-
2,714
Gain on disposal of fixed assets
6,082
-
13
Other income (expenses)
36,099
(31
)
-
(31
)
Total other income (expenses)
(81,924
)
2,348
(401,550
)
2,109
Loss before income taxes
(239,434
)
(1,736,700
)
(460,005
)
(518,258
)
Provision for income taxes expense (benefit)
-
-
-
-
Net loss
(239,434
)
(1,736,700
)
(460,005
)
(518,258
)
Net gain (loss) attributable to non-controlling interest
-
(4,242
)
-
(5,964
)
Net loss attributable to TRANSAKT
$
(239,434
)
$
(1,732,458
)
$
(460,005
)
$
(512,294
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Weighted average number of shares outstanding:
Basic and diluted
$
613,447,306
$
568,447,306
$
613,447,306
$
568,447,306
Other Comprehensive Income (Loss)
Net loss
$
(239,434
)
$
(1,736,700
)
$
(460,005
)
$
(518,258
)
Foreign currency translation adjustment
46,980
(493,274
)
(28
)
(77,199
)
Comprehensive income (loss)
(192,454
)
2,229,974
)
(460,033
)
(595,457
)
Comprehensive income (loss) attributable to the non-controlling interest
(4,235
)
(5,960
)
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(192,454
)
$
(2,225,739
)
$
(460,033
)
$
(589,497
)
Comments & Business Outlook
TRANSAKT LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014 (UNAUDITED)
Six Months
Six Months
Three Months
Three Months
Ended
Ended
Ended
Ended
June 30, 2015
June 30, 2014
June 30, 2015
June 30, 2014
Sales, net
$
81,145
$
221,604
$
81,145
$
112,597
Cost of sales
72,145
950,071
72,145
512,155
Gross profit
9,000
(728,467
)
9,000
(399,558
)
Selling, general and administrative expenses
108,055
490,214
60,153
198,225
Impairment loss on fixed assets
-
-
-
-
Impairment loss on goodwill
-
-
-
-
Loss from operations
(99,055
)
(1,218,681
)
(51,153
)
(597,783
)
Other income (expense)
Interest income
-
191
-
95
Interest expense
(38
)
(2,410
)
-
(935
)
Loss from investments
-
-
-
-
Loss from disposal of subsidiary
283,275
-
283,275
-
Currency exchange gain (loss)
290
(3,611
)
(915
)
9,125
Gain on disposal of fixed assets
6,069
-
6,069
Other income
36,099
-
36,099
-
Total other income (expenses)
319,626
239
318,459
14,354
Loss before income taxes
220,571
(1,218,442
)
267,306
(583,429
)
Provision for income taxes expense (benefit)
-
-
-
-
Net loss
220,571
(1,218,442
)
267,306
(583,429
)
Net gain (loss) attributable to non- controlling interest
-
1,722
-
10,915
Net loss attributable to TRANSAKT
$
220,571
$
(1,220,164
)
$
267,306
$
(594,344
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Weighted average number of shares outstanding:
Basic and diluted
$
613,447,306
$
568,447,306
$
613,447,306
$
568,447,306
Other Comprehensive Income (Loss)
Net loss
$
220,571
$
(1,218,442
)
$
267,306
$
(583,429
)
Foreign currency translation adjustment
47,008
(416,075
)
7,342
(365,033
)
Comprehensive income (loss)
267,579
(1,634,517
)
274,648
(948,462
)
Comprehensive income (loss) attributable to the non-controlling interest
1,725
10,921
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
267,579
$
(1,636,242
)
$
274,648
$
(959,383
)
Disposal of Assets
Item 1.01 Entry into Material Definitive Agreement
Item 2.01 Completion of Acquisition or Disposition of Assets
On June 30, 2015, our wholly owned subsidiary, TransAKT Taiwan Ltd., entered into a Share Transfer Agreement among Vegfab Agricultural Technology Co. Ltd. and Mr. Peng YuChi pursuant to which Mr. Peng acquired 100% of the issued and outstanding securities of Vegfab Agricultural Technology Co. Ltd. in consideration of $100,000. There are no material relationships between Peng YuChi and our company and its affiliates .
Vegfab Agricultural Technology Co. Ltd. was the sole material asset of TransAKT Taiwan Ltd. and its parent company (and our subsidiary), 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 James Wu, our company sold TransAKT Holdings Ltd. (and its subsidiary, TransAKT Taiwan Ltd.) to Mr. Wu for consideration of $100,000. All intercompany debts between TransAKT Holdings Ltd. and our affiliated companies were cancelled as a result of the transaction. James Wu served as our President, Chief Executive Officer, and Director from October 25, 2004 until March 12, 2015and is a non-affiliated shareholder of our company.
Following the sale of Vegfab Agricultural Technology Co. Ltd., TransAKT Taiwan Ltd., and TransAKT Holdings Ltd. in the above described transactions, our sole remaining subsidiaries are TransAKT (BVI) Ltd., and its 60%-owned subsidiary, TransAKT Bio Agritech Ltd., a Hong Kong (S.A.R) corporation. The primary business of TransAKT Bio Agritech Ltd.is to conduct research and development in the area of greenhouse agricultural technology.
Comments & Business Outlook
TRANSAKT LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (UNAUDITED)
Three Months
Three Months
Ended
Ended
March 31, 2015
March 31, 2014
Sales, net
$
71,658
$
109,007
Cost of sales
86,536
437,916
Gross profit
(14,878
)
(328,909
)
Selling, general and administrative expenses
129,143
291,989
Impairment loss on fixed assets
-
-
Impairment loss on goodwill
-
-
Loss from operations
(144,021
)
(620,898
)
Other income (expense)
Interest income
48
96
Interest expense
(38
)
(1,475
)
Loss from investments
-
-
Loss from disposal of subsidiary
-
-
Currency exchange gain (loss)
1,205
(12,736
)
Gain on disposal of fixed assets
-
-
Other income
1,540
-
Total other income (expenses)
2,755
(14,115
)
Loss before income taxes
(141,266
)
(635,013
)
Provision for income taxes expense (benefit)
-
-
Net loss
(141,266
)
(635,013
)
Net gain (loss) attributable to non-controlling interest
(1,512
)
(9,193
)
Net loss attributable to TRANSAKT LTD.
$
(139,754
)
$
(625,820
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
(0.00
)
$
(0.00
)
Weighted average number of shares outstanding:
Basic and diluted
568,447,306
568,447,306
Other Comprehensive Income (Loss)
Net loss
$
(141,266
)
$
(635,013
)
Foreign currency translation adjustment
524,301
(51,042
)
Comprehensive income (loss)
383,035
(686,055
)
Comprehensive income (loss) attributable to the non-controlling interest
1,512
(9,196
)
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
384,547
$
(676,859
)
Management Discussion and Analysis
Net Revenues and Cost of Sales
Net revenues decreased by approximately $37,349 or approximately 34% from $109,007 for the three months ended March 31, 2014 to $71,658 for the three months ended March 31, 2015. The decrease in net revenues was primarily due to the decrease in sales volume related to the sale of vegetables to small and medium sized supermarkets in Taiwan. Cost of sales for the three months ended March 31, 2015 totaling $86,536 or approximately 120% of net revenues. Gross profit as a percentage of net revenues was negative 20% for the three month ended March 31, 2015. However, the factory operated with limited capacity producing vegetables, resulting in sales revenue that negligibly exceeded fixed costs of operation incurred during the period.
Net Income (Loss) attributable to TRANSAKT LTD.
As a result of the above factors, we have net loss attributable to the Company’s common stockholders of approximately $139,754 for the three months ended March 31, 2015 compared to approximately $625,820 for the three months ended March 31, 2014, representing an decrease of $486,066or approximately 78%.
Auditor trail
Item 4.01 Changes in Registrant’s Certifying Accountant
(a) Previous independent registered public accounting firm
(i) On April 20, 2015, TransAKT Ltd. (the “Company”) formally informed KCCW Accountancy Corp. of their dismissal as the Company’s independent registered public accounting firm. (ii) The reports of KCCW Accountancy Corp. on the Company’s financial statements as of and for the fiscal years ended December 31, 2014 and 2013 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about the Company’s ability to continue as a going concern. (iii) The Company’s Board of Directors participated in and approved the decision to change independent registered public accounting firms. (iv) During the fiscal years ended December 31, 2014 and 2013, and through April 20, 2015, there have been no disagreements with KCCW Accountancy Corp. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction KCCW Accountancy Corp. would have caused them to make reference thereto in connection with their report on the financial statements for such years.
(v) The Company has requested that KCCW Accountancy Corp. furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of the letter provided by KCCW Accountancy Corp. is filed as Exhibit 16.1 to this Current Report on Form 8-K.
(b) New independent registered public accounting firm
(1) On April 28, 2015, the Company engaged AWC(CPA) LTD. as its new independent registered public accounting firm. During the two most recent fiscal years and through April 20, 2015, the Company had not consulted with AWC CPA, A Professional Corporation regarding any of the following: (i) The application of accounting principles to a specific transaction, either completed or proposed; (ii) The type of audit opinion that might be rendered on the Company’s financial statements, and none of the following was provided to the Company: (a) a written report, or (b) oral advice that AWC (CPA) LTD. concluded was an important factor considered by the Company in reaching a decision as to accounting, auditing or financial reporting issue; or
Comments & Business Outlook
TRANSAKT LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
2014
2013
Sales, net
$
449,505
$
359,773
Cost of sales
2,292,885
2,046,429
Gross profit
(1,843,380
)
(1,686,656
)
Selling, general and administrative expenses
1,743,835
2,750,757
Impairment loss on fixed assets
3,512,930
703,864
Impairment loss on goodwill
-
5,163,739
Loss from operations
(7,100,145
)
(10,305,016
)
Other income (expense)
Interest income
365
420
Interest expense
(2,766
)
(72,492
)
Loss from investments
-
(35,078
)
Loss from disposal of subsidiary
-
(177,404
)
Currency exchange gain (loss)
1,680
30,777
Gain on disposal of fixed assets
6,590
34,630
Other income
3,083
-
Total other income (expenses)
8,952
(219,147
)
Loss before income taxes
(7,091,193
)
(10,524,163
)
Provision for income taxes expense (benefit)
-
-
Net loss
(7,091,193
)
(10,524,163
)
Net loss attributable to non-controlling interest
(2,170
)
(10,756
)
Net loss attributable to TRANSAKT LTD.
$
(7,089,023
)
$
(10,513,407
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
(0.01
)
$
(0.03
)
Weighted average number of shares outstanding:
Basic and diluted
568,447,306
406,966,086
Other Comprehensive Income (Loss)
Net loss
$
(7,091,193
)
$
(10,524,163
)
Foreign currency translation adjustment
(475,058
)
(161,384
)
Comprehensive income (loss)
(7,566,251
)
(10,685,547
)
Comprehensive income (loss) attributable to the non-controlling interest
(2,686
)
(10,760
)
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(7,563,565
)
$
(10,674,787
)
Management Discussion and Analysis
Operating Results
On July 26, 2012, we acquired 100% of the equity interests of the Vegfab Agricultural Technology Co. Ltd. (the “Vegfab”) for the sum of US$5,500,000. The acquisition was accounted for as a business combination under the purchase method of accounting. Vegfab’s results of operations were included in our results beginning July 27, 2012. Vegfab contributed net revenues of $448,415 and $335,164, and net loss of $6,230,796 and $3,559,087 for the year ended December 31, 2014 and for the year ended December 31, 2013, respectively. We anticipate generating approximately $300,000 in annual revenues in fiscal 2015 based on our current operations and without regard to any plans we may have for expansion.
Revenues & Cost of Sales
Sales for the year ended December 31, 2014 has increased by approximately $92,815, or 26%, to $452,588 from $359,773 for the same period in 2013. The increase in net revenue was primarily attributable to an increase in selling vegetables which was partially offset by a decrease in the revenue from selling home growing system. The net revenue from selling vegetables has increased by approximately $169,678 or 63% from $269,082 for the year ended December 31, 2013 to $438,760 for the year ended December 31, 2014. The increase in net revenues from selling vegetables was primarily due to the increase in sales volume related to the sale of vegetables to small and medium sized supermarkets in Taiwan. We sold home growing system of approximately $90,691 for the year ended December 31, 2013 compared to $13,828 for the year ended December 31, 2014.
Cost of sales for the year ended December 31, 2014 totaled $2,292,885 or approximately 506.62% of net sales compared to $2,046,429 or approximately 568.81% of net sales for the year ended December 31, 2013. Gross profit as a percentage of net sales was -406.62% for the year ended December 31, 2014, compared to -468.81% for the same period of 2013. The construction of our factory with agricultural equipment used to grow vegetables was complete in the fourth quarter of 2013, whereas our agricultural equipment business had not generate significant revenue in the current year yet. As such, the factory operated with limited capacity producing vegetables, resulting in sales revenue that negligibly exceeded fixed costs of operation incurred during the period.
Net Loss
As a result of the above factors, we have net loss attributable to the Company’s common stockholders of approximately $7.09 million for the year ended December 31, 2014 as compared to approximately $10.51 million for the year ended December 31, 2013, representing a decrease of approximately $3.42 million or approximately 32.57%.
CFO Trail
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
Effective March 11, 2015:
A. James Wu has resigned as Chairman, Chief Executive Officer, President and Director of our Company. James Wu's resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise. B. Ho Kang-Wing was appointed as Chairman, Chief Executive Officer and President of our Company. C. Taifen Day resigned as Chief Financial Officer of our Company. Taifen Day's resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise. D. Yam Chi-Wah was appointed as Chief Financial Officer of our Company. E. Cheng Chun-Chih resigned as a director of our company. Cheng Chun-Chih’s resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.
F. Shiau Tzong-Huei resigned as a director of our company. Shiau Tzong-Huei’s resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise. G. He Jiaxian was appointed as a director of our Company. H. He Jingtian was appointed as a director of our Company. I. Tam Yuk Ching was appointed as a director of our Company.
Comments & Business Outlook
TRANSAKT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
(UNAUDITED)
Nine Months Ended
Nine Months Ended
Three Months Ended
Three Months Ended
September 30, 2014
September 30, 2013
September 30, 2014
September 30, 2013
Sales, net
$
334,459
$
273,700
$
112,855
$
179,036
Cost of sales
1,411,217
559,841
461,146
65,938
Gross profit
(1,076,758
)
(286,141
)
(348,291
)
113,098
Selling, general and administrative expenses
662,290
1,989,650
172,076
853,501
Loss from operations
(1,739,048
)
(2,275,791
)
(520,367
)
(740,403
)
Other income (expense)
Interest income
325
69
134
36
Interest expense
(3,131
)
(9,655
)
(721
)
(2,607
)
Loss from investments
-
(14,152
)
-
(3,706
)
Loss from disposal of subsidiary
-
(185,340
)
-
-
Currency exchange gain (loss)
(897
)
(49,724
)
2,714
(49,691
)
Gain on disposal of fixed assets
6,082
3,704
13
(11
)
Other expense
(31
)
-
(31
)
-
Total other income (expenses)
2,348
(255,098
)
2,109
(55,979
)
Loss before income taxes
(1,736,700
)
(2,530,889
)
(518,258
)
(796,382
)
Provision for income taxes expense (benefit)
-
-
-
-
Net loss
(1,736,700
)
(2,530,889
)
(518,258
)
(796,382
)
Net loss attributable to noncontrolling interest
(4,242
)
-
(5,964
)
-
Net loss attributable to TRANSAKT LTD.
$
(1,732,458
)
$
(2,530,889
)
$
(512,294
)
$
(796,382
)
Loss per share:
Basic and diluted income (loss) common stockholders per share Net loss
$
(0.00
)
$
(0.01
)
$
(0.00
)
$
(0.00
)
Weighted average number of shares outstanding: Basic and diluted
568,447,306
366,915,828
568,447,306
381,463,601
Other Comprehensive Income (Loss)
Net Loss
$
(1,736,700
)
$
(2,530,889
)
$
(518,258
)
$
(796,382
)
Foreign currency translation adjustment
(493,274
)
(20,900
)
(77,199
)
17,160
Comprehensive Income (Loss)
$
(2,229,974
)
$
(2,551,789
)
$
(595,457
)
$
(779,222
)
Comprehensive income (loss) attributable to the noncontrolling interest
(4,235
)
-
(5,960
)
-
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(2,225,739
)
$
(2,551,789
)
$
(589,497
)
$
(779,222
)
Management Discussion and Analysis
Net revenues decreased by approximately $66,181 to $112,855 for the three months ended September 30, 2014 compared to $179,036 for the same period in 2013. The decrease in net revenue was primarily attributable to the decrease in the revenue from selling LED lights which was partially offset by an increase in selling vegetables. We sold LED light of approximately $131,580 for the three months ended September 30, 2013, whereas there was $0 for the current period this year. The decrease was because we are focusing on planting and selling vegetables in 2014. The net revenue from selling vegetables has increased by $65,399 or 136% from $47,980 for the three months ended September 30, 2013 to $112,855 for the three months ended September 30, 2014. The increase in net revenues from selling vegetables was primarily due to the increase in sales volume related to the sale of vegetables to small and medium sized supermarkets in Taiwan.
Net Loss attributable to TRANSAKT LTD.
As a result of the above factors, we incurred a net loss attributable to the Company’s common stockholders of approximately $512,294 for the three months ended September 30, 2014 compared to approximately $796,382 for the three months ended September 30, 2013, representing a decrease of $284,088 or approximately (35.7)% .
Comments & Business Outlook
TRANSAKT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED)
Six Months
Six Months
Three Months
Three Months
Ended
Ended
Ended
Ended
June 30,
June 30,
2014
2013
June 30, 2014
June 30, 2013
Sales, net
$
221,604
$
94,664
$
112,597
$
40,157
Cost of sales
950,071
493,903
512,155
452,729
Gross profit
(728,467
)
(399,239
)
(399,558
)
(412,572
)
Selling, general and administrative expenses
490,214
1,136,149
198,225
743,816
Loss from operations
(1,218,681
)
(1,535,388
)
(597,783
)
(1,156,388
)
Other income (expense)
Interest income
191
33
95
24
Interest expense
(2,410
)
(7,048
)
(935
)
(3,212
)
Loss from investments
-
(10,446
)
-
(6,943
)
Loss from disposal of subsidiary
-
(185,340
)
-
-
Currency exchange gain (loss)
(3,611
)
(33
)
9,125
2,716
Gain on disposal of fixed assets
6,069
3,715
6,069
(22
)
Total other income (expenses)
239
(199,119
)
14,354
(7,437
)
Loss before income taxes
(1,218,442
)
(1,734,507
)
(583,429
)
(1,163,825
)
Provision for income taxes expense (benefit)
-
-
-
-
Net loss
(1,218,442
)
(1,734,507
)
(583,429
)
(1,163,825
)
Net loss attributable to noncontrolling interest
1,722
-
10,915
-
Net loss attributable to TRANSAKT LTD.
$
(1,220,164
)
$
(1,734,507
)
$
(594,344
)
$
(1,163,825
)
Loss per share:
Basic and diluted income (loss) common stockholders per share
Net loss
$
(0.00
)
$
(0.00
)
$
(0.00
)
$
(0.00
)
Weighted average number of shares outstanding:
Basic and diluted
568,447,306
359,521,380
568,447,306
358,526,905
Other Comprehensive Income (Loss)
Net Loss
$
(1,218,442
)
$
(1,734,507
)
$
(583,429
)
$
(1,163,825
)
Foreign currency translation adjustment
(416,075
)
(38,060
)
(365,033
)
(34,607
)
Comprehensive Income (Loss)
$
(1,634,517
)
$
(1,772,567
)
$
(948,462
)
$
(1,198,432
)
Comprehensive income (loss) attributable to the noncontrolling interest
1,725
-
10,921
-
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(1,636,242
)
$
(1,772,567
)
$
(959,383
)
$
(1,198,432
)
Management Discussion and Analysis
Net Revenues and Cost of Sales
Net revenues for the three months ended June 30, 2014 increased by $72,440 to $112,597 compared to $40,157 for the same period in 2013. The increase in net revenues was primarily due to the increase in sales volume related to the sale of vegetables to small and medium sized supermarkets in Taiwan. Cost of sales for the three months ended June 30, 2014 totaled $512,155 or approximately 454.86% of net sales. Gross profit as a percentage of net sales was -354.86% for the three month ended June 30, 2014. The construction of our factory with agricultural equipment used to grow vegetables was complete in the fourth quarter of 2013. However, the factory operated with limited capacity producing vegetables, resulting in sales revenue that negligibly exceeded fixed costs of operation incurred during the period.
Net Loss attributable to TRANSAKT LTD.
As a result of the above factors, we have net loss attributable to the Company’s common stockholders of approximately $594,344 for the three months ended June 30, 2014 compared to approximately $1,163,825 for the three months ended June 30, 2013, representing a decrease of $569,481 or approximately -48.9% .
Comments & Business Outlook
TRANSAKT LTD. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
2013
2012
Sales, net
$
359,773
$
202,636
Cost of sales
2,046,429
160,080
Gross profit
(1,686,656
)
42,556
Selling, general and administrative expenses
2,750,757
1,390,180
Impairment loss on fixed assets
703,864
-
Impairment loss on goodwill
5,163,739
-
Loss from operations
(10,305,016
)
(1,347,624
)
Other income (expense)
Interest income
420
53
Loss from investments
(35,078
)
(16,521
)
Loss from disposal of subsidiary
(177,404
)
-
Currency exchange gain (loss)
30,777
(26,543
)
Gain on disposal of fixed assets
34,630
2,145
Interest expense
(72,492
)
(7,685
)
Total other income (expenses)
(219,147
)
(48,551
)
Loss before income taxes
(10,524,163
)
(1,396,175
)
Provision for income taxes expense (benefit)
-
-
Loss from continued operations
(10,524,163
)
(1,396,175
)
Income from discontinued operations
-
58,142
Net loss
(10,524,163
)
(1,338,033
)
Net loss attributable to non-controlling interest
(10,756
)
-
Net loss attributable to TRANSAKT LTD.
$
(10,513,407
)
$
(1,338,033
)
Loss per share:
Basic and diluted income (loss) per share
Loss from continued operations
$
(0.03
)
$
(0.01
)
Loss from discontinued operations
$
-
$
0.00
Net loss
$
(0.03
)
$
(0.01
)
Weighted average number of shares outstanding:
Basic and diluted
406,966,086
220,343,651
Other Comprehensive Income (Loss)
Net loss
$
(10,524,163
)
$
(1,338,033
)
Foreign currency translation adjustment
(161,384
)
89,581
Comprehensive income (loss)
(10,685,547
)
(1,248,452
)
Comprehensive income (loss) attributable to the non-controlling interest
(10,760
)
-
Comprehensive income (loss) attributable to TRANSAKT LTD.
$
(10,674,787
)
$
(1,248,452
)
Management Discussion and Analysis
Operating Results
On July 26, 2012, we acquired 100% of the equity interests of the Vegfab Agricultural Technology Co. Ltd. (the “Vegfab”) for the sum of US$5,500,000. The acquisition was accounted for as a business combination under the purchase method of accounting. Vegfab’s results of operations were included in our results beginning July 27, 2012. Vegfab contributed net revenues of $335,164 and $195,323, and net loss of $3,559,087 and $483,330 for the year ended December 31, 2013 and for the period from July 27, 2012 through December 31, 2012, respectively. We anticipate generating approximately $750,000 in annual revenues in fiscal 2014 based on our current operations and without regard to any plans we may have for expansion.
Net Loss
As a result of the above factors, we have net loss attributable to the Company’s common stockholders of approximately $10.51 million for the year ended December 31, 2013 as compared to approximately $1.34 million for the year ended December 31, 2012, representing a decrease of approximately $9.17 million or approximately 685.74% .
Reverse Merger Activity
Effective July 26, 2012, we acquired all of the issued and outstanding shares of Vegfab Agricultural Technology Co. Ltd. (“Vegfab” or the “Company”), a Taiwanese corporation. We had entered into a Asset Purchase and Sale Agreement dated May 3, 2012 (the “Purchase Agreement”) among our company and Vegfab, however the parties elected at closing to instead proceed with an acquisition of the issued and outstanding shares of Vegfab.
Vegfab is in the business of manufacturing highly innovative agricultural equipment used to grow a large variety of vegetables and fruit using simulated sunlight from LED lamps in a proprietary hydroponic system. Vegfab’s 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.
The assets that we have acquired as a result of our acquisition of Vegfab consist of all equipment, product molds, operational inventory, employment contracts, books and records, intellectual property and technology of Vegfab.
Previously, we had entered into a Performance Compensation Agreement dated June 15, 2006 with James Wu, our President, pursuant to which the Company is required to pay Mr. Wu share compensation of 10% of the value of any venture acquisition that Mr. Wu secures for the company. As a result, Mr. Wu is entitled to 18,333,333shares of our company’s common stock with respect to the acquisition of Vegfab (the “Performance Shares”)
The closing of the Purchase Agreement transaction (the "Closing") took place on July 26, 2012 (the “Closing Date”). On the Closing Date, pursuant to the terms of the Purchase Agreement, we acquired all of the assets of Vegfab. In exchange, we had paid $1,000,000 in cash and issued 150,000,000 shares of our common stock to the shareholder’s of Vegfab, constituting approximately 37.2% of our common stock outstanding after the Closing. The aforementioned shares were issued to fourteen non-U.S persons (all residents of Taiwan) in offshore transactions relying on Regulation S of the Securities Act of 1933. As of the Closing Date we had 403,526,505 shares issued and outstanding.
Deal Flow
Item 3.02 Unregistered Sales of Equity Securities On May 17, 2012, we issued an aggregate of 39,854,567 shares of our 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.
We issued the shares to 26 non-US individuals (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933 and to one (1) US individual (as that term is defined in Section 4(2) of the Securities Act of 1933) pursuant to the exemption from registration provided for under Rule 506 of Regulation D, promulgated under the United States Securities Act of 1933, as amended.
Acquisition Activity
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.
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.