EVSV Enviro Serv Inc (PK)

Note 1 - Organization

Transfer Technology International Corp. (the “Company”) was previously known as Inverted Paradigms Corporation (“Inverted Paradigms” or the “Company”) was incorporated in the State of Nevada on December 18, 1997. On September 29, 2003, the Company completed a re- incorporation merger into a Delaware Corporation thus changing the state of incorporation from Nevada to Delaware. The Company is in the process of seeking new technology.

On March 17, 2009 the Company announced the creation of its wholly owned subsidiary Organic Products International Corp. (OPI). The decision to launch OPI is based on the development of three market ready products, and licensing agreements that provide a base of product offerings.

In November, 2009, the Company formed a new subsidiary called Xterminate, Inc., a Florida corporation, which launched their eco-friendly termite control business. The Company applies oil for termite control purposes.

The condensed consolidated unaudited financial statements included herein have been prepared by Transfer Technology International Corporation (the “Company”), formerly Inverted Paradigms Corporation and Subsidiaries without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the December 31, 2010 audited consolidated financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

The management of the Company believes that the accompanying unaudited condensed consolidated financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations, changes in stockholders’ equity (deficit), and cash flows for the periods presented.

Note 2 - Basis of Presentation – Going Concern

The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses since February 16, 1999 (date of inception), which losses have caused an accumulated deficit of $48,693,565 as of September 30, 2012 and $ 44,751,303 as of December 31, 2011. This factor, among others, raises substantial doubt about the Company’s ability to continue as a going concern.

Management has been able, thus far, to finance the losses through a series of private placements and convertible notes payable. The Company is continuing to seek other sources of financing and attempting to explore alternate ways of generating revenues through partnerships with other businesses. Conversely, the seeking of new technology is expected to result in operating losses for the foreseeable future. There are no assurances that the Company will be successful in achieving its goals.

In view of these conditions, the Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and future plans to raise capital provide an opportunity to continue as a going concern.

Note 3 - Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Transfer Technology International, Corporation and its wholly owned subsidiaries. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amount of financial instruments, including cash and cash equivalents, accounts payable, and accrued expenses, debt and other liabilities, approximate fair value due to their short maturities.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, services are rendered, pricing is fixed or determinable and collectability is reasonably assured.

Recent Accounting Pronouncements

In August 2010, the FASB issued ASU No 2010-22, Accounting for Various Topics. Technical Corrections to SEC Paragraphs- An announcement made by the staff of US Securities and Exchange Commission. This Update makes changes to several of the SEC guidance literature within the Codification. Some of the changes relate to (1) Oil and Gas Exchange Offers, (2) Accounting for Divestiture of a Subsidiary or Other Business Operations, (3) Replaces “Push Down” basis accounting references with “New” basis of accounting to be used in the acquired companies financial statements, (4) Fees paid to an investment banker in connection with an acquisition or asset purchase, when the investment banker is also providing interim financing or underwriting services must be allocated between the related service and debt issue costs. The amendments in this Update are effective immediately. The Company doesn’t expect this guidance to have a significant impact on its financials since there are no changes to accounting that were not already being applied by the Company.

In July 2010, the FASB issued ASU No 2010-20, Receivables (Topic 310) – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This Update requires additional disclosures for financing receivables, excluding short-term trade accounts receivables and or receivables measured at fair value. The new disclosures are designed to allow a user to better evaluate a company’s credit risk in the portfolio of financing receivables, how the risk is analyzed and in allowing for credit losses and the reason for the changes in the allowance for credit losses. Some of the additional disclosures required are to provide a roll forward of allowance for credit losses by portfolio segment basis, credit quality of indicators of financing receivables by class of financing receivables, the aging of financing receivables by class of financing receivable, significant purchases and sales of financing receivables by portfolio segment, amongst other requirements. The amendments in this Update are effective for reporting periods ending on or after December 15, 2010 for disclosures as of the end of the reporting period and disclosures related to activity are effective for reporting periods beginning on or after December 15, 2010 for public entities. For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011. Comparative disclosures for earlier reporting periods are encouraged, butnot required. The Company doesn’t expect this guidance to have a significant impact on its financials since it doesn’t have any finance receivables. The receivables are short-term trade receivables.

In February 2010, the FASB issued ASU No 2010-10, Consolidation (Topic 810) – Amendments for Certain Investment Funds. This update provides for the deferral of the consolidation requirements under Topic 810 for a reporting entity’s interest in an entity 1) that has all the attributes of an investment company or 2) for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies. The amendments are effective as of the first annual period that begins after November 15, 2009, and for interim periods within that period. The Company will adopt this Update on January 1, 2010 and it didn’t have a significant impact on the financials since the Company has no interest in investment type companies.

In February 2010, the FASB issued ASU No 2010-08, Technical Corrections to Various Topic. This update provides clarifications, eliminates inconsistencies and outdated provisions within the guidance. None of the provisions fundamentally change US GAAP, but certain clarifications regarding hedging and derivatives may cause a change in the application of that Subtopic. The amendments are effective for the first reporting beginning after issuance – June 30, 2010 for the Company. The amendments were reviewed and no items of significance were noted. As such, this update is not expected to have a significant impact on the Company’s financial statements.

In January 2010, the FASB issued ASU No 2010-06, Fair Value Measurements and Disclosures (Topic 820) Improving Disclosures about Fair Value Measurements. This update provides amendment to the codification regarding the disclosures required for fair value measurements. The key additions area as follows: 1) Disclose transfer in and out of Level 1 and 2, 2) Activity in Level 3 should show information about purchases, sales, settlements, etc on a gross basis rather than as net basis, and 3) Additional disclosures about inputs and valuation techniques. The new disclosure requirements are effective for interim and annual periods beginning after December 31, 2009, except for the gross disclosures of purchases, etc which is effective for periods beginning after December 15, 2010. The Company will adopt this Update on January 1, 2010 and doesn’t expect it will have a significant impact on the financials since there aren’t many items recorded at fair value, but additional disclosures about inputs and valuation techniques will be made.

In January 2010, the FASB issued ASU No 2010-04, Accounting for Various Topics – Technical Corrections to SEC Paragraphs. This update provides updates/corrections to various topics of the codification with regards to the SEC’s position on various matters. There is no new guidance, but adjustments to the SEC’s position on already issued updates. Some of the main topics covered are as follows: 1) Requirements for using push down accounting in an acquisition 2) appropriate balance sheet presentation of unvested, forfeitable equity instruments are issued to non employees as consideration for future services – these are to be treated as not issued and no entry recorded until the instruments are earned. 3) intangible assets arising from insurance contracts acquired in a business combination. The corrections are applicable for 2009 since the updates relate to already issued guidance. The main issue that may impact the Company is the accounting for unvested, forfeitable equity instruments. The Company will evaluate and determine if there are any contracts with non-employees for which equity instruments are granted and ensure they are accounted for in accordance with the update.

Income Taxes

The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Deferred Income Taxes

Deferred income taxes reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are classified as current or non-current based on the classification of the related assets or liabilities for financial reporting, or according to the expected reversal dates of the specific temporary differences, if not related to an asset or liability for financial reporting. Valuation allowances are established against deferred tax assets if it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment date.

Income Tax Uncertainties

The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on the two-step process prescribed by applicable accounting principles. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to determine the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision in the period. The Company recognizes interest and penalties as incurred in finance income, (expense), net in the Consolidated Statements of Operations.

Net Loss Per Share Information

Basic and diluted loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. The Company’s common stock warrants have been excluded from the diluted loss per share computation since their effect is anti-dilutive.

The following is a reconciliation of the computation for basic and diluted EPS:

For the years ended December 31, 2011 and 2010 options and warrants were not included in the computation of diluted EPS because inclusion would have been anti-dilutive. Stock options were not included since none have been granted.  

For the nine months ended September 30, 2012 and 2011 options and warrants were not included in the computation of diluted EPS because inclusion would have been anti-dilutive. Stock options were not included since none have been granted. There were 4,250,000 warrants at September 30, 2012 and 4,726,500 warrants at September 30, 2011.

Depreciation expense for the nine months ended September 30, 2012 and 2011 was $0 and $401 respectively.

Note 5 – Commitments

The Company leases an office suite for its Tampa, Florida headquarters. The terms of the lease extends until February 28, 2012. The Company is required to pay a base rent of $17,595 for the twelve months period ending February 28, 2012. The total expected lease payments through December 31, 2011 is$8,798 and for the two months ended February 28, 2012 is $2,933 for the total of $11,730.

The Company also leases 600 square feet of office space for its termite control operation. Lease payments are $1,500 per month. The lease is on a month to month basis.

Note 6 – Convertible Notes and Notes Payable

Various notes are in default and continue to accrue interest. The Company has the option, and it is managements’ intent to convert all past due convertible notes to common stock in 2010 and 2011. The conversion price shall be based upon one half the average closing share price of the stock for the 10 prior days before conversion or .25 cents, whichever is greater.

During the year ended December 31, 2010, the Company converted debt totaling $768,724, which included $126,224 of accrued interest into 55,389,090 shares of common stock. The debt was held by 32 convertible note holders. The debt was converted at the rate of $0.13 per share. The convertible notes originally established a conversion price of $0.25 per share. On August 26, 2010, the board of directors repriced the conversion rate to $0.13 per share given the depressed value of the Company’s stock. In accordance with generally accepted accounted principles, the Company recognized approximately $50,000 of debt inducement expense in connection with this transaction.

Note 8– Contingent Liabilities

Lawsuit by Gary Harrison

In the first quarter of 2009 a dispute arose with Gary Harrison regarding his consulting responsibilities with the Company. In a settlement of the matter, the Company agreed to pay Mr. Harrison $67,857 together with interest that accrues at 8% per annum. The payment came due on January 25, 2010. The Company was unable to make the payment and the parties agreed upon a six month extension of the payment due date to July 25, 2010. The Company was unable to make payment on July 25, 2010. This amount has been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities.

On September 28, 2010, Mr. Harrison filed a lawsuit against the Company in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County Florida, Civil Division, Division J, Case Number 10019528. The suit seeks to collect $67,857 pursuant to the settlement agreement together with post default interest at the rate of 18% per annum. The suit was served upon the Company on November 11, 2010. The Company had until December 1, 2010, to answer the complaint. Due to a lack of funding, the Company was not able to retain legal counsel for the purpose of answering the complaint within the allotted time. On April 5, 2011, the court entered a default judgment against the Company in the amount of $88,949.80. To date, to the knowledge of the Company, no legal action has been taken to enforce the judgment.

Lawsuit by Brown and Goldfarb, LLC

Effective January 1, 2010, the Company entered into an agreement with Brown and Goldfarb, LLC, wherein the Company was granted an exclusive license to sell a therapeutic device for thermally assisted urinary function. On April 28, 2010, the Company was sued by Brown and Goldfarb, LLC in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, Division K, Case Number 10008285, for failure to pay cash advance fees of $40,000 and issue 250,000 shares of Company common stock required by the Agreement. The parties settled the lawsuit by the Company agreeing to pay $10,000 on September 30, 2010 and $15,000 on July 30,2010.

The Company was unable to make the first payment and as a result, default judgment was entered against the Company in the amount of $50,000 on July 13, 2010. Brown and Goldfarb has agreed to not execute on their judgment if they receive payment of $25,000. So far the Company has only been able to pay $5,000. The Company has accrued $50,000 to reflect the liability to the Company as a result of the default judgment. At the present time the parties are negotiating a settlement whereby the Company will pay an additional $5,000 and the rest of the payment will be in stock. Until the Company has the requisite $5,000, this arrangement cannot be finalized.

Default on Buy Back Agreements

In February, 2009, the Company was contacted by three investors requesting the Company buy back their investments. The Company agreed to do so. The combined investment price was $235,000 and was to be paid by the Company over time on monthly payments. The Company was only able to make the first two payments and has now been in default on the agreements for two years. The Company has accrued for the settlements in the accompanying Consolidated Balance Sheet. However, no legal action has been brought to enforce the agreements and the investors have not contacted the Company in over a year.

Claims by two additional Shareholders

On August 21, 2010, a convertible note issued by the Company came due in favor of Mr. Michael Buckley in the amount of $200,000. Interest was discounted at the inception of the note so the $200,000 is the full amount due. Mr. Buckley has opted to not convert the note and is demanding payment in cash from the Company. The Company is unable to make payment. Mr. Buckley has hired legal counsel who has contacted the Company. Mr. Buckley has a perfected security interest in all of the assets of the Company. The perfected security interest was put in place by making UCC-1 filings with the states of Florida and Delaware on October 27, 2010, and October 29, 2010, respectively and by filing an assignment of patents with respect to the two patents owned by Company, with the United States Patent and Trademark Office on November 4, 2010. If the Company is not successful in paying this obligation or otherwise working out a solution to the satisfaction of Mr. Buckley, Mr. Buckley will be in a position to take over all of the assets of the Company potentially shutting down all business operations. In July, 2011, the Company received court documentation whereby Mr. Buckley is foreclosing on the patent rights belonging to the Company that are subject to Mr. Buckley’s lien. An additional note in the amount of $100,000 payable to Michael Buckley has also recently come due so a combined amount of $300,000 is now owed to Mr. Buckley by the Company. Management is working diligently with Mr. Buckley to work out a solution for these receivables.

In July, 2010, a convertible note issued by the Company came due in favor of Mr. Louis Fiorica in the amount of $10,000. Mr. Fiorica has decided to not convert the note and is demanding payment of $10,000 plus interest. The Company is not in a position to make payment. To date, no legal action has been taken by Mr. Fiorica against the Company

Note to John Cawood

Ninety days ago, a note payable by the Company to Mr. John Cawood in the amount of $100,000 became due and payable. At the present time the Company does not have means to repay the note. The Company has not been contacted by Mr. Cawood or any party representing Mr. Cawood regarding this note.

Lawsuit by Margaret Wisniewski

On December 4, 2008, Margaret Wisniewski purchased from the Company a One-year Convertible Promissory Note in the amount of $50,000. Mrs. Wisniewski has now filed suit in the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, State of Florida seeking a return of her investment. The complaint alleges the investment constituted exploitation of a vulnerable adult. The Company did not have the funding necessary to defend the suit and the Company’s default has been entered with the court but no default judgment has been entered. Opposing counsel has agreed to not enter default judgment at this time but rather negotiate an agreement whereby the Company will pay the amounts owed. These amounts have been accrued in the accompanying condensed consolidated balance sheet in settlement liabilities. Management has recently reached out to opposing counsel for the purpose of settling this dispute through the issuance of stock.

Note 9 – Income Taxes

Income Taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes related to differences between the basis of assets and liabilities for financial and income tax reporting will either be taxable or deductible when the assets or liabilities are recovered or settled. The difference between the basis of assets and liabilities for financial and income tax reporting are not material therefore, the provision for income taxes from operations consist of income taxes currently payable.

There was no provision for income tax for the three months ended September 30, 2012 and the year ended December 31, 2011. At September 30, 2012 and December 31, 2011 the Company had an accumulated deficit approximating $46,693,565 and $ 44,751,303 .

The Company has recorded full valuation allowance on its deferred tax assets as of September 30, 2012 and December 31, 2011. These assets were primarily derived from net operating losses, which The Company will more than likely than not be able to utilize.

Note 10 - Stockholders’ Deficit

The Company had 250,000,000 authorized shares of common stock as of September 30, 2012 and December 31, 2011. The Company had 877,581 and 249,963,747 shares of common stock issued and outstanding as of June 30, 2012 and December 31, 2011 respectively .

2012

The Company retired 249,086,166 shares.

No shares were issued in the second quarter of 2012

2011

No shares were issued in the first quarter of 2011

During the quarter ended June 30, 2011, the Company issued 2,500,000 shares of common stock for consultants. The common stocks were issued at a price of $.0005 per share.

During the quarter ended June 30, 2011, the Company issued 500,000 shares of common stock for employee’s compensation. The common stocks were issued at a price of $.0068 per share.

During the quarter ended June 30, 2011, the Company issued 90,000,000 shares of common stock for executive compensation, accrued payroll and stock payable for employment agreement. The common stocks were issued at a price of $.0068 per share.

During the quarter ended June 30, 2011, the Company issued 7,000,000 shares of common stock for consultants. The common stocks were issued at a price of $.0013 per share.

During the quarter ended June 30, 2011, the Company issued 15,000,000 shares of common stock for a legal settlement. The common stocks were issued at a price of $.0021 per share.

2010

During the quarter ended March 31, 2010, the Company issued 350,000 shares of common stock for executive compensation. The common stocks were issued at a price of $.03 per share.

During the quarter ended March 31, 2010, the Company issued 170,000 shares of common stock for directors compensation. The common stocks were issued at a price of $.03 per share.

During the quarter ended March 31, 2010, the Company issued 50,000 shares of common stock for employees compensation. The common stocks were issued at a price of $.03 per share.

During the quarter ended March 31, 2010, the Company issued 635,000 shares of common stock for consultants compensation. The common stocks were issued at a price of $.03 per share.

There were no transactions of the common stock during the quarter ended June 30, 2010. The following table summarizes our warrants as of March 31, 2011.

Note 11 - Restatement of Financial Statements

None

Note 12 – Fair Value Measurements

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured at fair value on a recurring basis. ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows at September 30, 2012:

The table below presents our assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2012. We classify financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model.