TRANSAKT CORP
February 3, 2006
United States Securities and Exchange Commission
Division of Corporate Finance
Attention:Mr. Larry Spirgel
Dear Sir,
Re:
TransAKT Corp.
Form 20-F for the year ended December 31, 2004
File No. 000-5039
We are writing in response to your request from our telephone conversation on February 2, 2006 wherein you requested that we perform a second calculation in response to prior comment 3 of your letter using 3 trading days on either side of the announcement of our IPM deal as a reasonable period for the calculation of market value.
As previously mentioned the IPM acquisition was announced on July 7, 2004. The weighted average closing share price from June 30, 2004 to July 12, 2004 on the TSX Venture exchange was $0.32 and the simple average was also $0.32. Only 69,200 shares traded during that time which is still quite nominal. Average daily trading volume was only 9,886 shares. The stock price was anywhere from $0.30 to $0.34 during the period (see below). As mentioned in our call our normal private placement terms are a 30% or higher discount to market in these circumstances. Discounting $0.32 by 30% we get $0.22 cents per share as a value which is comparable to the $0.23 calculated previously.
<date> | <open> | <high> | <low> | <close> | <vol> | <trades> | WACC | |
20040630 | 0.33 | 0.34 | 0.33 | 0.34 | 5,000 | 2 | 0.024566 | Wednesday |
20040702 | 0.32 | 0.32 | 0.32 | 0.32 | 500 | 1 | 0.002312 | Friday |
20040705 | 0.3 | 0.32 | 0.3 | 0.32 | 14,000 | 3 | 0.06474 | Monday |
20040707 | 0.28 | 0.34 | 0.28 | 0.33 | 23,500 | 6 | 0.112066 | Wednesday |
20040708 | 0.32 | 0.32 | 0.32 | 0.32 | 5,000 | 1 | 0.023121 | Thursday |
20040709 | 0.28 | 0.3 | 0.28 | 0.3 | 14,200 | 5 | 0.061561 | Friday |
20040712 | 0.3 | 0.3 | 0.3 | 0.3 | 7,000 | 1 | 0.030347 | Monday |
2.23 | 69,200 | 0.32 | ||||||
Ave Volume | 9,886 | daily | ||||||
Simple ave price | 0.318571 |
Please note that July 1 is a holiday |
There was no trading activity on July 6 according to our records |
As stated in Paragraph 22 of SFAS 141 “… the quoted market price of an equity security issued to effect a business combination generally should be used to estimate the fair value of an acquired entity after recognizing possible effects of price fluctuations, quantities traded, issue costs, and the like…”
In the analysis performed by management, the thinly traded market was also supportive of applying the discount to the calculated market value above as at the time the Company had over 30 million shares outstanding and only 69,200 were traded within the few days before and after the announcement. In addition only 19,200 shares traded following the announcement resulting in a market price decrease from $0.33 to $0.30.
Yours truly,
TRANSAKT CORP.
“signed”
Riaz Sumar
Chief Financial Officer
Suite 260, 1414 8th Street SW, Calgary, AB, T2R 1J6 Telephone (403) 290-1744
