CURRENT ASSETS | | 30/06/2013 | | | 31/12/2012 | | | 30/06/2012 | | | 31/12/2011 | |
| | | | | | | | | | | | |
Cash and cash equivalents | | | 9,722 | | | | 6,413 | | | | 15,584 | | | | 70,289 | |
Trade receivables, net | | | 201,339 | | | | 64,170 | | | | 122,194 | | | | 240,867 | |
Due from related parties | | | - | | | | - | | | | - | | | | - | |
Due from Shareholders | | | - | | | | - | | | | - | | | | - | |
Inventories | | | 68,829 | | | | 111,461 | | | | 32,419 | | | | 55,689 | |
Other current assets | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total current assets | | | 279,890 | | | | 182,043 | | | | 170,196 | | | | 366,845 | |
| | | | | | | | | | | | | | | | |
NON CURRENT ASSETS | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Property, plant and equipment,net | | | 5,353 | | | | 6,076 | | | | 2,032 | | | | 1,027 | |
Other Assets | | | - | | | | | | | | | | | | - | |
Other non current assets | | | 400,000 | | | | 400,000 | | | | 400,000 | | | | - | |
| | | | | | | | | | | | | | | | |
Total non current assets | | | 405,353 | | | | 406,076 | | | | 402,032 | | | | 1,027 | |
| | | | | | | | | | | | | | | | |
TOTAL ASSETS | | | 685,243 | | | | 588,119 | | | | 572,228 | | | | 367,872 | |
| | | | | | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | | | | | |
Borrowings | | | - | | | | - | | | | - | | | | - | |
Trade payables | | | 218,517 | | | | 274,352 | | | | 143,672 | | | | 181,984 | |
Due to shareholders | | | - | | | | - | | | | - | | | | - | |
Due to related parties | | | 189,499 | | | | 261,499 | | | | 324,499 | | | | 265,318 | |
Other current liabilities | | | 153,808 | | | | 11,310 | | | | 47,260 | | | | 27,390 | |
| | | | | | | | | | | | | | | | |
Total current liabilities | | | 561,824 | | | | 547,161 | | | | 525,431 | | | | 474,692 | |
| | | | | | | | | | | | | | | | |
NON CURRENT LIABILITIES | | | | | | | | | | | | | | | | |
Borrowings | | | - | | | | - | | | | 71,841 | | | | 250,000 | |
Employee termination benefits | | | - | | | | - | | | | - | | | | - | |
Reserve for retirement pay | | | - | | | | - | | | | - | | | | - | |
Share purchase advances | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | |
Total non current liabilities | | | - | | | | - | | | | 71,841 | | | | 250,000 | |
| | | | | | | | | | | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | |
Share capital | | | 507,428 | | | | 544,303 | | | | 544,303 | | | | 127,570 | |
Retained earnings | | | (464,415 | ) | | | (521,403 | ) | | | (520,454 | ) | | | (137,698 | ) |
Net income / (loss) for the period | | | 80,406 | | | | 18,058 | | | | (48,893 | ) | | | (346,692 | ) |
| | | | | | | | | | | | | | | | |
Total shareholders’ equity | | | 123,419 | | | | 40,958 | | | | (25,044 | ) | | | (356,820 | ) |
| | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | | 685,243 | | | | 588,119 | | | | 572,228 | | | | 367,872 | |
TouchIT Technologies, Inc.
Financial Statements
September 30, 2011 and 2010
(Unaudited)
TOUCHIT TECHNOLOGIES, INC
COMBINED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTH PERIODS ENDED 30 JUNE 2013 & 2012
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)To the Board of Directors
| | 3 Months Ended June 30 2013 | | | 3 Months Ended June 30 2012 | | | 6 Months Ended June 30 2013 | | | 6 Months Ended June 30 2012 | |
| | | | | | | | | | | | |
NET SALES | | | 423,578 | | | | 285,803 | | | | 800,189 | | | | 505,685 | |
COST OF SALES | | | 283,423 | | | | 202,746 | | | | 550,489 | | | | 353,002 | |
Gross profit | | | 140,155 | | | | 93,057 | | | | 249,700 | | | | 152,683 | |
MARKETING AND SELLING EXPENSE | | | 8,383 | | | | 3,675 | | | | 14,717 | | | | 37,458 | |
GENERAL AND ADMINISTRATIVE EXPENSES | | | 86,797 | | | | 54,516 | | | | 163,599 | | | | 165,317 | |
Profit from operations | | | 44,975 | | | | 34,866 | | | | 71,384 | | | | (50,092 | ) |
OTHER INCOME AND EXPENSES,net | | | -- | | | | 1,200 | | | | 9,021 | | | | 1,200 | |
FINANCIAL INCOME AND EXPENSES, net | | | -- | | | | -- | | | | -- | | | | -- | |
Profit Loss before taxation and currency translation gain/(loss) | | | 44,975 | | | | 36,066 | | | | 80,405 | | | | (48,892 | ) |
TAXATION CHARGE | | | -- | | | | -- | | | | -- | | | | -- | |
Taxation current | | | -- | | | | -- | | | | -- | | | | -- | |
Deferred | | | -- | | | | -- | | | | -- | | | | -- | |
CURRENCY TRANSLATION GAIN/(LOSS) | | | -- | | | | -- | | | | -- | | | | -- | |
Net income/(loss) for the Period | | | 44,975 | | | | 36,066 | | | | 80,405 | | | | (48,892 | ) |
OTHER COMPREHENSIVE INCOME | | | -- | | | | -- | | | | -- | | | | -- | |
Total comprehensive income | | | 44,975 | | | | 36,066 | | | | 80,405 | | | | (48,892 | ) |
TouchIT Technologies, Inc.
100 West Big Beaver Road,
Suite 200, Troy Michigan, 48084
Dear Board of Directors,
I have reviewed the accompanying statements of financial position of TouchIT Technologies, Inc. as of September 30, 2011 and 2010 and the related statements of activities and statements of cash flows for the nine months then ended, and the accompanying supplementary information, which is presented only for supplementary analysis purposes, in accordance with the standards of the Public Company Accounting Oversight Board (United States) Standards. All information included is the representation of the Board of Directors of TouchIT Technologies.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an examination in accordance with US Generally Accepted Accounting Principles (“US GAAP”) standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with US GAAP standards.
My review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with US GAAP. The information in the accompanying statements and schedules is presented only for supplementary analysis purposes. Such information has been subject to the inquiry and analytical procedures applied in the review of the basic financial statements, and I am not aware of any material medications that should be made thereto.
/S/ Edward Richardson Jr. CPA
Certified Public Accountant
Southfield, MI
November 10, 2011
TOUCHIT TECHNOLOGIES, INC
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED 30 JUNE 2013 & 2012
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)
| | 6 Months Ended June 30 2013 | | | 6 Months Ended June 30 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net income | | | 80,405 | | | | (48,892 | ) |
Adjustments to reconcile net income to net cash provided | | | 2,056 | | | | (436,865 | ) |
By operating activities: | | | | | | | | |
Depreciation and amortisation | | | 723 | | | | | |
Provision for employee benefit | | | -- | | | | -- | |
| | | | | | | | |
Changes in operating assets and liabilities | | | | | | | | |
Trade receivables, net | | | (137,169 | ) | | | 118,674 | |
Due from shareholders | | | -- | | | | -- | |
Due from related parties | | | -- | | | | -- | |
Inventories | | | 42,632 | | | | 23,270 | |
Other current assets | | | -- | | | | -- | |
Other non current assets | | | -- | | | | -- | |
Trade payables | | | 133,664 | | | | 30,869 | |
Due to shareholders | | | -- | | | | -- | |
Due to related parties | | | -- | | | | -- | |
Other current liabilities | | | 142,498 | | | | 19,870 | |
Share Purchase Advances | | | | | | | | |
| | | | | | | | |
Net cash generated from (used for) operating activities | | | 264,808 | | | | (293,074 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Increase/(decrease) in short-term borrowings | | | (261,499 | ) | | | -- | |
Increase/(decrease) in long-term borrowings | | | | | | | 238,574 | |
Dividends paid | | | -- | | | | -- | |
| | | | | | | | |
Net cash (used for) provided from financing activities | | | (261,499 | ) | | | 238,574 | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Purchases of property, plant and equipment and intangible assets | | | -- | | | | (205 | ) |
Share capital increase | | | | | | | | |
| | | | | | | | |
Net cash used for investing activities | | | -- | | | | (205 | ) |
| | | | | | | | |
NET INCREASE / (DECREASE) IN CASH AND BANKS | | | 3,309 | | | | (54,705 | ) |
| | | | | | | | |
CASH AND BANKS AT BEGINNING OF THE YEAR | | | 6,413 | | | | 70,289 | |
| | | | | | | | |
CASH AND BANKS AT END OF THE PERIOD | | | 9,722 | | | | 15,584 | |
Supplementary Information
TouchIT Technologies, Inc.
BALANCE SHEET
As of September 30, 2011
ASSETS
CURRENT ASSETS | | | |
Cash in Bank - General | | | 65,974.00 | |
Inventory | | | 107,133.00 | |
Prepaid Expenses | | | | |
| | | | |
Total Current Assets | | | 173,107.00 | |
| | | | |
PROPERTY AND EQUIPMENT | | | | |
Equipment | | | 230.00 | |
| | | | |
Net Property and Equipment | | | 230.00 | |
| | | | |
TOTAL ASSETS | | | 173,337.00 | |
The footnotes are an integral part of the financial statements.
TouchIT Technologies, Inc.
BALANCE SHEET
As of September 30, 2011
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES | | | |
| | | |
Accounts Payable - Trade | | | 439,673.36 | |
| | | | |
Total Current Liabilities | | | 439,673.36 | |
| | | | |
LONG-TERM LIABILITIES | | | | |
Note Payable | | | 644,917 | |
| | | | |
Total Long-Term Liabilities | | | 644,947 | |
| | | | |
Total Liabilities | | | 1,089,590 | |
| | | | |
| | | | |
STOCKHOLDERS' EQUITY | | | | |
Capital Stock, $0.01 par value, 100,000,000 shares | | | 127,570.00 | |
authorized, 55,839,419 shares issued and | | | | |
outstanding | | | | |
Retained Earnings | | | (1,038,423 | ) |
| | | | |
Total Stockholders' Equity | | | (910,853 | ) |
| | | | |
TOTAL LIABILITIES AND | | | | |
STOCKHOLDERS' EQUITY | | | 173,337.00 | |
The footnotes are an integral part of the financial statements.
TOUCHIT TECHNOLOGIES, INC. | |
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY | |
FOR THE PERIOD ENDED JUNE 30, 2013 AND 2012 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Retained | | | Stockholder's | |
| | Common Stock | | | Preferred Stock | | | Paid-in Capital | | | Treasury Stock | | | Earnings | | | Equity | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Amount | | | Amount | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2013 | | | 228,064,419 | | | $ | 127,570 | | | $ | - | | | $ | - | | | | 228,064,419 | | | $ | 379,858 | | | | - | | | $ | - | | | $ | (503,345 | ) | | $ | 4,083 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 80,404 | | | | 80,404 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital Transactions | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prior Period Adjustments | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 38,932 | | | | 38,932 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at June 30, 2013 | | | 228,064,419 | | | $ | 127,570 | | | $ | - | | | $ | - | | | | 228,064,419 | | | | 379,858 | | | | - | | | $ | - | | | $ | (384,009 | ) | | $ | 123,419 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retained | | | Stockholder's | |
| | Common Stock | | | Preferred Stock | | | Paid-in Capital | | | Treasury Stock | | | Earnings | | | Equity | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Amount | | | Amount | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2012 | | | 55,839,419 | | | $ | 127,570 | | | $ | - | | | $ | - | | | | 55,839,419 | | | $ | 416,733 | | | | - | | | $ | - | | | $ | (484,389 | ) | | $ | 59,914 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (48,893 | ) | | | (48,893 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital Transactions | | | 18,350,000 | | | | - | | | | - | | | | - | | | | 18,350,000 | | | | - | | | | - | | | | - | | | | (36,065 | ) | | | (36,065 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prior Period Adjustments | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at June 30, 2012 | | | 228,064,419 | | | $ | 127,570 | | | $ | - | | | $ | - | | | | 74,189,419 | | | $ | 416,733 | | | | - | | | $ | - | | | $ | (569,347 | ) | | $ | (25,044 | ) |
TouchIT Technologies, Inc.INCOME STATEMENT
For the 3 Months and 9 Months Ended September 30, 2011
| | 3 Months Ended | | | 9 Months Ended | |
| | September 30, 2011 | | | September 30, 2011 | |
Sales | | | | | | |
Sales | | | 224,850.00 | | | | 1,139,717.00 | |
Delivery Income | | | 10,710.00 | | | | 10,710.00 | |
Less Returns & Allowances | | | - | | | | - | |
| | | | | | | | |
Total Sales | | | 235,560.00 | | | | 1,150,427.00 | |
| | | | | | | | |
Cost of Goods Sold | | | | | | | | |
Material Purchases | | | 191,717.00 | | | | 1,024,118.00 | |
| | | | | | | | |
Total Cost of Goods Sold | | | 191,717.00 | | | | 1,024,118.00 | |
| | | | | | | | |
Gross Profit | | | 43,843.00 | | | | 126,309.00 | |
| | | | | | | | |
Operating Expenses | | | | | | | | |
Marketing & Selling Expenses | | | 10,000.00 | | | | 437,851.00 | |
General & Administrative Expenses | | | 156,842.61 | | | | 339,899 | |
| | | | | | | | |
Total Operating Expenses | | | 166,842.61 | | | | 717,750.61 | |
| | | | | | | | |
Operating Income (Loss) | | | (162,499.61 | ) | | | (631,441.61 | ) |
| | | | | | | | |
Other Income (Expense) | | | | | | | | |
Other Income & Expenses | | | 104,220.00 | | | | 57,876 | |
Financial Income & Expenses | | | - | | | | (28,433.00 | ) |
Other | | | 61,447.00 | | | | - | |
Gain on Discontinued Operations | | | 206,461.18 | | | | 206,461.18 | |
| | | | | | | | |
Total Other Income (Expense) | | | 372,128.18 | | | | 235,904.18 | |
| | | | | | | | |
Net Income (Loss) Before Taxes | | | 209,128.57 | | | | (395,537.43 | ) |
| | | | | | | | |
| | | | | | | | |
Net Income (Loss) | | | 209,128.57 | | | | (395,537.43 | ) |
The footnotes are an integral part of the financial statements.
TouchIT Technologies, Inc.
STATEMENT OF RETAINED EARNINGS
For the 3 Months and 9 Months Ended September 30, 2011
| | 3 Months Ended | | | 9 Months Ended | |
| | September 30, 2011 | | | September 30, 2011 | |
| | | | | | |
Beginning of Period | | | (747,952.00 | ) | | | (143,285.00 | ) |
Plus: Net Income | | | 219,128.57 | | | | (395,537.43 | ) |
Less: Dividends Paid | | | - | | | | - | |
Prior Period Adjustments | | | 500,000 | | | | (500,000) | |
| | | | | | | | |
RETAINED EARNINGS | | | | | | | | |
END OF PERIOD | | | (1,038,823.83 | ) | | | (1,038,823.43 | ) |
The footnotes are an integral part of the financial statements.
TouchIT Technologies, Inc.
STATEMENT OF CASH FLOWS
For the 3 Months and 9 Months Ended September 30, 2011
| | 3 Months Ended | | | 9 Months Ended | |
| | September 30, 2011 | | | September 30, 2011 | |
| | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net Income (Loss) | | | 209,128 | | | | (395,537.43 | ) |
Adjustments to reconcile Net Income (Loss) to net Cash provided by (used in) operating activities: PPA | | | (409,239.93 | ) | | | (492,937 | ) |
Losses (Gains) on sales of Fixed Assets: | | | - | | | | - | |
Decrease (increase) in Operating Assets: | | | - | | | | - | |
Accounts Receivable | | | 702,150.00 | | | | 1,619,205.00 | |
Inventory | | | 464,453.00 | | | | 258,510.00 | |
Other | | | 4,452.00 | | | | 1,335.00 | |
Increase (Decrease) in Operating Liabilities: | | | - | | | | - | |
Accounts Payable | | | 334,952.36 | | | | 314,928.36 | |
Accrued Liabilities | | | (1,135,578 | ) | | | (1,268,833 | ) |
Total Adjustments | | | (39,310.07 | ) | | | 432,208..36 | |
Net Cash Provided by (Used in) Investing Activities | | | (109,817.93 | ) | | | (36,670.93 | ) |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Capital Expenditures | | | - | | | | (230.00 | ) |
Disposition of Fixed Assets | | | 0 | | | | 82,687. | |
Proceeds From Sale of Fixed Assets | | | - | | | | - | |
Net Cash Provided By (Used In) Investing Activities | | | 0 | | | | 82,457 | |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Notes Payable Borrowings | | | 644,917 | | | | 696,290.77 | |
Notes Payable Repayments | | | (750,000.00 | ) | | | (753,215.00 | ) |
Proceeds from Sale of Stock | | | - | | | | - | |
Net Cash Provided By (Used In) Financing Activities | | | (105,082.73 | ) | | | (103,709.95 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 64,735.00 | | | | 15,418.00 | |
| | | | | | | | |
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | | | 1,239.00 | | | | 50,556.00 | |
| | | | | | | | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | | | 65,974.00 | | | | 65,974.00 | |
The footnotes are an integral part of the financial statements.
TOUCHIT TECHNOLOGIES, INC
STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
| | Common Stock | | | Preferred Stock | | | Retained Earnings | | | Total Shareholders Equity | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Amount | | | Amount | |
| | | | | | | | | | | | | | | | | | |
Balance at January 1, 2011 | | | 61,630,001.00 | | | $ | 127,570.00 | | | | 25,000.00 | | | | - | | | $ | -143,285.00 | | | $ | -15,715.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | | - | | | | - | | | | - | | | | - | | | $ | (395,538 | ) | | $ | (395,538 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Capital Transactions | | | - | | | | - | | | | - | | | | - | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Prior Period Adjustments | | | - | | | | - | | | | - | | | | - | | | | 500,000 | | | | (500,000 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance at September 30, 2011 | | | 55,839,419.00 | | | $ | 127,570.00 | | | | 25,000.00 | | | | - | | | $ | (1,038,823 | ) | | $ | (911,253 | ) |
The footnotes are an integral part of the financial statements.
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
1. | OPERATIONS OF THE COMPANY: |
General
TouchIT Technologies, Inc. (the “Company”) was incorporated in the State of Nevada as “Hotel Management Systems, Inc.” (“Hotel Management”). On May 7, 2010, the Company entered into a share exchange agreement, with Hotel Management, TouchIT Technologies Koll Sti (“TouchIT Tech KS”), TouchIT Education Koll Sti (“TouchIT Ed”)(“TouchIT Ed” and together with TouchIT Tech KS is collectively referred to as “TouchIT”), and the stockholders of TouchIT Tech KS and TouchIT Ed. Both TouchIT Tech KS and TouchIT Ed are corporations formed under the laws of Turkey and are based in Istanbul, Turkey. The closing of the transaction (the “Closing”) took place on May 7, 2010 (the “Closing Date”), all as disclosed in a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 24, 2010. See “Recent Developments”. Subsequently, the Registrant amended its Articles of Incorporation to change its name to TouchIT Technologies, Inc., as disclosed in a Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 24, 2010.
Organization
Pursuant to the terms of the Share Exchange Agreement, Hotel Management issued a total of 48,330,000 shares of their common stock, par value USD 0.001 per share (the “Common Stock”) to the shareholders of TouchIT Tech KS and TouchIT Ed in exchange for the transfer of 100% of the shares of TouchIT Tech KS and TouchIT Ed to Hotel Management. This exchange transaction resulted in TouchIT Tech KS and TouchIT Ed becoming Hotel Management. The wholly-owned subsidiaries and the stockholders of TouchIT own approximately 78.93% of the Hotel Management’s issued and outstanding stock, prior to any financing.
Simultaneously with the closing of the Share Exchange Agreement, on May 7, 2010, Management entered into a Subscription Agreement (the “Subscription Agreement”) with investors for the sale of shares up to the value of USD 1,500,000 (the Purchase Price”). As a result USD 750,000 of the Purchase Price has been recognized in the Company’s balance sheet as a future obligation to one of the investors.
Average number of employees of the Company as of September 30, 2011 and December 31, 2010 is six.
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Description of Business
The Company is a designer, producer and marketer of touch-based visual communication products. The Company manufactures a large range of touch screen and touch board products containing TouchIT's proprietary technology to suit all types of applications, from small LCD touch-screens to large interactive whiteboard displays and audience response systems, with applications to several industry segments including education, business, and government. For more information, please visit the Company's Website: www.touchittechnologies.com.
2. | IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS |
In January 2010, the FASB issued an amendment to ASC, “Fair Value Measurements and Disclosure,” to require entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair measures which are effective for fiscal years beginning after December 15, 2010, its adoption will not have a material impact on the Company’s financial statements.
The Company maintains its books of account and prepares financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America. The Company’s fiscal year ends on December 31.
4. | SIGNIFICANT ACCOUNTING POLICIES: |
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments, which are readily convertible into, cash, with original maturities of three months or less.
Basis of Accounting
The Company uses the accrual basis of accounting.
Accounts Receivable – Recognition of Bad Debt
The Corporation considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made.
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Revenue recognition
The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services are rendered, the sales price is terminable, and collectability is reasonably assure. Revenue typically is recognized at the time of shipment. Sales are recorded net of discounts, rebates, and returns.
Inventories
Inventories are stated at the lower of cost or market. Costs, including an appropriate portion of fixed and variable overhead expenses are assigned to inventories by the method most appropriate to the particular class of inventory being valued on the weighted average basis.
Related Parties
Parties are considered to be related if one parry has the ability to control the other party or exercise significant influence over the other party in making the financial and operating decisions. For the purpose of these financial statements shareholders are referred to as related parities. Related parties are also included individuals that are principle owners, management and members of the Company’s Board of Directors and their families.
Capitalization
All costs incurred over $500 are capitalized. Costs which lengthen the life of a fixed asset are capitalized and depreciated over the extended life of the asset.
Depreciation
Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Assets reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. If the fair value is less that the carrying amount of the asset, a loss is recognized for the difference.
Taxation
The Company has elected to be treated as a regular “C” corporation; therefore, the corporation , not the stockholders, will pay income taxes.
Leases
Leases are classified as capital leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Comprehensive Income
In June 1997, the Financial Accounting Standard Board issued SFAS No. 130, “Reporting Comprehensive Income.” SFAS No. 130 is effective for years beginning after June 15, 1997. This statement provides reporting standards of comprehensive income and its components and requires that all components of comprehensive income be reported in the financial statements in the period in which they are recognized. The Company has adopted the provisions of SFAS No. 130 in its financial statements and adoption of this statement did not have any effect.
Financial Instruments
Fair value is defined as the price that would be received to sell an assets or paid to transfer a liability in an orderly transaction between participants at the measurement date (i.e., an exit price). The guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority
To unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 – Quoted, active market prices for identical assets or liabilities. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers of brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The Company did not have any Level 1 assets or liabilities.
Level 2 – Observable inputs other than Level 1, such as quoted market prices for similar assets or liabilities, quoted for identical or similar assets in inactive markets, and model derived valuations in which all significant inputs are observable in active markets. The Company did not have any Level 2 assets or liabilities.
Level 3 – Valuation techniques in which one or more significant inputs are observable in the marketable. The Company did not have any Level 3 assets or liabilities.
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
5. | CASH AND CASH EQUIVALENTS |
As of September 30, 2011 and September 30, 2010, cash and cash equivalents comprised were comprised of the following:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Cash on Hand | | $ | 0 | | | $ | 0 | |
Banks | | $ | 65,597 | | | $ | 41,966 | |
| | | | | | | | |
Total | | $ | 65,597 | | | $ | 41,966 | |
As of September 30, 2011 and September 30, 2010, trade receivables comprised were comprised of the following:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Trade Receivables | | $ | 0 | | | $ | 822,894 | |
Provision for doubtful accounts | | $ | (0 | ) | | $ | (0 | ) |
| | | | | | | | |
Total | | $ | 0 | | | $ | 822,894 | |
7. | RELATED PARTY TRANSACTIONS: |
In the course of conducting its business, the Company conducted various business transactions with related parities on commercial terms.
Related parties and shareholders balances and transactions have been presented as follows:
Due from related parties | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
ASB Trading | | $ | 0 | | | $ | 6,000 | |
Emiko Yazi Tahalari ve Egitim Gerecleri A.S. | | $ | 0 | | | $ | 536,366 | |
Touch IT Technologies Koll. Sti.. Ronald George Murphy ve Ortaklari | | $ | 0 | | | $ | 132,236 | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 674,602 | |
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Due from shareholders | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Andrew Stuart Brabin | | $ | 0 | | | $ | 10,484 | |
Recp Tanisman | | $ | 0 | | | $ | 43,404 | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 53,888 | |
Due to related parties | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Kamron, Inc. | | $ | 159,064 | | | $ | 55,198 | |
ASB Trading | | $ | 106,254 | | | | | |
TouchIT Technologies Dis Tic Koll Sirketi | | $ | 0 | | | $ | 536,366 | |
Emko Emaye ve Yazi Tahtalari | | $ | 0 | | | $ | 534,177 | |
| | | | | | | | |
Total | | $ | 265,318 | | | $ | 1,125,741 | |
Due to shareholders | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Ali Riza Tanisman. | | $ | 0 | | | $ | 46,230 | |
Recep Tanisman | | $ | 0 | | | $ | 202 | |
Andrew Stuart Brabin | | $ | 0 | | | $ | 12,809 | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 59,241 | |
Major purchases from related parties | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Touch It Technologies Koll Sti Ronald George Murphy ve Ortakari | | $ | 0 | | | $ | 148,756 | |
TouchIT Education Technologies Dis Tic Koll Sti | | $ | 0 | | | $ | 141,260 | |
Emko Emaye ve Yazi Tahtalari | | $ | 0 | | | $ | 333,480 | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 623,496 | |
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Major sales to related parties | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
TouchIT Education Technologies Dis Tic Koll Sti | | $ | 0 | | | $ | 148,756 | |
Emko Emaye ve Yazi Tahtalari | | $ | 0 | | | $ | 0 | |
Emko Yazi Tahalari ve Egitim Gerecleri A.S | | $ | 0 | | | $ | 372,956 | |
Touch IT Technologies Koll. Sti Ronald Geroge Murphy ve Ortakari | | $ | 0 | | | $ | 127,340 | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 649,052 | |
Service provided by | | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
Kamron, Inc. | | $ | 159,064.00 | | | $ | 68,222 | |
Andrew Stuart Brabin | | $ | 0 | | | $ | 27,934 | |
ASB Trading | | $ | 106,253.00 | | | $ | 0 | |
Emko Yazi Tahalari ve Egitim Gerecleri A.S | | $ | 0 | | | $ | 1,730 | |
| | | | | | | | |
Total | | $ | 265,317.00 | | | $ | 97,886 | |
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Trade goods | | $ | 8,160 | | | $ | 530,116 | |
Advances given for purchases | | $ | 98,373 | | | | | |
| | | | | | | | |
Total | | $ | 106,533 | | | $ | 530,116 | |
As of September 30, 2011 and September 30, 2010, other receivables comprised of the following:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Prepaid Expense | | $ | 0 | | | $ | 4,424 | |
Advances given to personnel | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 4,424 | |
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
As of September 30, 2011 and September 30, 2011 non currents comprised of the following:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
Property, Plan and Equipment, net | | $ | 0 | | | $ | 60,440 | |
Intangible Assets, net | | $ | 0 | | | $ | 12,731 | |
License right | | $ | 230 | | | $ | 8,400 | |
Accumulated Depreciation | | $ | (0 | ) | | | | |
Other | | | | | | $ | 1,116 | |
Total | | $ | 230 | | | $ | 82,687 | |
Rights represent the operating licenses obtained from the Under Secretariat of the Prime Ministry for Foreign Trade. The validation date of the license has been extended from 10 to 15 years in 2010.
As of September 30, 2011 and September 30, 2010, trade payables were comprised of the following:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
Burns & Levinson | | $ | 60,325 | | | | | |
Danco Sales | | | 6,211 | | | | | |
Edgar Agents | | | 707 | | | | | |
Empire Stock Transfer | | | 150 | | | | | |
HSBC | | | 496 | | | | | |
Quizdom UK Ltd | | | 750 | | | | | |
Sean M Paradis | | | 16,096 | | | | | |
TouchIT Technologies | | | 504 | | | | | |
Xiamen Intech | | | 9,368 | | | | | |
Other | | | 79751 | | | | | |
Totals | | $ | 174,358 | | | $ | 0 | |
| | | | | | | | |
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
12. | OTHER CURRENT LIABILITIES |
As of September 30, 2011 and September 30, 2010, other current liabilities of the following:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 14,236 | |
The issued share capital of the Company is respectively for the period ended at September 30, 2011 and 2010 is comprised of the following:
| 30.09.2011 | | 30.09.2010 |
| Shares | | Shares |
| Outstanding | | Outstanding |
Andrew Stuart Brabin | 16,110,000 | | 16,110,000 |
Recep Tanisman | 16,110,000 | | 16,110,000 |
Ronald George Murphy | 16,110,000 | | 16,110,000 |
Total | 48,330,000 | | 48,330,000 |
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
The composition of sales by principal for the periods ended September 30, 2011 and 2010 can be summarized as follows:
| | 30/09/2011 | | | 30/09/2010 | |
| | | | | | |
CleverBoard | | $ | 389,575.00 | | | $ | 631,121.00 | |
TouchIT Board 50" | | $ | 9,639.00 | | | $ | 34,484.00 | |
TouchIT Board 78" | | $ | 297,097.00 | | | $ | 571,331.00 | |
TouchIT Board 80" | | $ | 40,726.00 | | | $ | 180,825.00 | |
TouchIT Board 90" | | $ | 24,231.00 | | | $ | 93,042.00 | |
Triumph Board 78" | | $ | 0.00 | | | $ | 136,060.00 | |
Triumph Board 50" | | $ | 0.00 | | | $ | 1,222.00 | |
Triumph Board 80" | | $ | 0.00 | | | $ | 52,386.00 | |
Electronic Parts | | $ | 416,336.00 | | | $ | 710,784.00 | |
Voting Systems | | $ | 4,738.00 | | | $ | 140,906.00 | |
Wireless Tablets | | $ | 5,500.00 | | | $ | 27,913.00 | |
LCD Components | | $ | 615.00 | | | $ | 0.00 | |
| | | | | | | | |
Others | | $ | 16,856.00 | | | $ | 107,352.00 | |
| | | | | | | | |
Returns (-) | | $ | -54,886.00 | | | $ | -10,490.00 | |
| | | | | | | | |
Total | | $ | 1,150,427.00 | | | $ | 2,676,936.00 | |
The composition of cost of sales by principal for the periods ended September 30, 2011 and 2010 can be summarized as follows:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
Beginning inventory of trade goods | | | | | | | | |
Purchases | | $ | 1,024,118 | | | $ | 1,798,579 | |
Ending inventory of trade goods (-) | | | | | | | | |
| | | | | | | | |
Total | | $ | 1,024,118 | | | $ | 1,798,579 | |
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
16. | MARKETING AND SELLING EXPENSES |
The composition of marketing and selling expenses by principal for the periods ended September 30, 2011 and 2010 are summarized as follows:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Marketing and Selling Expenses | | $ | 437,851 | | | $ | 349,041 | |
| | | | | | | | |
| | | | | | | | |
Total | | $ | 437,851 | | | $ | 349,041 | |
17. | GENERAL AND ADMINISTRACTIVE EXPENSES |
The composition of general and administrative expenses by the principal operations for the periods ended September 30, 2011 and 2010 are as follows:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
General and Administrative Expenses | | $ | 279,900 | | | $ | 275,980 | |
| | | | | | | | |
| | | | | | | | |
Total | | $ | 279,900 | | | $ | 275,980 | |
18. | OTHER INCOME AND (EXPENSES), net |
The composition of other income and expenses for the years September 30, 2011 and 2010 can be summarized as follows:
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
Other Income and Expenses | | $ | 235,904 | | | $ | (31,276 | ) |
| | | | | | | | |
| | | | | | | | |
Total | | $ | 235,904 | | | $ | (31,276 | ) |
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
19. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES |
The Company manages its capital to ensure that it will be able to continue as a going concern while maxizing the return to stockholders through the optimization of the debt and equity balance. The capital structure of the Company consists of debt, which includes the borrowings, cash and cash equivalents and equity, comprising issued capital reserves and retained earnings.
30.09.2011 | Financial assets at amortized cost | Loans and receivables | Financial liabilities as amortized cost | Carrying value | Fair Value |
Financial Assets | | | | | |
Cash | 65,974 | | 439,673 | 439,673 | 439,673 |
| | | | | |
| | | | | |
| | | | | |
30.09.2010 | | Financial assets at amortized cost | | | Loans and receivables | | | Financial liabilities as amortized cost | | | Carrying value | | | Fair Value | |
| | | | | | | | | | | | | | | | | |
Cash & Cash Equivalent | | | | - | | | $ | 41,966 | | | $ | 41,966 | | | $ | 41,966 | | | $ | 41,966 | |
Trade receivables (including related parties) | | | | - | | | $ | 1,497,496 | | | $ | 1,497,496 | | | $ | 1,497,496 | | | $ | 1,497,496 | |
Trade Payables | | | | - | | | | | | | $ | 1,301,865 | | | $ | 1,301,865 | | | $ | 1,301,865 | |
Financial risk factors
The Company’s activities expose it to a variety of financial risks, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets seeks to minimize potential adverse effects on the Company’s financial performance.
See Accountants Report
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Market risk
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates.
Foreign currency risk management
The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Foreign currency position, net for the periods ended September 30, 2011 and 2010 can be summarized as follows:
30.09.2011 | Financial assets at amortized cost | Loans and receivables | Financial liabilities as amortized cost | Carrying value | Fair Value |
| | | | | |
| - | - | - | - | - |
| | | | | |
30/09/10 | | | Foreign Currency | | | TRY | |
Cash | USD | | $ | 1,150.00 | | | | 1,669.00 | |
Banks | USD | | $ | 2,018.00 | | | | 2,928.00 | |
Due from related parties | USD | | $ | 674,602.00 | | | | 978,982.00 | |
Trade receivables | USD | | $ | 815,869.00 | | | | 1,237,990.00 | |
Due from shareholders | USD | | $ | 10,484.00 | | | | 15,214.00 | |
Advances given(Inventories) | USD | | $ | 67,225.00 | | | | 97,557.00 | |
Trade payables | USD | | $ | (42,593.00 | ) | | | (61,811.00 | ) |
Advances received (Other current liabilities) | USD | | $ | 0.00 | | | | 0.00 | |
Due to related party | USD | | $ | (1,125,741.00 | ) | | | (1,633,675.00 | ) |
Convertible Notes | USD | | $ | (750,000 | ) | | | (1,088,400.00 | ) |
Due to Shareholders | USD | | $ | (12,809.00 | ) | | | (18,588.00 | ) |
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2011
Credit risk management
Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in a financial loss to the company. The Company has adopted a policy of only dealing with creditworthy counterparties. The Company’s exposure and the credit ratings of it counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
Liquidity risk management
Liquidity risk arises from the fact that the Company may not receive funds from its counterparties at the expected time. This risk is managed by maintaining a balance between continuity of funding and flexibility through the use of overdrafts and trade receivables.
The following tables details the Company’s remaining contractual maturity for its non derivative financial liabilities. The tables have been drawn up on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.
| | | 30.09.2011 | | | | 30.09.2010 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total | | $ | 0 | | | $ | 0 | |
As filed on the 28th of October 2011, with the SEC in a Form 8K, On October 21, 2011, TouchIT Technologies, Inc (the “Company”), through its board of directors (the “Board of Directors”), accepted the resignation of Recep Tanisman as Chief Executive Officer and from all other positions he held with the Company. In conjunction with the resignation, the Board of Directors agreed to repurchase and return to treasury the 16,110,000 shares of common stock held by Mr. Tanisman in exchange for the assets and subsequent closure of the Company’s two (2) Turkish subsidiaries, TouchIT Technologies Koll Sti and TouchIT Education Koll Sti. In addition, the transaction cleaned up the balance sheet of the Company as Mr. Tanisman agreed to assume the liability of all of the existing Turkish debtors, and the Company assumed the liability for all non-Turkish debtors and creditors. In connection with the transaction, Mr. Tanisman also agreed to indemnify the Company against any future claims from him.
TOUCHIT TECHNOLOGIES, INC. |
BALANCE SHEET |
FOR THE PERIODS ENDED 30 SEPTEMBER 2011 & 2010 AND YEARS ENDED 31 DECEMBER 2010 & 2009 |
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated) |
CURRENT ASSETS | | 30/09/2011 | | | 31/12/2010 | | | 30/09/2010 | | | 31/12/2009 | |
| | | | | | | | | | | | |
Cash and cash equivalents | | | 65,974.00 | | | | 50,556.00 | | | | 41,966 | | | | 54,845.00 | |
Trade receivables, net | | | 0.00 | | | | 705,225.00 | | | | 822,894 | | | | 274,802.00 | |
Due from related parties | | | 0.00 | | | | 863,395.00 | | | | 674,602 | | | | 130,594.00 | |
Due from Shareholders | | | | | | | 50,585.00 | | | | 53,888 | | | | 0.00 | |
Inventories | | | 107,133.00 | | | | 365,643.00 | | | | 530,116 | | | | 259,883.00 | |
Other current assets | | | 0.00 | | | | 1,106.00 | | | | 4,424 | | | | 782.00 | |
| | | | | | | | | | | | | | | | |
Total current assets | | | 173,107.00 | | | | 2,036,510.00 | | | | 2,127,890 | | | | 720,906.00 | |
| | | | | | | | | | | | | | | | |
NON CURRENT ASSETS | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Property, plant and equipment, net | | | 230.00 | | | | 64,495.00 | | | | 60,440 | | | | 29,872.00 | |
Intangible assets, net | | | 0.00 | | | | 25,145.00 | | | | 12,731 | | | | 0.00 | |
Rights | | | 0 | | | | 0.00 | | | | 8,400 | | | | 14,976.00 | |
Other non current assets | | | 0.00 | | | | 3,555.00 | | | | 1,116 | | | | 3,725.00 | |
| | | | | | | | | | | | | | | | |
Total non current assets | | | 230.00 | | | | 93,195.00 | | | | 82,687 | | | | 48,573.00 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
TOTAL ASSETS | | | 173,337 | | | | 2,129,705.00 | | | | 2,210,577 | | | | 769,479.00 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | | | | | |
Borrowings | | | 0.00 | | | | 2,351.00 | | | | 5,471 | | | | 11,282.00 | |
Trade payables | | | 174,355.00 | | | | 124,745.00 | | | | 176,114 | | | | 70,619.00 | |
Due to shareholders | | | 0.00 | | | | 47,257.00 | | | | 59,241 | | | | 75,584.00 | |
Due to related parties | | | 265,318.00 | | | | 1,145,992.00 | | | | 1,125,741 | | | | 670,976.00 | |
Other current liabilities | | | 0.00 | | | | 73,233.00 | | | | 14,236 | | | | 120,619.00 | |
| | | | | | | | | | | | | | | | |
Total current liabilities | | | 439,673.00 | | | | 1,393,578.00 | | | | 1,380,803 | | | | 949,080.00 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
NON CURRENT LIABILITIES | | | | | | | | | | | | | | | | |
Borrowings | | | 104,917 | | | | - | | | | - | | | | 2,321 | |
Employee termination benefits | | | - | | | | - | | | | 247 | | | | - | |
Reserve for retirement pay | | | - | | | | 1,842 | | | | 686 | | | | 1,041 | |
Convertible Notes | | | 540,000 | | | | 750,000 | | | | 750,000 | | | | - | |
| | | | | | | | | | | | | | | | |
Total non current liabilities | | | 644,917 | | | | 751,842 | | | | 750,933 | | | | 3,362 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | | | |
Share capital | | | 127,570 | | | | 127,570 | | | | 125,500 | | | | 125,500 | |
Retained earnings | | | (643,285 | ) | | | (308,463 | ) | | | (308,463 | ) | | | (46,285 | ) |
Net income / (loss) for the period | | | (395,538 | ) | | | 173,899 | | | | 261,804 | | | | (262,178 | ) |
| | | | | | | | | | | | | | | | |
Total shareholders’ equity | | | (911,253 | ) | | | (7,004 | ) | | | 78,841 | | | | (182,963 | ) |
| | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND | | | | | | | | | | | | | | | | |
SHAREHOLDERS' EQUITY | | | 173,337 | | | | 3,138,416 | | | | 2,210,577 | | | | 769,479 | |
TOUCHIT TECHNOLOGIES, INC. |
STATEMENT OF COMPREHENSIVE INCOME |
FOR THE PERIODS ENDED 30 SEPTEMBER 2011 & 2010 AND YEARS ENDED 31 DECEMBER 2010 & 2009 |
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated) |
| | 30/09/2011 | | | 30/09/2010 | | | 31/12/2009 | |
NET SALES | | | 1,150,427 | | | | 2,676,936 | | | | 2,029,074 | |
COST OF SALES | | | 1,024,118 | | | | (1,798,549 | ) | | | (1,742,047 | ) |
Gross profit | | | 126,309 | | | | 878,387 | | | | 287,027 | |
MARKETING AND SELLING EXPENSE | | | 437,851 | | | | (349,041 | ) | | | (409,386 | ) |
GENERAL AND ADMINISTRATIVE EXPENSES | | | 339,900 | | | | (275,980 | ) | | | (140,121 | ) |
Profit from operations | | | (631,442 | ) | | | 253,366 | | | | (262,480 | ) |
OTHER INCOME AND EXPENSES, net | | | 57,876 | | | | (31,276 | ) | | | 6,621 | |
FINANCIAL INCOME AND EXPENSES, net | | | 178,028 | | | | (5,905 | ) | | | (8,741 | ) |
Profit Loss before taxation and currency translation gain/(loss) | | | (395,538 | ) | | | 216,185 | | | | (264,600 | ) |
TAXATION CHARGE | | | -- | | | | -- | | | | -- | |
Taxation current | | | -- | | | | -- | | | | -- | |
Deferred | | | -- | | | | -- | | | | -- | |
CURRENCY TRANSLATION GAIN/(LOSS) | | | -- | | | | 45,619 | | | | 2,422 | |
Net income/(loss) for the year | | | (395,538 | ) | | | 261,804 | | | | (262,178 | ) |
OTHER COMPREHENSIVE INCOME | | | -- | | | | -- | | | | -- | |
Total comprehensive income | | | (395,538 | ) | | | 261,804 | | | | (262,178 | ) |
TOUCHIT TECHNOLOGIES, INC. |
STATEMENT OF CASH FLOW |
FOR THE PERIODS ENDED 30 SEPTEMBER 2011 & 2010 AND YEARS ENDED 31 DECEMBER 2010 & 2009 |
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated) |
| | | | | | | | | | | | |
| | 30/09/2011 | | | 31/12/2010 | | | 30/09/2010 | | | 31/12/2009 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | (395,537 | ) | | | 165,178 | | | | 261,804 | | | | (262,178 | ) |
Net income | | | 0 | | | | | | | | | | | | | |
Adjustments to reconcile net income to net cash provided PPA | | | (492,337 | ) | | | | | | | | | | | | |
By operating activities: | | | (432,208 | ) | | | 17,516 | | | | 16,826 | | | | 17,133 | |
Depreciation and amortisation | | | -- | | | | 801 | | | | (108 | ) | | | 727 | |
Provision for employee benefit | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Changes in operating assets and liabilities | | | | | | | | | | | | | | | | |
Trade receivables, net | | | 1,619,205 | | | | (430,428 | ) | | | (548,092 | ) | | | (189,816 | ) |
Due from shareholders | | | | | | | (773,544 | ) | | | (53,888 | ) | | | 12,258 | |
Due from related parties | | | | | | | | | | | (544,008 | ) | | | 203,282 | |
Inventories | | | 258,510 | | | | (17,620 | ) | | | (270,233 | ) | | | 22,993 | |
Other current assets | | | 1,335 | | | | 98,467 | | | | (3,642 | ) | | | 3,896 | |
Other non current assets | | | | | | | 331 | | | | 2,609 | | | | (3,725 | ) |
Trade payables | | | 314,928 | | | | 54,126 | | | | 96,471 | | | | (272,925 | ) |
Due to shareholders | | | | | | | 54,413 | | | | (16,211 | ) | | | 30,430 | |
Due to related parties | | | | | | | 392,276 | | | | 463,657 | | | | 386,729 | |
Other current liabilities | | | (1,268,833 | ) | | | (47,386 | ) | | | (106,383 | ) | | | 95,332 | |
Convertible Notes | | | | | | | 750,000 | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net cash generated from (used for) operating activities | | | 36,671 | | | | 67,197 | | | | (701,198 | ) | | | 44,136 | |
| | | | | | | | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
Increase/(decrease) in short-term borrowings | | | | | | | (8,931 | ) | | | (5,811 | ) | | | 6,815 | |
Increase/(decrease) in long-term borrowings | | | (105,083 | ) | | | | | | | (2,321 | ) | | | (2,797 | ) |
Dividends paid | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Net cash (used for) provided from financing activities | | | (103,710 | ) | | | (8,931 | ) | | | (8,132 | ) | | | 4,018 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | | | | | |
Purchases of property, plant and equipment and intangible assets | | | 82,457 | | | | (62,304 | ) | | | (53,549 | ) | | | (17,324 | ) |
Share capital increase | | | | | | | | | | | 750,000 | | | | | |
| | | | | | | | | | | | | | | | |
Net cash used for investing activities | | | 82,457 | | | | (62,304 | ) | | | 696,451 | | | | (17,324 | ) |
| | | | | | | | | | | | | | | | |
NET INCREASE / (DECREASE) IN CASH AND BANKS | | | 15,418 | | | | (4,289 | ) | | | (12,878 | ) | | | 30,830 | |
| | | | | | | | | | | | | | | | |
CASH AND BANKS AT BEGINNING OF THE YEAR | | | 50,556 | | | | 54,845 | | | | 54,845 | | | | 24,015 | |
| | | | | | | | | | | | | | | | |
CASH AND BANKS AT END OF THE PERIOD | | | 65,974 | | | | 50,556 | | | | 41,967 | | | | 54,845 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Quarterly Report. This discussion and analysis may contain forward-looking statements based on assumptions about our future business. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Forward-Looking Statements
This Quarterly Report contains forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Management’s Discussion and Analysis or Plan of Operation,” “Business” and those listed in our other Securities and Exchange Commission (“SEC”) filings. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.
Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this Report.
Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Report.
Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside of our control, and involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made, including, but not limited to, the following:
● actual or anticipated fluctuations in our quarterly and annual operating results;
● actual or anticipated product constraints;
● decreased demand for our products resulting from changes in consumer preferences;
● product and services announcements by us or our competitors;
● loss of any of our key executives;
● regulatory announcements, proceedings or changes;
● announcements in the touch technology community;
● competitive product developments;
● intellectual property and legal developments;
● mergers or strategic alliances in the touch technology industry;
● any business combination we may propose or complete;
● any financing transactions we may propose or complete; or
● broader industry and market trends unrelated to its performance.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
Plan of OperationCOMPANY OVERVIEW
The ability of our Company to achieve our business objectives is contingent upon our success in raising additional capital until adequate revenues are realized from operations.
We are a manufacturer (via 3rd party contract manufacture) of touch based visual communication products for education and corporate worldwide marketplaces. Our mission is to design and manufacture high quality technology products. We manufacture a large range of touch screen and touch board products to suite all types of application from pen input wireless tablets, to large enameled steel touch-sensitive interactive whiteboards and large interactive Liquid Crystal Displays (“LCD”). Our products stand out from our competition in terms of our design, functionality and price offering. Our customers seek our products as they provide them with a different point of entry to the market in terms of price, quality of design and margin. Currently, demand for our products is exceeding our ability to supply.
COMPANY OVERVIEWIn the past three years, we have designed, manufactured, launched, developed and sold four new products as well as established the business from scratch and equipped a factory.
In our first year of trading, we exceeded revenues of $2 million USD having designed, manufactured, launched and sold four new products as well as established the business and equipped a factory. Our second full year of trading saw 176% growth as we expanded into world-wide markets.
We manufacture touch-based visual communication products for the education and corporate worldwide marketplaces. Our products stand out fromOn January 10, 2011, we forecasted our competition in terms2011 revenue projections to be $9 million. However, having had a slow first three quarters of design, functionality and price offering. Our customers seekthis year, our products as they provide themability to hit this target will depend upon whether we may obtain a different pointlarge number of entry to the market in terms of price, quality of design and margin. tender opportunities.
Our keys to success are:
1. Establish and maintain working relationships and contractual agreements with distribution and Original Equipment Manufacturer (“OEM”) customers;
2. Increase our profit margin by lowering the import and raw material costs by bulk purchasing from vendors;
3. By increasing our purchasing power, we can increase our stock holding and lowering delivery times to customers thus enabling further sales growth; and
4. Effectively communicate with our current and potential customers, through targeted efforts, our position as a differentiated provider of the highest quality of margin laden touch-based communication products.
Recent Developments
On May 7, 2010, we (which at that time was called Hotel Management Systems, Inc.), entered into a Share Exchange Agreement with TouchIT Tech KS, the stockholders of TouchIT Tech KS, TouchIT Ed, and the stockholders of Touch Ed. Both TouchIT Tech KS and TouchIT Ed are corporations formed under the laws of Turkey and are based in Istanbul, Turkey. The Closing took place on May 7, 2010.
On April 11, 2012,February 16, 2011, we borrowed Two Hundred Fifty Thousand Dollars ($250,000) (the “Advance”) from Bibby International Trade FinanceTCA Global Credit Master Fund, LP (the “Lender”) pursuant to a revolving credit facility evidenced by a Master PurchaseCredit Agreement with an effective date of April 11, 2012November 30, 2010 (the “MPA”“Credit Agreement”).
The MPA evidencesPursuant to the Credit Agreement, on February 16, 2011, our Company issued to the Lender One Hundred Thousand (100,000) shares of our common stock, par value at $0.001 per share (the “Restricted Shares”), which have piggy back registration rights as part of any registration statement filed by our Company and full ratchet rights and anti-dilution rights during the six months following February 16, 2011. Furthermore, we also issued to Lender Twenty-Five Thousand (25,000) shares of our Company's Series A convertible preferred stock, par value of $0.001, with such shares shall be converted into shares of common stock of our Company on February 16, 2012 upon the satisfaction of certain conditions (including if the value of the Restricted Shares is less than $45,000 on February 16, 2012 based on the average closing price for the 30 trading days prior thereto). On June 28, 2011, the economic of the preferred shares to the Lender was increased to $65,000 in consideration for extended terms on invoices presented in a revolvingslow sales period.
For all the terms and conditions of the Credit Agreement, the Security Agreement and the Note, reference is hereby made to such documents respectively filed as Exhibits 10.1, 10.2 and 10.3 as part of the Form 8-K filed with the SEC on February 23, 2011. All statements made herein concerning the foregoing document are qualified by reference to said Exhibits.
We have seen that the credit line has increased the liquidity of our business by improving cash flow and reducing the debtor days for an average of 45 down to less than 15. We expect to continue to use this credit facility for the purchaseforeseeable future. The decision to increase this line will be dependent on the increase of eligible receivables (those from the Company’s accounts receivable up toUSA and UK) and management will make a decision based on sales history and forecasts from the principal amount of $250,000, which subject to Lender approval, may be increased. The outstanding principal amount is due on April 11, 2013. This facility was renewed for a further year on April 11, 2013.customer base.
The Advance is securedOn October 21, 2011, we, through our Board of Directors, accepted the resignation of Recep Tanisman as Chief Executive Officer and from all other positions he held with the Company. In conjunction with the resignation, our Board of Directors agreed to repurchase and return to treasury the 16,110,000 shares of common stock held by among other things, (i)Mr. Tanisman in exchange for the MPA made byassets and betweensubsequent closure of our Companytwo (2) Turkish subsidiaries, TouchIT Tech KS and TouchIT Ed. In addition, the Lender pursuanttransaction cleaned up our balance sheet as Mr. Tanisman agreed to whichassume the Borrower has granted a security interest inliability of all of the Borrower's assetsexisting Turkish debtors, and we will now assume the liability for all non-Turkish debtors and creditors. Furthermore, in connection with the transaction, Mr. Tanisman agreed to indemnify us against any future claims from him.
During the Lender (the "Security Agreement"), (ii) a personal guaranty and validity guaranty executed by Andrew Brabin, Chief Executive Officerfiscal quarter ended September 30, 2011, we have also transitioned the manufacture of our Company.products from our facility in Istanbul, Turkey to Taiwan. Management believes that in the long term, we will benefit from reduced overheads, a higher quality of product and the increased availability of personnel with a high technical ability. We have seen that our results for the fiscal quarter ended September 30, 2011 were affected by the transition of the production facility from Turkey to Taiwan. However, we have begun to fulfill the back orders that we have been holding for our customers and production is now fully up to speed.
The MPA also includes customary representations and warranties and affirmative and negative covenants, including, among others, payment of certain customary fees and expenses, covenants relating to financial reporting, maintenance of property and insurance, incurrence of liens and/or other indebtedness. The MPA also contains customary provisions for events of default, remedies in circumstances of default, required notices, governing law and jurisdiction of governance.
We have now completed the development and the establishment of a production line in Taiwan for a new rangethe Interactive LCD products which we plan to launch in the fourth quarter of Interactive LED products. Supply of LCD panels has become challenging as panel manufacturers have sent many models end of life in favor of the LED equivalent.2011. These products will include Interactive LEDs, witha 42”, a 55”, and without an embedded PC in sizes from 32” to 80”. The unique feature for the range of LEDs is that they do not require a driver to be installed, nor do they require any form of calibration by the user. These are true plug and play devices.65” LCD. All of these products arewill be full high definition and touch-based, and may include options of multiple input “multi-touch”. We have also launched the TouchIT LED Fusion which is three interactive products in one. An Interactive LED, and Interactive Easel and an Interactive Table. This is a revolutionary product as it takes us into new group collaboration markets. Management believes the LED range of product will give us an advantage in the marketplace as the competition try and catch up with their own development. on these models.
We have finishedshipped product through Cascade School Supplies (USA) in conjunction with Schoolhouse Reps to the development ofBurlington Public School System (“School System”) in Massachusetts, USA. This was a new range of four point touch models of LED. These models were launched at the beginningsignificant order for us as it encompassed five of the quarter. These models have some unique features especially concerning the Apple Macintosh Operating System (“MAC OS”). Traditionally, MAC OS only allows for third party touch screens to operate in single touch mode. However, we have developed a range of LED screens that allow for multi-touch gesture support in MAC OS. Management believes that this new feature will give the Company a unique sales pointschools in the marketplaceschool system having TouchIT Boards installed. In the near future, there may be more schools in the School System that will require similar products to be installed. We also undertook several training sessions with the teachers of the School System. The School System has now become a case study for us and will also appeal the growing number of MAC users World-Wide. These modelsis an excellent example to draw on. We and our partners are now sold in all our markets world-wide.
TouchIT has been awarded with the CTICK standard mark for its range of LED product in Australia. After several weeks of testing the standard can now be applied to its products. Furthermore, the product has also been approved for governmental use during the same testing procedure. Management believes that this will give the Company a competitive advantage in governmental tenders where the competition does not have such suitability certification.
We launched and sold into the Australian marketplace a range of IP65 (A standard for all weather, outdoor and sunlight readable products) LCD & LED panels. The Company is able to offer these models in both touch and non-touch formats. Management believes that our niche for this particular product line is the Company’s ability to do small custom design builds of the products for customers that other manufacturers may not entertain. This is a range of products that if successful in the Australian marketplace we will roll out world-wide. The Company has sold these into both private (Perth International Rugby Stadium) and government (Western Australian Government) entities in Australia and these were installed in Quarter 2 2013 through our distributor Ingram Micro. There is an increase in demand for this kind of product in Australia and Management believes we will lookhoping to expand this category laterto the neighboring school systems for similar projects in the year.early 2012.
We have sold unitscontinued our efforts of expanding our product line through elementary school and secondary school markets, as well as the higher educational market. We are working on opportunities in Michigan and higher educational institutions in upstate New York.
We look to expand our reseller base with PCMall.gov, Cascade, US Markerboard and look to expand into the United States, AustraliaCanadian marketplace with several interested parties looking at the TouchIT product lines.
We have had additional interest from the US government on our interactive boards and Interactive LCD.
We have shipped our products this quarter directly through CSN stores. We have continued to work with DEMCO, based out of Madison, WI. DEMCO is a large educational / Library / Furniture company that sell throughout the USA into the educational library markets with whom we signed an OEM agreement this quarter.
We now have around forty resellers throughout the USA that we support through our distribution network that sell TouchIT branded products to numerous vertical markets. We will continue to work with our partners and grow the sales channel.
We have targeted the retail marketplace and partnered with the Sales and Marketing Team, Berberian Associates Group covering New England, Florida, Midwest and the South in order to take our product line to the retail, online, educational and enterprise channels. Established for over 30 years, Berberian Associates have a wealth of experience in Sales and Marketing of technology products. They represent a host of brands and have the necessary infrastructure to help grow businesses. Berberian Associates completed sales training on the products and began the product introductions to some of the largest retailers in the USA. We have signed initial vendor agreements with large U.S. retailers.
We entered the Australian market place by partnering with Ingram Micro PTY (“Ingram Micro”). Having a successful product launch at the Integrate Sydney 2011 Trade Show in September, Ingram Micro has begun to sell our products to its resellers. Ingram Micro will also be looking to push our product line into the various tenders that are open in Australia.
We have continued our expansion into the Middle East with presentations made directly to the Ministry of Education in Abu Dhabi. The Ministry has ongoing large projects for new schools where it is considering the new LED product line. The company has received excellent feedback on these models and Management expects that by Quarter 4 2013, the LED range will be 75%purchase of revenue. The LED range represents a higher ticket item which will impact revenues and also presents a greater margin opportunity which Management believes will have a positive impact on profits.our products as it is planning to equip all classrooms with Interactive Whiteboards.
With our partner DEMCO, we participated in the American Library Association show in Chicago 27th June 2nd July. Management believes that weWe will continue to see continued revenues from Demco. Demco is currently waiting to take deliverylook into the viability of an order whichOEM offering of a content software that is destinedsuitable for both 7-11 and 11-16 age groups. If concluded, the Madison, WI Public Library System.software will be sold in conjunction with our existing products to strengthen our product portfolio.
SalesLast, we have undertaken and completed significant research and development of TouchIT WIS continue to increase. TouchIT WIS TouchIT "WIS" (Wireless Interactive Screen, pronounced "WIZ") is a wireless presentation system. TouchIT "WIS" allows a group of students in a class or business professionals in a meeting room to take turns in presenting from their Windows or MAC computer or evennew products, including a mobile device, which are connected wirelessly tostand with integrated projector mount and a document camera and a new wireless tablet. Management hopes that these new products may launch by the TouchIT LED Duo transmitting in full HD. The increase of Bring Your Own Device (BYOD) initiatives is proving that there is a strong market for this variantend of the TouchIT LED product line.
With our partner Shiffler Inc, we participated in School Dude University in Myrtle Beach SC, USA. This mini-tradeshow event gave the Company some prestigious exposure amongst the attendees of the event, as corporate sponsorship is limited to a select few.
At the request of the Apple Division at Ingram Micro Australia, we participated in the Apple Mobility Roadshow. This was a series of events in Brisbane, Melbourne, and Sydney where we showcased our 4 point touch LED and the gesture support that it has under the MAC operating system. This was the first outing for this product and the feedback that we received from the specialist MAC resellers was encouraging. Management believes that this will lead to revenue being recognized in Q3 as a direct result of this event.
We participated in the ISTE Trade Show in San Antonio TX, USA in July. This is the Company’s main educational trade show event for the year. The Company’s exhibition booth was focused around the LED product range where we displayed 4 stations of LED along with the Fusion. We received over 100 leads from the show that Management believes will generate revenue for the company in Q3 2013.
The Company is finalizing a new Digital Signage product that it will launch in Q3 2013. This product will comprise of a standalone player and signage software. The Company has been receiving a number of requests for such a product. The product will be unique in that it will be able to cater for all types of digital signage, moreover touch and non-touch applications with the same piece of software. This is something that most of the competition do not cater for. The go to market strategy for this new product will be to target both the touch and non-touch applications. Therefore, this product will take us into a different vertical market of signage which Management believes will become a revenue stream for the Company by Q4 2013.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The accompanying financial statements include the financial statements of TouchIT Tech KS and TouchIT Ed. Although not significant, it should be noted that inter-company transactions and balances do exist and have not been consolidated. TouchIT Tech KS and TouchIT Ed together are also referred to as the “Company.”
This management's discussion and analysis of our financial condition and results of operations are based on the financial statements of both TouchIT Tech KS and TouchIT Ed, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we will evaluate these estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis:
Basis of presentation financial statements:
Our Company maintains itsWe maintain our books of account and prepares itsprepare our statutory financial statements in accordance with accounting principles in the United States of America and tax legislation. The accompanying financial statements are based on the statutory records, with adjustments and reclassifications, for the purpose of fair presentation in accordance with United States generally accepted accounting principles (“US GAAP”).principles.
There are inter-company transactions that have not been consolidated on these financial statements.
Revenue recognition:
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for customer returns, rebates, and other similar allowances.
Inventories:
Inventories are stated at the lower of cost or net realizable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of inventory being valued on the weighted average basis. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to deliver service.
Property, plant and equipment:
Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses, if any. Depreciation is charged so as to write off the cost of assets, other than land and construction in progress, over their estimated useful lives, using straight line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
The ranges of estimated useful lives are as follows:
- | Machinery and equipments: 2-6 years |
- | Furniture, fixtures and office equipments: 4-5 years |
Shipping and handling:
Shipping and handling costs related to costs of the raw material purchased is included in cost of revenues.
Research and development costs:
Research and development costs are expensed as incurred. The costs of material and equipment that are acquired or constructed for research and development activities, and have alternative future uses, either in research and development, marketing, or sales, are classified as property and equipment or depreciated over their estimated useful lives.
Company reporting year end:
We use a calendar year as our fiscal year ending December 31.
RESULTS OF OPERATIONS
TOUCHIT TECHNOLOGIES, INCINC. STATEMENTS OF COMPREHENSIVE INCOME
FOR QUARTER ENDED JUNESEPTEMBER 30, 20132011 & 20122010
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)
| | 30/09/2011 | | | 30/09/2010 | |
NET SALES | | | 1,150,427 | | | | 2,676,936 | |
COST OF SALES | | | 1,024,118 | | | | (1,798,549 | ) |
Gross profit | | | 126,309 | | | | 878,387 | |
MARKETING AND SELLING EXPENSE | | | 437,851 | | | | (349,041 | ) |
GENERAL AND ADMINISTRATIVE EXPENSES | | | (339,899 | ) | | | (275,980 | ) |
Profit from operations | | | (631,442 | ) | | | 253,366 | |
OTHER INCOME AND EXPENSES, net | | | 57,876 | | | | (31,276 | ) |
FINANCIAL INCOME AND EXPENSES, net | | | 178,028 | | | | (5,905 | ) |
Profit Loss before taxation and currency translation gain/(loss) | | | (395,538 | ) | | | 216,185 | |
TAXATION CHARGE | | | -- | | | | -- | |
Taxation current | | | -- | | | | -- | |
Deferred | | | -- | | | | -- | |
CURRENCY TRANSLATION GAIN/(LOSS) | | | -- | | | | 45,619 | |
Net income/(loss) for the year | | | (395,538 | ) | | | 261,804 | |
OTHER COMPREHENSIVE INCOME | | | -- | | | | -- | |
Total comprehensive income | | | (395,538 | ) | | | 261,804 | |
NET SALES (REVENUE) – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, revenue has decreased by 67% or by $1,526,509 from $2,676,936 to $1,150,427. This decrease can be attributed to a slow down in the market due to uncertain budgetary commitments from certain of our customers. This decrease can also be attributed to our transition from manufacturing in Turkey to manufacturing in Taiwan, as there was a “down time” during the third quarter when we were unable to ship any products. Going forward, we plan to increase our focus on the development of recurring business in existing and new markets in lieu of non-recurring tender business. We are also looking to break into the retail market (Business to Business Divisions) of some of the larger retailers in the USA. Our management anticipates that revenues will continue to grow for the remaining of the year due to the back orders that already have been placed. We are also shipping the LCD product line in the fourth quarter, which represents a much larger ticket item that will drive our revenues higher.
GROSS PROFIT – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, gross profit has decreased by $758,078 from $752,123 to $126,309. This is primarily due to the decrease in sales revenue.
OPERATIONAL PROFIT – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, operational profit has decreased from $253,366 to an operational loss of ($631,442), a decrease of $378,076. This can be attributed to the maintenance of overhead coupled with a drop in sales before transitioning production to Taiwan. The operational costs did not decrease when revenue decreased. The move to Taiwan improves the financial position of our Company as there are no fixed overheads associated with the production of the products.
| | 30/06/2011 | | | 30/06/2010 | | | 31/12/2009 | |
| | | | | | | | | |
MARKETING AND SELLING EXPENSE | | | (437,851 | ) | | | (349,041 | ) | | | (409,386 | ) |
As a percentage of revenue | | | 38 | % | | | 13 | % | | | 20 | % |
GENERAL AND ADMINISTRATIVE EXPENSES | | | (339,899 | ) | | | (275,980 | ) | | | (140,121 | ) |
As a percentage of revenue | | | 30 | % | | | 10 | % | | | 7 | % |
NET INCOME FOR THE PERIOD – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, NET income for the period has decreased by $133,734 from $261,804 to a net loss of ($395,538). This decrease can be attributed to the decrease in revenue with an increase in expenditure as we put in place the marketing mechanisms for our business to grow.
TOUCHIT TECHNOLOGIES, INC BALANCE SHEET AT SEPTEMBER 30, 2011 & 2010
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)
CURRENT ASSETS | | 30/09/2011 | | | 30/09/2010 | |
| | | | | | |
Cash and cash equivalents | | | 65,974.00 | | | | 41,966 | |
Trade receivables, net | | | 0.00 | | | | 822,894 | |
Due from related parties | | | 0.00 | | | | 674,602 | |
Due from Shareholders | | | | | | | 53,888 | |
Inventories | | | 107,133.00 | | | | 530,116 | |
Other current assets | | | 0.00 | | | | 4,424 | |
| | | | | | | | |
Total current assets | | | 173,107.00 | | | | 2,127,890 | |
| | | | | | | | |
NON CURRENT ASSETS | | | | | | | | |
| | | | | | | | |
Property, plant and equipment, net | | | 230.00 | | | | 60,440 | |
Intangible assets, net | | | 0.00 | | | | 12,731 | |
Rights | | | 0.00 | | | | 8,400 | |
Other non current assets | | | 0.00 | | | | 1,116 | |
| | | | | | | | |
Total non current assets | | | 230.00 | | | | 82,687 | |
| | | | | | | | |
| | | | | | | | |
TOTAL ASSETS | | | 173,337 | | | | 2,210,577 | |
| | | | | | | | |
| | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Borrowings | | | 0.00 | | | | 5,471 | |
Trade payables | | | 174,355.00 | | | | 176,114 | |
Due to shareholders | | | 0.00 | | | | 59,241 | |
Due to related parties | | | 265,318.00 | | | | 1,125,741 | |
Other current liabilities | | | 0.00 | | | | 14,236 | |
| | | | | | | | |
Total current liabilities | | | 439,673.00 | | | | 1,380,803 | |
| | | | | | | | |
| | | | | | | | |
NON CURRENT LIABILITIES | | | | | | | | |
Borrowings | | | 104,917 | | | | - | |
Employee termination benefits | | | - | | | | 247 | |
Reserve for retirement pay | | | - | | | | 686 | |
Convertible Notes | | | 540,000 | | | | 750,000 | |
| | | | | | | | |
Total non current liabilities | | | 644,917 | | | | 750,933 | |
| | | | | | | | |
| | | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | |
Share capital | | | 127,570 | | | | 125,500 | |
Retained earnings | | | (143,285 | ) | | | (308,463 | ) |
Net income / (loss) for the period | | | (355,538 | ) | | | 261,804 | |
| | | | | | | | |
Total shareholders’ equity | | | (371,253 | ) | | | 78,841 | |
| | | | | | | | |
TOTAL LIABILITIES AND | | | | | | | | |
SHAREHOLDERS' EQUITY | | | 173,337 | | | | 2,210,577 | |
CURRENT ASSETS – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, total current assets have decreased $1,954,783. This decrease is due to a decrease in sales revenue resulting in a decrease in trade receivables. These decreased from $822,894 at September 30, 2010 to $0 at September 30, 2011. We have also decreased our inventory holding moving to a “just in time” supply rather than overstocking which in turn helps cash flow. Monies owed from related parties and from shareholders have also decreased representing a reduction in assets of $728,490
NON-CURRENT ASSETS – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, total non-current assets have decreased by 99% or $82,456. This is mainly due to the transition of production from Turkey to Taiwan and the sale of the assets in the Turkish facilities.
TOTAL ASSETS – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, total assets have decreased by 92% or $2,037,239 from $2,210,577 to $173,337. The reason for the decrease in assets can be attributed to the decrease in Trade Receivables which is directly related to the drop in revenue, the decrease in dues from related parties and shareholders, and the move of production from Turkey to Taiwan.
CURRENT LIABILITIES – For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, total current liabilities have decreased by 68% or $941,130 from $1,380,803 to $439,673. Trade payables have decreased by 1% or $1,759, which can be attributed to our increased ability to pay for inventory and services through regular cash flow. Monies owed to related parties has decreased by $860,423 or 76%. This is due to less inter-company transactions between the Turkish subsidiaries that are now closed which were not consolidated.
NON-CURRENT LIABILITIES - For the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010, non-current liabilities have increased by $106,016 which can be attributed to the ABL Lending facility provided by TCA Global Credit Master Fund LLP being utilized by us.
Convertible Notes
Two 8% convertible notes due May 17, 2015 in the principal amounts of $400,000 and $100,000, respectively, on the balance sheets as of the dates indicated (collectively, the "Convertible Notes"), and accrued interest payable under the Convertible Notes. The Convertible Notes were issued in connection with certain subscription agreements entered into by the Company and the related share exchange agreement dated May 7, 2010 among the Company, TouchIt Tech KS, the stock holders of TouchIt Tech KS, TouchIt Ed, and the stockholders of TouchIt Ed (the "Share Exchange Agreement"), pursuant to which we entered into various agreements with purchasers of the Convertible Notes.
As of September 30, 2011, we owed approximately $500,000 in aggregate principal amount and $40,000 in accrued interest.
TOUCHIT TECHNOLOGIES, INC. STATEMENT OF CASH FLOW FOR QUARTERS ENDED
SEPTEMBER 30, 2011 & 2010
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)
| | 36/06/2013 | | | 30/06/2012 | |
| | | | | | |
NET SALES | | | 800,189 | | | | 505,685 | |
COST OF SALES | | | 550,489 | | | | 353,002 | |
Gross profit | | | 249,700 | | | | 152,683 | |
MARKETING AND SELLING EXPENSE | | | 14,717 | | | | 37,458 | |
GENERAL AND ADMINISTRATIVE EXPENSES | | | 163,599 | | | | 165,317 | |
Profit from operations | | | 71,384 | | | | (50,092 | ) |
OTHER INCOME AND EXPENSES,net | | | 9,021 | | | | 1,200 | |
FINANCIAL INCOME AND EXPENSES, net | | | -- | | | | -- | |
Profit Loss before taxation and currency translation gain/(loss) | | | 80,405 | | | | (48,892 | ) |
TAXATION CHARGE | | | -- | | | | -- | |
Taxation current | | | -- | | | | -- | |
Deferred | | | -- | | | | -- | |
CURRENCY TRANSLATION GAIN/(LOSS) | | | -- | | | | -- | |
Net income/(loss) for the year | | | 80,405 | | | | (48,892 | ) |
OTHER COMPREHENSIVE INCOME | | | -- | | | | -- | |
Total comprehensive income | | | 80,405 | | | | (48,892 | ) |
NET SALES (REVENUE) – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, revenue has increased by 58% or by $294,504 from $505,685 to $800,189. This increase can be attributed to a change in strategy by Management. Our going forward sales activity reflects our management’s plan of increasing focus on the development of recurring business in existing and new markets for the new Interactive LED Line. Our management does anticipate that revenues will continue to grow for the balance of the year due to the LED product line which represents a much larger value ticket item which will drive revenues higher and the current back order that the Company has built up. | | 30/09/2011 | | | 30/09/2010 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net income | | | (355,537 | ) | | | 261,804 | |
Adjustments to reconcile net income to net cash provided | | | | | | | | |
By operating activities: | | | 925,145 | | | | 16,826 | |
Depreciation and amortisation | | | -- | | | | (108 | ) |
Provision for employee benefit | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Changes in operating assets and liabilities | | | | | | | | |
Trade receivables, net | | | 1,619,205 | | | | (548,092 | ) |
Due from shareholders | | | | | | | (53,888 | ) |
Due from related parties | | | | | | | (544,008 | ) |
Inventories | | | 258,510 | | | | (270,233 | ) |
Other current assets | | | 1,335 | | | | (3,642 | ) |
Other non current assets | | | | | | | 2,609 | |
Trade payables | | | 314,928 | | | | 96,471 | |
Due to shareholders | | | | | | | (16,211 | ) |
Due to related parties | | | | | | | 463,657 | |
Other current liabilities | | | (1,268,833 | ) | | | (106,383 | ) |
Convertible Notes | | | | | | | | |
| | | | | | | | |
Net cash generated from (used for) operating activities | | | 569,608 | | | | (701,198 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Increase/(decrease) in short-term borrowings | | | | | | | (5,811 | ) |
Increase/(decrease) in long-term borrowings | | | (646,925 | ) | | | (2,321 | ) |
Dividends paid | | | | | | | | |
| | | | | | | | |
Net cash (used for) provided from financing activities | | | (646,925 | ) | | | (8,132 | ) |
| | | | | | | | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Purchases of property, plant and equipment and intangible assets | | | 92,735 | | | | (53,549 | ) |
Share capital increase | | | | | | | 750,000 | |
| | | | | | | | |
Net cash used for investing activities | | | 92,735 | | | | 696,451 | |
| | | | | | | | |
NET INCREASE / (DECREASE) IN CASH AND BANKS | | | 50,556 | | | | (12,878 | ) |
| | | | | | | | |
CASH AND BANKS AT BEGINNING OF THE YEAR | | | 15,418 | | | | 54,845 | |
| | | | | | | | |
CASH AND BANKS AT END OF THE PERIOD | | | 65,974 | | | | 41,967 | |
GROSS PROFIT – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, gross profit has increased by $97,017 from $152,683 to 249,700. This is primarily due to the restructuring of the business over the last year and the focus on the more profitable LED product line. Our management does anticipate gross profits to continue to rise for the balance of the year.
OPERATIONAL PROFIT – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, operational profit has increased from $(50,092) to $71,384 an increase of $121,476. This can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.
| | 30/06/2013 | | | 30/06/2012 | |
| | | | | | |
MARKETING AND SELLING EXPENSE | | $ | 14,717 | | | $ | 37,458 | |
As a percentage of revenue | | | 2 | % | | | 7 | % |
GENERAL AND ADMINISTRATIVE EXPENSES | | $ | 37,458 | | | $ | 165,317 | |
As a percentage of revenue | | | 5 | % | | | 33 | % |
NET INCOME FOR THE PERIOD – For the first sixnine months of the year, quarter ended JuneSeptember 30, 2013,2011, as compared to the sixnine months ended JuneSeptember 30, 2012,2010, NET income for the period has increaseddecreased by $129,297$133,734 from $(48,892)$261,804 to $80,405.($395,538). This decrease can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.
TOUCHIT TECHNOLOGIES, INC BALANCE SHEET AT JUNE 30, 2013 & 2012
(Amounts expresseddecrease in US Dollars (USD) in full unless otherwise indicated)
CURRENT ASSETS | | 30/06/2013 | | | 30/06/2012 | |
| | | | | | |
Cash and cash equivalents | | | 9,722 | | | | 15,584 | |
Trade receivables, net | | | 201,339 | | | | 122,194 | |
Due from related parties | | | - | | | | - | |
Due from Shareholders | | | - | | | | - | |
Inventories | | | 68,829 | | | | 32,419 | |
Other current assets | | | | | | | | |
| | | | | | | | |
Total current assets | | | 279,890 | | | | 170,196 | |
| | | | | | | | |
NON CURRENT ASSETS | | | | | | | | |
| | | | | | | | |
Property, plant and equipment,net | | | 5,353 | | | | 2,032 | |
Other Assets | | | - | | | | | |
Other non current assets | | | 400,000 | | | | 400,000 | |
| | | | | | | | |
Total non current assets | | | 405,353 | | | | 402,032 | |
| | | | | | | | |
TOTAL ASSETS | | | 685,243 | | | | 572,228 | |
| | | | | | | | |
CURRENT LIABILITIES | | | | | | | | |
Borrowings | | | - | | | | - | |
Trade payables | | | 218,517 | | | | 143,672 | |
Due to shareholders | | | - | | | | - | |
Due to related parties | | | 189,499 | | | | 324,499 | |
Other current liabilities | | | 153,808 | | | | 47,260 | |
| | | | | | | | |
Total current liabilities | | | 561,824 | | | | 525,431 | |
| | | | | | | | |
NON CURRENT LIABILITIES | | | | | | | | |
Borrowings | | | - | | | | 71,841 | |
Employee termination benefits | | | - | | | | - | |
Reserve for retirement pay | | | - | | | | - | |
Share purchase advances | | | - | | | | - | |
| | | | | | | | |
Total non current liabilities | | | - | | | | 71,841 | |
| | | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | |
Share capital | | | 507,428 | | | | 544,303 | |
Retained earnings | | | (464,415 | ) | | | (520,454 | ) |
Net income / (loss) for the period | | | 80,406 | | | | (48,893 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 123,419 | | | | (25,044 | ) |
| | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | | 685,243 | | | | 572,228 | |
CURRENT ASSETS – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, total current assets have increased by $109,694 or 64%. This increase is primarily due torevenue with an increase in Trade Receivables which have increased by 65% when comparedexpenditure as we put in place the marketing mechanisms for our business to the same period in 2012.grow.
NON-CURRENT ASSETS – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, total non-current assets have increased by $3,321 or 1%. This is mainly due to a small increase in fixed assets on the Company’s balance sheet.
TOTAL ASSETS – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, total assets have increased by $113,015 or 20% from $572,228 to $685,243. The reason for the increase in assets is primarily due to an increase in Trade Receivables which have increased by 65% when compared to the same period in 2012.
CURRENT LIABILITIES – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, total current liabilities have increased by $36,393 from $525,431 to $561,824, a 7% increase. Trade payables have increased by 52% or $74,845, which can be attributed to the trade credit that is being offered to the Company from the LED supplier.
NON-CURRENT LIABILITIES - For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012 they have decreased by $71,841 from $71,841 to zero. This can be attributed to a reduction in Company borrowings.
TOUCHIT TECHNOLOGIES, INC STATEMENT OF CASH FLOW FOR QUARTERS ENDED
JUNE 30, 2013 & 2012
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)
| | 30/06/2013 | | | 30/06/2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net income | | | 80,405 | | | | (48,892 | ) |
Adjustments to reconcile net income to net cash provided | | | 2,056 | | | | (436,865 | ) |
By operating activities: | | | | | | | | |
Depreciation and amortisation | | | 723 | | | | | |
Provision for employee benefit | | | -- | | | | -- | |
| | | | | | | | |
Changes in operating assets and liabilities | | | | | | | | |
Trade receivables, net | | | (137,169 | ) | | | 118,674 | |
Due from shareholders | | | -- | | | | -- | |
Due from related parties | | | -- | | | | -- | |
Inventories | | | 42,632 | | | | 23,270 | |
Other current assets | | | -- | | | | -- | |
Other non current assets | | | -- | | | | -- | |
Trade payables | | | 133,664 | | | | 30,869 | |
Due to shareholders | | | -- | | | | -- | |
Due to related parties | | | -- | | | | -- | |
Other current liabilities | | | 142,498 | | | | 19,870 | |
Share Purchase Advances | | | | | | | | |
| | | | | | | | |
Net cash generated from (used for) operating activities | | | 264,808 | | | | (293,074 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Increase/(decrease) in short-term borrowings | | | (261,499 | ) | | | -- | |
Increase/(decrease) in long-term borrowings | | | | | | | 238,574 | |
Dividends paid | | | -- | | | | -- | |
| | | | | | | | |
Net cash (used for) provided from financing activities | | | (261,499 | ) | | | 238,574 | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Purchases of property, plant and equipment and intangible assets | | | -- | | | | (205 | ) |
Share capital increase | | | | | | | | |
| | | | | | | | |
Net cash used for investing activities | | | -- | | | | (205 | ) |
| | | | | | | | |
NET INCREASE / (DECREASE) IN CASH AND BANKS | | | 3,309 | | | | (54,705 | ) |
| | | | | | | | |
CASH AND BANKS AT BEGINNING OF THE YEAR | | | 6,413 | | | | 70,289 | |
| | | | | | | | |
CASH AND BANKS AT END OF THE PERIOD | | | 9,722 | | | | 15,584 | |
NET INCOME FOR THE PERIOD – For the first six months of the year, quarter ended June 30, 2013, as compared to the six months ended June 30, 2012, NET income for the period has increased by $129,297 from $(48,892) to $80,405. This can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.
NET CASH GENERATED FOR OPERATING ACTIVITIES – For the first sixnine months of the year, quarter ended JuneSeptember 30, 2013,2011, as compared to the sixnine months ended JuneSeptember 30, 2012,2010, NET cash generated for operating activities was $264,808$569,608 compared to $(293,074)$(701,198) which is ana increase of $557,882.$1,270,805. This can be attributed primarily in the increasenegative accrued liabilities of credit from Trade Payables and Other Liabilities.$(1,268,833).
Cash flow in general has improved as we make use of the Credit Facility from our Lender. This has reduced the debtor days from an average of 45 to 15 or less on eligible accounts from the UK, USA and Australia. However, with sales being down, we have not been able to make full use of this facility. Our management expects to utilize the facility to its full extent as our business grows.
grows in these countries.
CASH FLOW FROM FINANCING ACTIVITES – For the first sixnine months of the year, quarter ended JuneSeptember 30, 2013,2011, as compared to the sixnine months ended JuneSeptember 30, 2012,2010, cash flow from financing activities was $(261,499)$(646,925) compared to $238,574$(8,132) at JuneSeptember 30, 2012.2010. This wasis due to the restructuring of our credit lines and the switch from TCA’s structure to that of our current Lender BITF.a decrease in long term borrowings.
CASH POSITION. There was a NET decreaseincrease in the cash and cash equivalents of $5862$24,007 from the beginning of the period through JuneSeptember 30, 2013.2011. This change in cash position can be attributed to being normal in course of regular businessbusiness. We generally pay our suppliers on 30 day terms and as a business, remain to be cash poor with low cash reserves.terms.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
We are a “smaller reporting company” (as defined by Rule 12b-2 of the Exchange Act) and are not required to provide the information required under this item.
Item 4. | Controls and Procedures. |
(a) Disclosure Controls and Procedures
Regulations under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controls and procedures,” which are defined to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.
We carried outconducted an evaluation, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of JuneSeptember 30, 2013,2011, our disclosure controls and procedures were not effective at the reasonable assurance level but we did identifydue to the material weaknesses described below.
A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following sixthree material weaknesses in our disclosure controls and procedures:
1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
3. We do not have review and supervision procedures for financial reporting functions. The review and supervision function of internal control relates to the accuracy of financial information reported. The failure to review and supervise could allow the reporting of inaccurate or incomplete financial information. Due to our size and nature, review and supervision may not always be possible or economically feasible. Management evaluated the impact of our significant number of audit adjustments and has concluded that the control deficiency that resulted represented a material weakness.
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.
(b) Changes in internal control over financial reporting
During the sixthree months ended JuneSeptember 30, 2013, our Company has2011, we have not made any changes to internal control over financial reporting.
PART II - OTHER INFORMATION
On August 5th 2013, pursuant to the Advance from Bibby International Trade Finance, the Lender, the Lender agreed to increase the MPA from $250,000 to $500,000. All other terms of the MPA remained unchanged. Management requested this increase in order to capitalize on sales that will be recognized in Quarter 3 2013.
Item 1. | Legal Proceedings. |
We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On May 7, 2010, we entered into a Share Exchange Agreement with TouchIT Tech KS, the stockholders of TouchIT Tech KS, TouchIT, and the stockholders of Touch Ed, pursuant to which we issued 48,330,000 shares of our Common Stock to the shareholders of TouchIT Tech KS and TouchIT Ed in exchange for all shares held by these shareholders in TouchIT Tech KS and TouchIT Ed. The issuance of these shares was exempted from registration pursuant to Section 4(2) of the Securities Act of 1933. The terms of the Share Exchange Agreement are discussed more fully in Item 1.01 and 2.01 on Form 8-K, filed with the SEC on May 12, 2010.
In connection with the closing of the Share Exchange Agreement, on May 7, 2010, we entered into a Subscription Agreement with certain investors for the sale of up to $1,500,000 of principal amount convertible promissory notes of the Company convertible into up to 6,000,000 shares of our Common Stock and share purchase warrants to purchase up to 6,000,000 shares of our Common Stock. The terms of the Subscription Agreement, Notes and Warrants (including the terms of conversion and/or exercise of the Notes and Warrants) are discussed more fully in Item 1.01 and 2.01 on Form 8-K, filed with the SEC on May 12, 2010. The issuance of these securities was exempted from registration pursuant to Section 4(2) of the Securities Act of 1933.
On April 10th 2013 The Company entered into an agreement with Ronald George Murphy to convert debt for services as an Officer and President of World Wide Sales for the period April 1, 2012 to March 31, 2013 in exchange for the Company’s restricted Common Stock in the aggregate of 45,000,000 shares for an accrued amount of $10,000. The company owed him a balance of $108,413 at June 30, 2013
On April 10th 2013 The Company entered into an agreement with Andrew Stuart Brabin to convert debt for services as Chief Executive Officer for the period April 1, 2012 to March 31, 2013 in exchange for the Company’s restricted Common Stock in the aggregate of 45,000,000 shares for an accrued amount of $10,000. The company owed him a balance of $81,086 at June 30, 2013
(a) Exhibits
Exhibit Number | | Description of Exhibit |
| | |
31.1 | | Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.* |
| | |
31.2 | | Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended.* |
| | |
32.1 | | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Principal Executive Officer and Principal Financial Officer).* |
101.INS | | |
| | 101.INS tucn-20130630.xml XBRL Instance Document |
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101.SCH | | 101.SCH tucn-20130630.xsd XBRL Taxonomy Extension Schema Document |
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101.CAL | | 101.CAL tucn-20130630_cal.xml XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF | | 101.DEF tucn-20130630_def.xml XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB | | 101.LAB tucn-20130630_lab.xml XBRL Taxonomy Extension Labels Linkbase Document |
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101.PRE | | 101.PRE tucn-20130630_pre.xml XBRL Taxonomy Extension Presentation Linkbase Document |
PART III – REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM
Edward Richardson Jr., CPA
15565 Northland Suite 508 West
Southfield, MI. 48075
To the Board of Directors
TouchIT Technologies, Inc.
101 West Beaver Road
Suite 1400, Troy, MI. 48084
I have reviewed the accompanying balance sheet of TouchIT Technologies, Inc. as of June 30, 2013 and 2012, and the related statements of income and retained earnings and cash flows for the period then ended, and the accompanying supplementary information, which is presented only for supplementary analysis purposes, in accordance with the standards of the Public Company Accounting Oversight Board (United States). All information included is the representation of the Board of Directors of TouchIT Technologies.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an examination in accordance with US Generally Accepted Accounting Principles (“US GAAP”) standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with US GAAP standards.
My review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with US GAAP. The information in the accompanying statements and schedules is presented only for supplementary analysis purposes. Such information has been subject to the inquiry and analytical procedures applied in the review of the basic financial statements, and I am not aware of any material medications that should be made thereto.
/S/ Edward Richardson Jr., CPA
August 12, 2013
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.
| TouchIT Technologies, Inc. | |
| | | |
| By: | /s/ Andrew Brabin | |
| | Andrew Brabin Chief Executive Officer and Chief Financial Officer Dated: November 13, 2013January 27, 2014 | |
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