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EX-31 - EX-31.1 SECTION 302 CERTIFICATION - TRANSACT ENERGY CORPtransact10q063010ex311.htm
EX-31 - EX-31.2 SECTION 302 CERTIFICATION - TRANSACT ENERGY CORPtransact10q063010ex312.htm
EX-32 - EX-32.1 SECTION 906 CERTIFICATION - TRANSACT ENERGY CORPtransact10q063010ex321.htm
EX-32 - EX-32.2 SECTION 906 CERTIFICATION - TRANSACT ENERGY CORPtransact10q063010ex322.htm

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, 2010.

or


     .   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _______________________  to  ___________________________


Commission File Number:  333-139746


TRANSACT ENERGY CORP.

(Exact name of registrant as specified in its charter)


Nevada

98-0515445

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

105-5119 Beckwith Blvd., San Antonio, TX

78249

(Address of principal executive offices)

(Zip Code)


210-561-6015

(Registrant’s telephone number, including area code)


_______________________________________________________

(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. Yes  X . 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 smaller 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      . No  X .


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to 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 June 30, 2010:  10,502,000




PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS


The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2010 and 2009 and for the periods then ended have been made.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2009 audited financial statements.  The results of operations for the periods ended June 30, 2010 and 2009 are not necessarily indicative of the operating results for the full year.



2




TRANSACT ENERGY CORP.

(A Development Stage Company)

__________________________

 

INTERIM BALANCE SHEETS

 

ASSETS

 

 

 

 

 

 

 

(Unaudited)

 

(Audited)

 

 

June 30,

 

December 31,

 

 

2010

 

2009

 

 

 

 

 

Current

 

 

 

 

    Cash

$

600

$

3,800

    Interest receivable

 

30,926

 

11,770

    Loans receivable - related party  

 

248,521

 

248,521

    Prepaid expenses

 

16,615

 

-

             Total Current Assets

 

296,662

 

264,091

 

 

 

 

 

Investment In Lease

 

12,684

 

12,684

 

 

 

 

 

Software, net

 

2,803

 

3,383

 

 

 

 

 

 

$

312,149

$

280,158

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

    Accounts payable

$

305,525

$

83,053

    Accrued interest

 

11,706

 

3,094

    Note payable

 

40,000

 

-

    Notes payable - Related parties

 

155,671

 

92,964

             Total Current Liabilities

 

512,902

 

179,111

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

    Preferred stock, $.001 par value,

 

 

 

 

  10,000,000 shares authorized no shares issued and outstanding

 

-

 

-

    Common Stock, $.001 par value,

 

 

 

 

  100,000,000 shares authorized

 

 

 

 

  10,502,000 shares  issued and outstanding

 

10,502

 

10,502

    Capital in excess of par value

 

370,699

 

370,699

    Deficit accumulated during the development stage

 

(581,954)

 

(280,154)

 

 

 

 

 

              Total Stockholders' Equity (Deficit)

 

(200,753)

 

101,047

 

 

 

 

 

 

$

312,149

$

280,158

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.




3




TRANSACT ENERGY CORP.

(A Development Stage Company)

__________________________

 

INTERIM STATEMENTS OF OPERATIONS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative

From

inception

March 15,

2006

to June 30,

2010

 

Three

months

ended

June 30,

2010

 

Six

months

 ended

June 30,

2010

 

Three

months

 ended

June 30,

2009

 

Six

months

 ended

June 30,

2009

 

 

 

 

 

 

 

 

 

 

 

REVENUE

$

-

$

-

$

-

$

-

$

-

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

    General and administrative

 

517,037

 

223,844

 

312,344

 

8,911

 

18,766

    Unsuccessful lease purchases

 

18,673

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

      Total Expenses

 

535,710

 

223,844

 

312,344

 

8,911

 

18,766

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE OTHER INCOME (EXPENSE)

 

(535,710)

 

(223,844)

 

(312,344)

 

(8,911)

 

(18,766)

 

 

 

 

 

 

 

 

 

 

 

    Interest income

 

30,926

 

9,631

 

19,156

 

-

 

-

    Interest expense

 

(77,170)

 

(4,779)

 

(8,612)

 

(685)

 

(932)

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

 

 

 

 

 

 

 

 

    BEFORE INCOME TAXES

 

(581,954)

 

(218,992)

 

(301,800)

 

(9,596)

 

(19,698)

 

 

 

 

 

 

 

 

 

 

 

CURRENT TAX EXPENSE

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

DEFERRED TAX EXPENSE

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(581,954)

$

(218,992)

$

(301,800)

$

(9,596)

$

(19,698)

 

 

 

 

 

 

 

 

 

 

 

LOSS PER COMMON SHARE

 

 

$

(0.02)

$

(0.03)

$

(0.00)

$

(0.00)

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.




4




TRANSACT ENERGY CORP.

(A Development Stage Company)

__________________________

 

INTERIM STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Cumulative

from inception

March 15,

2006 to

June 30,

2010

 

Six months

 ended

June 30,

2010

 

Six months

 ended

June 30,

2009

Cash Flows From Operating Activities:

 

 

 

 

 

 

   Net loss for the period

$

(581,954)

$

(301,800)

$

(19,698)

   Adjustments to reconcile net loss to cash used by

 

 

 

 

 

 

     operating activities:

 

 

 

 

 

 

        Amortization

 

677

 

580

 

-

        Interest expense from beneficial conversion

 

 

 

 

 

 

          feature on notes payable

 

65,464

 

-

 

-

   Change in assets and liabilities:

 

 

 

 

 

 

     Increase in interest receivable

 

(30,926)

 

(19,156)

 

-

     Increase in prepaid expenses

 

(16,615)

 

(16,615)

 

-

     Increase (decrease) in accounts payable

 

305,525

 

222,472

 

(2,860)

     Increase in accrued interest

 

11,706

 

8,612

 

932

         Net Cash (used) by Operating Activities

 

(246,123)

 

(105,907)

 

(21,626)

 

 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

   Acquisition of oil and gas leases

 

(12,684)

 

-

 

-

   Purchase of software

 

(3,480)

 

-

 

-

   Issuance of loans receivable

 

(263,521)

 

-

 

-

   Proceeds from loans receivable

 

15,000

 

-

 

-

        Net Cash (Used) by Investing Activities

 

(264,685)

 

-

 

-

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

 

   Proceeds from common stock issuance

 

329,000

 

-

 

-

   Stock offering costs

 

(13,263)

 

-

 

(2,130)

   Proceeds from notes payable

 

195,671

 

102,707

 

17,500

        Net Cash Provided by Financing Activities

 

511,408

 

102,707

 

15,370

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash

 

600

 

(3,200)

 

(6,256)

 

 

 

 

 

 

 

Cash at Beginning of Period

 

-

 

3,800

 

6,326

 

 

 

 

 

 

 

Cash at End of Period

 

600

 

600

 

70

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

     Cash paid during the period for:

 

 

 

 

 

 

        Interest

$

-

$

-

$

-

        Income taxes

$

-

$

-

$

-

 

 

 

 

 

 

 

Supplemental Schedule of Non-cash Investing and Financing Activities:

         For the six month period ended June 30, 2010 and 2009:

            The Company increased Capital in excess of par value by $ 65,464 as a result of a beneficial conversion feature on notes payable during 2009.

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.



5





TRANSACT ENERGY CORP.

[A Development Stage Company]


NOTES TO INTERIM FINANCIAL STATEMENTS


JUNE 30, 2010


(Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Organization – TransAct Energy Corp. (“the Company”) was organized under the laws of the State of Nevada on March 15, 2006. The Company is in the business of developing and managing power production facilities globally primarily using alternative/sustainable energy sources. The Company has not generated revenues and is considered a development stage company as defined in Accounting Standards Codification (“ASC”) Topic No. 915. The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.


Interim Condensed Financial Statements - The accompanying interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2010 and 2009 and for the periods then ended have been made.


Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2009 audited financial statements. The results of operations for the periods ended June 30, 2010 and 2009 are not necessarily indicative of the operating results for the full year.


Cash and Cash Equivalents - The Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents.

 

Software and related amortization - Software is recorded at cost and the Company provides for amortization using the straight line method over three years.


Income Taxes - The Company accounts for income taxes in accordance with ASC Topic No. 740, “Accounting for Income Taxes.”


The Company adopted the provisions of ASC Topic No. 740, “Accounting for Income Taxes”, on January 1, 2007. As a result of the implementation of ASC Topic No. 740, the Company recognized approximately no increase in the liability for unrecognized tax benefits.


The Company has no tax positions at June 30, 2010 and 2009 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.


The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the periods ended June 30, 2010 and 2009 and years ended December 31, 2009 and 2008, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at June 30, 2010 and 2009.


Loss Per Share - The computation of loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with ASC Topic No. 260, “Earnings Per Share” [See Note 9].


Accounting 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, the disclosures 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 estimated by management.



6





TRANSACT ENERGY CORP.

[A Development Stage Company]


NOTES TO INTERIM FINANCIAL STATEMENTS


JUNE 30, 2010


(Unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Recently Enacted Accounting Standards – In June 2009 the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.


Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605),

Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2010-21 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.


Investment in leases – All costs such as bid fees and lease rental payments related to the acquisition of energy leases are deferred and amortized on a straight-line basis over the term of the lease. (See Note 3)


Foreign currency translation - Transactions in foreign currencies are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and the weighted average exchange rate for each period for revenues, expenses, gains and losses. Translation adjustments are recorded as a separate component of accumulated other comprehensive income (loss) when material and foreign currency transaction gains and losses are recorded in other income and expense.


Stock offering costs – Costs incurred in connection with stock offerings will be deferred and offset against the proceeds of the stock offering. Costs incurred in connection with unsuccessful offerings will be expensed.


NOTE 2 – LOANS RECEIVABLE – RELATED PARTY


The $12,000, $5,000, $7,000, $212,000 and $12,521 loans receivable from a company whose sole shareholder holds less than 10% in Transact, are unsecured and are due on November 1, November 10, November 29, December 6 and December 6, 2010 respectively. The loans are secured by certain assets and equipment of the company and bear interest at rates between 15% and 18% per annum for the terms of the loans. At June 30, 2010 and December 31, 2009 Interest receivable was $ 30,926 and $ 11,770 respectively.


NOTE 3 - INVESTMENT IN LEASE


On September 7, 2006 the Company acquired a 100% interest in a Petroleum and Natural Gas Lease from the province of Alberta, Canada for $12,051 cash. To date the Company has paid annual lease payments of $633 for a total capitalized cost of $ 12,684. The lease is for a five year term and calls for annual rental and royalty payments in accordance with the Mines and Mineral Act of Alberta.


NOTE 4 – SOFTWARE


 

 

 

 

Accumulated

 

Net Book

 

Value

 

 

Cost

 

Amortization

 

June 30, 2010

 

Dec 1, 2009

 

 

 

 

 

 

 

 

 

 Software

$

 3,480

$

677

$

2,803

$

3,383



7





TRANSACT ENERGY CORP.

[A Development Stage Company]


NOTES TO INTERIM FINANCIAL STATEMENTS


JUNE 30, 2010


(Unaudited)


NOTE 5 – NOTE PAYABLE


The $ 40,000 convertible promissory note bears interest at 8% per annum and is due and payable on March 11, 2011. The holder has the option to convert the entire principal amount on or before March 31, 2011 into common shares of the Company based on a conversion rate of 60% of the Market Price being the average of the lowest three trading prices over the past ten days prior to the conversion. At no time may the holder convert into an amount of shares which would result in the holder and its affiliates to beneficially own more than 4.99% of the outstanding shares of common stock. No shares have been converted for the period ended June 30, 2010.


NOTE 6 – NOTES PAYABLE – RELATED PARTIES


a) The $10,000 convertible promissory note payable to a company whose shareholders hold less than 10% in Transact is unsecured, bears interest at 10% per annum and was due and payable on March 31, 2010. The payee had the option to convert the entire principal amount on or before March 31, 2010 into common shares of the Company based on a conversion rate of $.00345 per share and no interest was due if the principal is converted to shares of the Company. No shares were converted and the Company is currently negotiating with the lender to repay the loan with interest.


b) The $17,500 promissory note payable to a company whose shareholders hold less than 10% in Transact is unsecured, bears interest at 10% per annum and is due on demand.


c) The $12,000, $5,000, $7,000 and $41,464 promissory notes payable to an officer and shareholder are secured by certain assets and equipment of the Company, bear interest at 18% and 8% per annum and are due on November 1, November 10, November 29, and December 10, 2010 respectively. The notes are convertible into common stock at $.01 per share at the option of the note holder. A beneficial conversion feature was recorded in the amount of $65,464 and charged to interest expense during 2009.


d) The $ 59,707 promissory notes payable to an officer and shareholder and $3,000 promissory note payable to a former officer are secured by certain assets and equipment of the Company, bear interest at 8% per annum and are due on demand.


Accrued interest for the notes at June 30, 2010 was $ 11,706 and at December 31, 2009 was $3,094.


NOTE 7 - CAPITAL STOCK


Preferred Stock - The Company has authorized 10,000,000 shares of preferred stock, $.001 par value, with such rights, preferences and designations and to be issued in such series as determined by the Board of Directors. No shares are issued and outstanding at June 30, 2010.


Common Stock The Company has authorized 100,000,000 shares of common stock, $.001 par value, with such rights, preferences and designations and to be issued in such series as determined by the Board of Directors.


During April 2006, the Company issued 8,500,000 shares of its previously authorized, but unissued common stock. Total proceeds from the sale of stock amounted to $8,500 (or $.001 per share).


During August 2006, the Company issued 900,000 shares of its previously authorized, but unissued common stock. Total proceeds from the sale of stock amounted to $45,000 (or $.05 per share).


During September 2009, the Company issued 1,102,000 shares of its previously authorized, but unissued common stock. Total proceeds from the sale of stock amounted to $275,500 (or $.25 per share). Offering costs of $ 13,263 were netted against the proceeds.



8





TRANSACT ENERGY CORP.

[A Development Stage Company]


NOTES TO INTERIM FINANCIAL STATEMENTS


JUNE 30, 2010


(Unaudited)


NOTE 8 - GOING CONCERN


The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company was only recently formed and has incurred losses since its inception. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans and/or through additional sales of its common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.


NOTE 9 - RELATED PARTY TRANSACTIONS


Management Compensation - For the six month period ended June 30, 2010 the Company has paid $ 45,000 and accrued $37,500 of compensation to officers of the Company (see Note 11). In July 2010 the Company has issued 25,000 shares of common stock to a former officer which has been accrued as a liability in the amount of $6,250 at June 30, 2010 (See Note 12).


The Company has also accrued executive compensation of $125,000 to the President for the six month period ended June 30, 2010 (See Note 11).


Office Space - The Company shares office space with a related company of an officer/shareholder on a month to month basis. During the six month period ended June 30, 2010 the Company has accrued $6,300 for the use of office space, telephone, fax and office equipment. At June 30, 2010 the Company had a payable of $15,909 for the use of telephone, fax and office equipment


(See also Notes 2 and 6)


NOTE 10 - LOSS PER SHARE


The following data show the amounts used in computing loss per share for the periods presented:


 

 

Three months

 

Six months

 

Three months

 

Six months

 

 

ended

 

ended

 

ended

 

ended

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

2010

 

2010

 

2009

 

2009

 

 

 

 

 

 

 

 

 

Loss available to common shareholders (numerator)

$

(218,992)

$

(301,800)

$

(9,596)

$

(19,698)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding during the period used in loss per share (denominator)

 

10,502,000

 

10,502,000

 

9,400,000

 

9,400,000


Dilutive loss per share was not presented, as the Company had no common equivalent shares for all periods presented that would affect the computation of diluted loss per share.



9





TRANSACT ENERGY CORP.

[A Development Stage Company]


NOTES TO INTERIM FINANCIAL STATEMENTS


JUNE 30, 2010


(Unaudited)


NOTE 11 – COMMITMENTS


Effective October 1, 2009 through September 30, 2011, the Company entered into a compensation agreement with Shahhid Shafiq Vohra to assist the Company with business development globally for consideration of $90,000 annually for the contract period plus 100,000 common shares of the Company valued at $0.25 per share which were issued in July 2010. The value of $25,000 regarding the unissued common shares has been reflected as a liability in the financial statements at this time ( See Note 12).


During January 2010 the Company entered into an agreement with an outside consultant to serve as the Chief Financial Officer of the Company through December 31, 2010 with continuing one month extensions until cancelled. Compensation for the services will be $12,500 per month and is payable in common stock of the Company until such time as the Company secures its first $500,000. Compensation valued at $67,742 has been accrued as a liability at June 30, 2010. In July 2010 the Company issued 48,775 common shares to satisfy this compensation agreement (See Note 12).


During the period ended June 30, 2010 the Company committed to a three year lease for office space which commences July 1, 2010 and expires on June 30, 2013. The annual minimum lease payments over this three year period for this office space are $8,888 plus common area costs and GST. The Company has also agreed to receive one third of the operating costs and rent from a related company of an officer/shareholder on a month to month basis.


In April 2010 the Company entered into an investment banking agreement to arrange funding of not less than $6,000,000 through the sale of common shares of the Company.

The Company has agreed to pay a fee in the amount of $50,000 of which $15,000 has been placed into escrow, to be disbursed for third party due diligence expenses according to the terms of the agreement. Under the terms of the agreement the Company has also agreed to pay a fee of not less than 2% of the monies obtained as a loan and 8% of the monies obtained via equity investors. The balance of $35,000 is to be paid as the due diligence process proceeds.


In May 2010 the Company also entered into a financing brokerage agreement where the broker introduced potential investors up to November 11, 2010. As a retainer for their services the Company agreed to issue 10,000 common shares which were issued in July 2010 ( See Note 12) and pay 8% on funds raised, to date cash compensation of $3,200 was been paid for $40,000 raised as a convertible debenture during the period ended June 30, 2010.


In February 2010, the Board of Directors of TransAct Energy appointed Rod Bartlett as the new President, Chief Executive Officer and as an independent director. Effective January 1, 2010 the Company finalized the terms of a compensation agreement with its President and Chief Executive Officer and had the same ratified by resolution of the board of directors in a meeting held in July. The Agreement pays an annual base salary of $250,000, with a cash bonus annually based on 5% of EBITDA and a stock bonus formulated around the return on invested capital where the issued and outstanding stock of the company times the rate of return divided by ten will equate to the stock issued.


NOTE 12 – SUBSEQUENT EVENTS


In July 2010 the Company issued common shares as follows:


- 25,000 common shares to a former officer of the Company pursuant to a management compensation agreement ( See Note 9).


 - 100,000 common shares to a officer of the Company pursuant to a management compensation agreement ( See Note 11).


 - 48,775 common shares to a officer of the Company pursuant to a compensation agreement ( See Note 11).


 - 10,000 common shares pursuant to an investment banking broker agreement  (See Note 11).


The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there are no additional events to disclose.



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ITEM 2. PLAN OF OPERATIONS


MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION


FORWARD-LOOKING STATEMENT NOTICE


This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.


OUR BUSINESS


Our business is the development, production, management and conservation of electricity from sustainable electricity projects. Our focus is energy produced from geothermal, solar and municipal waste. Our power conservation technologies are centered around technology innovations including hydrogen fuel cells and low temperature geothermal. The current global markets we are involved in include Brazil, Canada, India, Indonesia, Iraq, Kingdom of Saudi Arabia (“KSA”), Pakistan and Vietnam. (See attached Appendix “B”).


TransAct Energy Corp. (TEGY) is a registered public company, incorporated in Nevada in 2006, currently traded on the Over the Counter Bulletin Board (OTCBB). We received our DTC eligibility in May 2010. Our corporate offices are located in San Antonio, Texas, USA with satellite offices in Vancouver, British Columbia, Canada; Abu Dubai, UAE and soon Mumbai, India.


We launched into the sustainable energy sector in October 2008 by initiating a business relationship with Dr. Ghomshei (a leading authority on alternative energy, specifically geothermal technologies) where we initially agreed to form a joint venture company to exploit both high and low temperature geothermal opportunities in British Columbia, Canada. We elected not to form the joint venture however we have continued this relationship by bringing Dr. Ghomshei into TEGY as SVP Power Development to oversee all power plant development. Dr Ghomshei has been instrumental in developing ongoing geothermal opportunities in Canada, India, Indonesia, and KSA.


[transact10q063010001.jpg]

In addition to the geothermal technology TEGY has secured the rights for the manufacturing and distribution of a proprietary photovoltaic solar technology for all of south and west Asia. This technology is expected to be mass produced at $0.70 USD per watt or less, a new milestone in this sector. The solar panel produced using this technology is reported to have greater solar conversion efficiencies than other existing photovoltaic technologies. This combination of low production cost and higher efficiency will allow TEGY to compete if not dominate in its markets. We have committed to build a plant in India to produce solar panels and other custom applications from this technology. As a result we have been asked to develop several solar projects using our panels in India. (www.squareonesolar.com)


As part of our agreement with Square One Solar, TEGY also negotiated the exclusive global rights to develop their Polymer plant (the secret component of the technology) to supply the Polymer to all of the Square One Solar licensees (currently other than TEGY there is one in the United States and another in China.) This is anticipated to be an excellent and ongoing source of revenue for the company






PLAN OF OPERATION


The Company intends to raise $6 million USD through private placements during the third quarter to fund the first stages of a series of power plants in Asia. As a newer IPP, the Company made a conscious decision to stay out of the North American market with the exception of some geothermal in western Canada and Alaska. TransAct decided to focus primarily on south and west Asia where there is a huge power deficit, carbon based power and the alternative resources necessary to make electricity.


In selecting the power technologies/sources we could support; sustainability and the end cost per kilowatt hour were critical factors. By offering several different types of power plants and even hybrid power plants that use old/new technology together we can provide governments and industry short and long-term answers to their power needs. Geothermal, solar, garbage and hydrogen provide the best mix, as standalone power sources and in combination, in these geographic areas.


Many of the countries in South and West Asia use carbon fuels (coal, oil) to fuel their power plants. They have these resources and their policies have been ignorant of their alternatives until now. In order to gain a foot hold in these countries we have in four cases agreed to develop carbon based plants where we have design control in order to engineer the facility and apply hybrid technology to reduce Green House Gas (GHG) emissions to the lowest possible levels. We help to solve an immediate power problem in order to access the future green power market.


Ultimately we make money by selling electricity per kilowatt hour (“kwh”), having this sale guaranteed is the key to planning a successful project that can be profitable over its life cycle. This is done by securing in advance long-term power purchase agreements (PPA) with payment guarantees. The government or industry providing the PPA has to be accessible by law, able to pay enough per kwh and guarantee payment before any money is put into the proposed power plant infrastructure. With the PPA in hand we maybe able to leverage this into long-term debt enough to higher debt to equity ratio.


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The countries with carbon based power typically pay more per kwh (India $0.18 USD per kwh) because of the fuel cost. Carbon based and nuclear facilities are also faced with the uncertainty of the future cost of their feed-stock. Selling power that has a low production cost per kwh (geothermal is typically $0.045 USD per kwh), no cost related to feed-stock and no green house gas emissions is this company’s competitive strategy. We sell our power at the same price point as other power plants; we also have the potential earnings of carbon credits. After we retire the cost of the power plant, we have our operating costs as do the other plants but no feed-stock costs creating better returns for our investors in the long term.


For TEGY to maximize earnings, capital and limit liabilities we need to be strategicly related to non-American jurisdictions. By incorporating wholly owned subsidiaries in countries that have tax treaties with the target country we are able to return more earnings to TEGY. In the case of India for example we intend over the next quarter to form a Mauritius company that will then in turn establish an Indian Public company that will trade on the Indian Stock Exchange, TransAct Energy Group India (TEGI) will independently raise capital in India for our Indian projects. This company will in turn set up subsidiaries to hold each manufacturing facility and joint venture or special purpose vehicles for each power project. The liabilities become isolated and the earnings flow through tax free through to the Mauritius Company where they are taxed at a low level before coming through to TransAct. To this end we are commissioning Khandwala Securities Limited of Mumbai, India as our investment bankers in India.


RESULTS OF OPERATIONS


During the three months ended June 30, 2010, the Company has engaged in no significant operations other than maintaining its reporting status with the SEC.



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Results of Operations – Three Months Ended June 30, 2010 Compared to the Three Months Ended June 30, 2009


No revenues were received by the Company during the three months ended June 30, 2010 or 2009. Our general and administrative expenses were $223,844 for the three months ended June 30, 2010 compared to $8,911 for the same period in 2009.


Results of Operations for the Six Months Ended June 301, 2010 Compared to The Six Months Ended June 30 2009


We did not generate any revenue from January 1, 2010 to June 30, 2010 as was the same for the six month period in 2009. For the six months ended June 30, 2010 our expenses were $312,344 compared to $18,766 for the same period in 2009. Expenses consisted of professional fees, administrative and management fees and miscellaneous expenses. The main difference between the two periods was management compensation which was nil for the period ending 2009 and $192,742 for the period ending June 2010. Consulting fees of $49,095 for the period with no fees reported in 2009. Travel/ Meeting expenses climbed to $25,350 versus $546 for the previous year first 6 months. As a result, we have reported a net loss of $(301,800) for the period ended June 30, 2010. Our total net loss from January 1, 2009 through June 30, 2009 was $(19,698)


Stock-Based Compensation Costs


Stock-based compensation represents 21.7% of the Company’s operating expenses for the period ended June 30, 2010. There was no stock based compensation from the same period in 2009. The stocks are a part of our executive compensation plan, and are issued to obtain, retain and motivate our directors, executives and employees.


LIQUIDITY AND CAPITAL RESOURCES


As of June 30, 2010, we have $600 in cash, $12,684 investment in oil and gas lease, interest receivable of $30,926, and loans receivable of $248,521. Our current liabilities consist of accounts payable in the amount of $305,525 and notes payable of $195,671 with accrued interest of $11,706.


NEED FOR ADDITIONAL FINANCING


Proposed Public Offering of Common Stock - The Company made a public offering of up to 2,000,000 shares of common stock. The Company filed a registration statement with the United States Securities and Exchange Commission on Form S-1. The offering was declared effective on December 12, 2008. An offering price of $.25 per share had arbitrarily been determined by the Company. The offering was managed by the Company without any underwriter. The shares were offered and sold by officers and directors of the Company, who received no sales commissions or other compensation in connection with the offering, except for reimbursement of expenses actually incurred on behalf of the Company in connection with the offering. The Company filed a post-effective amendment to its registration statement which was declared effective on July 17, 2009. The offering was closed at August 31, 2009. The Company raised a total of $275,500 and subsequently issued 1,102,000 common shares.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


Not required by smaller reporting companies.


ITEM 4T. CONTROLS AND PROCEDURES.


(a)

Evaluation of Disclosure Controls and Procedures. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). We are committed to maintaining disclosure controls and procedures designed to ensure that information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures and implementing controls and procedures.


Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded



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that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2010, the end of the period covered by this report.



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(b)

Changes in Internal Control over Financial Reporting. There were no changes in the Company's internal controls or procedures over financial reporting, known to the chief executive officer or the chief financial officer that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.


PART II – OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.


No legal proceedings are threatened or pending against TransAct Energy Corp. or any of our officers or directors. Further, none of our officers, directors or affiliates are parties against TransAct Energy Corp., or have any material interests in actions that are adverse to our own.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


The Company did not sell or issue any securities during the period covered by this report.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.


None


ITEM 4. (REMOVED AND RESERVED)

 


ITEM 5. OTHER INFORMATION.


None


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.


(a) Exhibits


Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.


Exhibit No.

Title of Document

Location

31

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

Attached

32

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Attached


(b) Reports on Form 8-K


None


*

The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.



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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


TRANSACT ENERGY CORP.



Date: August 13, 2010

By:  /s/ Rod Bartlett      

Rod Bartlett

President,

Chief Executive Officer




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