UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
Form 10-Q/A
Amendment Number 2No. 1 to
Form 10-Q
 
x   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2013March 31, 2012
 
¨   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 
For the transition period from _________ to _____________
 
Commission file number 333-151252
 
TouchIT Technologies, Inc.
 (Exact Name of Registrant as Specified in Its Charter)

Nevada 26-2477977
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
101100 West Big Beaver Road, Suite 1400,200, Troy, MI, 48084, USA
 (Address of Principal Executive Offices) (Zip Code)

248 764 1084680 6700 / 00 44 207 858 1045
(Registrant’s Telephone Number, Including Area Code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   

Yes  xNo  ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

Yes  ¨No  ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Larger accelerated filer       ¨
Accelerated filer    ¨
Non-accelerated filer       ¨
(Do not check if a smaller reporting company)
Smaller reporting company     x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes  ¨No x

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 228,064,41959,189,419 shares of common stock outstanding as of August 13, 2013.May10, 2012.

 
 
 
 
TOUCHIT TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2013MARCH 31, 2012

INDEX


PAGE
PART I - FINANCIAL INFORMATION  
    
Item 1. Financial Statements. 4F-1
    
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations. 81
    
Item 3.Quantitative and Qualitative Disclosures About Market Risk. 1510
    
Item 4.Controls and Procedures. 1511
    
PART II - OTHER INFORMATION  
    
Item 1.Legal Proceedings. 1611
    
Item 6.Exhibits. 1712
    
PART III – REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM 18

Signature 1913

 
 
 
 
This amendment no. 1 to Quarterly Report on Form 10-Q for period ended March 31, 2012 is pursuant to that certain Current Report on Form 8-K Item 4.02 filed with the Securities and Exchange Commission on January __, 2014 pertaining to non-reliance on previously issued financial statements.  On approximately January 18, 2014, the Board of Directors was advised by the Company's independent public accountant, Edward Richardson Jr. CPA that its financial statements reviewed and/or audited by Richard for the quarters referenced below as filed (collectively, the Financial Statements") with the Securities and Exchange Commission could not be relied upon based upon the inadvertent non-disclosure of 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 previously 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 Technologies Koll Sti ("TouchIt Tech KS), the stock holders of TouchIt Tech KS, TouchIt Education Koll Sti ("TouchIt Ed"), and the stockholders of TouchIt Ed (the "Share Exchange Agreement"), pursuant to which the Company entered into various agreements with purchasers of the Convertible Notes.
Period EndedFormDate Filed with SEC
September 30, 2011
10-QNovember 14, 2011
December 31, 201110-KApril 5, 2012
March 31, 201210-QMay 10, 2012
June 30, 201210-QAugust 2, 2012
September 30, 201210-QNovember 9, 2012
December 31, 201210-KMarch 28, 2013
March 31, 201310-QMay 15, 2013
June 30, 201310-QAugust 14, 2013
September 30, 2013
10-KNovember 14, 2013
See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. "
EXPLANATORY NOTE
 
TouchIT Technologies, Inc. (the “Company”) was incorporated in the State of Nevada as “Hotel Management Systems, Inc.”  On May 7, 2010, the Company entered into a share exchange agreement, with TouchIT Technologies Koll Sti (“TouchIT Tech KS”), TouchIT Education Koll Sti (“TouchIT Ed”)(“TouchIT Ed” and together with TouchIT Tech KS, “TouchIT”), and the stockholders of TouchIT Tech KS and 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 of the transaction (the “Closing”) took place on May 7, 2010 (the “Closing Date”), all as disclosed 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 on Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 24, 2010.
 
Unless otherwise specified or required by context, as used in this Quarterly Report on Form 10-Q, the terms “we,” “our,” “us” and the “Company” refer collectively to (i) TouchIT Technologies, Inc., a Nevada corporation (“TouchIT”), (ii) TouchIT Tech KS and TouchIT Ed, both being wholly-owned subsidiaries of TouchIT.  In this Quarterly Report on Form 10-Q, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the shares of our common stock, $0.001 par value per share. All financial information presented is for the combined entity TouchIT, which comprises of TouchIT Tech KS and TouchIT Ed. They have not been consolidated and inter-company transactions, although not significant, do exist.
 
CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS
 
In addition to historical information, this Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in such forward looking statements.  Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management’s opinions only as of the date thereof. 
 
In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “proposed,” “intended” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other forward-looking information. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, growth rates, and levels of activity, performance or achievements. There may be events in the future that we are not able to accurately predict or control.

All forward-looking statements included in this Quarterly Report are based on information available to us on the date of this Quarterly Report.  Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this Quarterly Report.

 
3






TOUCHIT TECHNOLOGIES, INC
REVIEWED FINANCIAL STATEMENTS
(Unaudited)

March 31 2012
and
Comparative Periods






F-1



Edward Richardson Jr., CPA
15565 Northland Suite 508 West
Southfield, MI. 48075

To the Board of Directors
TouchIT Technologies, Inc.
100 West Beaver Road
Troy, MI.

I have reviewed the accompanying balance sheet of TouchIT Technologies, Inc. as of March 31, 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 OversightBoard (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

May 9, 2012
F-2
 
 
PART I - FINANCIAL INFORMATION

TOUCHIT TECHNOLOGIES, INC
   BALANCE SHEETS
FOR THE PERIODS ENDED 30 JUNE 2013 & 2012 AND 31 DECEMBER 2012 & 2011
TOUCHIT TECHNOLOGIES INC
   BALANCE SHEET
FOR THE PERIODS ENDED 31 MARCH 2012 & 2011 AND YEARS ENDED 31 DECEMBER 2011 & 2010
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

CURRENT ASSETS NOTE  31/03/12  31/12/11  31/03/11  31/12/10 
                
Cash and cash equivalents  5   3,644   70,289   27,954   50,556 
Trade receivables, net  6   97,257   240,867   365,234   705,225 
Due from related parties  7   -   -   484,459   863,395 
Due from Shareholders      -   -   49,827   50,585 
Inventories  8   51,568   55,689   612,991   365,643 
Other current assets  9   -       4,561   1,106 
                     
Total current assets      152,469   366,845   1,545,026   2,036,510 
                     
NON CURRENT ASSETS  10                 
                     
Property, plant and equipment,net      2,832   1,027   64,051   64,495 
Intangible assets, net      -   -   33,403   25,145 
Rights      -   -   -   - 
Other non current assets      400,000   -   153   3,555 
                     
Total non current assets      402,832   1,027   97,607   93,195 
                     
                     
TOTAL ASSETS      555,301   367,872   1,642,633   2,129,705 
                     
                     
CURRENT LIABILITIES                    
Borrowings      -   -   587   2,351 
Trade payables  11   234,546   181,984   205,295   124,745 
Due to shareholders      -   -   60,448   47,257 
Due to related parties      342,999   265,318   807,120   1,145,992 
Other current liabilities      38,866   27,390   54,209   73,233 
                     
Total current liabilities  12   616,411   474,692   1,127,659   1,393,578 
                     
                     
NON CURRENT LIABILITIES                    
Borrowings      380,668   250,000   -   - 
Employee termination benefits  13   -   -   1,373   - 
Reserve for retirement pay      -   -   -   1,842 
Convertible Notes      540,000   540,000   750,000   750,000 
                     
Total non current liabilities      920,668   790,000   751,373   751,842 
                     
                     
COMMITMENTS AND CONTINGENCIES      -             
                     
SHAREHOLDERS' EQUITY                    
Share capital  14   127,570   127,570   127,570   127,570 
Retained earnings      (1,024,390)  (637,698)  (143,285)  (308,463)
Net income / (loss) for the period      (84,958)  (386,692)  (220,684)  173,899 
                     
Total shareholders’ equity      (981,778)  (896,820)  (236,399)  (7,004)
                     
TOTAL LIABILITIES AND                    
SHAREHOLDERS' EQUITY      555,301   367,872   (1,642,633)  3,138,416 

F-3
 
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
 STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED 31 MARCH 2012 & 2011 AND YEARS ENDED 31 DECEMBER 2011 & 2010
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

  NOTE  31/03/12  31/12/11  31/03/11  31/12/10 
                
NET SALES  15   219,882   1,595,943   773,658   3,577,881 
COST OF SALES  16   150,256   (1,341,374)  (556,766)  (2,502,037)
Gross profit      59,626   254,569   216,892   1,075,844 
MARKETING AND SELLING EXPENSE  17   33,783   (578,887)  (293,399)  (504,329)
GENERAL AND ADMINISTRATIVE EXPENSES  18   110,801   (356,528)  (86,852)  (479,064)
Profit from operations      (84,958)  (680,847)  (163,359)  92,451 
OTHER INCOME AND EXPENSES, net  19   --   294,154   (46,836)  24,094 
FINANCIAL INCOME AND EXPENSES, net  20   --   --   (1,449)  (8,294)
Profit Loss before taxation and currency translation gain/(loss)      (84,958)  (386,692)  (211,644)  60,063 
TAXATION CHARGE      --   --   --   -- 
Taxation current      --   --   --   -- 
Deferred      --   --   --   -- 
CURRENCY TRANSLATION GAIN/(LOSS)      --   --   (9,039)  60,063 
Net income/(loss) for the year      (84,958)  (386,692)  (211,644)  105,115 
OTHER COMPREHENSIVE INCOME      --   --   --   -- 
Total comprehensive income      (84,958)  (386,692)  (220,683)  165,178 

 
 
4F-4
TOUCHIT TECHNOLOGIES INC
  STATEMENT OF CASH FLOW
FOR THE PERIODS ENDED 31 MARCH 2012 & 2011 AND YEARS ENDED 31 DECEMBER 2011 & 2010
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

  31/03/12  31/12/11  31/03/11  31/12/10 
CASH FLOWS FROM OPERATING  ACTIVITIES            
Net income  (84,958)  (346,692)  (220,683)  165,178 
Adjustments to reconcile net income to net cash provided  (400,000)   (401,447)         
By operating activities:                
Depreciation and amortisation  --   --   7,431   17,516 
Provision for employee benefit  --   --   (469)  801 
                 
                 
Changes in operating assets and liabilities                
Trade receivables, net  143,610   1,378,337   339,990   (430,428)
Due from shareholders  --   --   (33,340)  (773,544)
Due from related parties  --   --   379,679     
Inventories  4,121   309,953   (217,422)  (17,620)
Other current assets  --   1,106   3,376   98,467 
Other non current assets  --   --       331 
Trade payables  130,244   322,557   92,934   54,126 
Due to shareholders  --   --   (336,735)  54,413 
Due to related parties  --   --   (1,330)  392,276 
Other current liabilities  11,475   (1,241,442)  (19,024)  (47,386)
Convertible Notes  --   --       750,000 
                 
Net cash generated from (used for)  operating activities  (195,508)  (17,628)  (5,593)  67,197 
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Increase/(decrease) in short-term borrowings      --   (1,764)  (8,931)
Increase/(decrease) in long-term  borrowings  130,668   (38,158)  --     
Dividends paid      --         
                 
Net cash (used for) provided from  financing activities  130,668   (38,158)  (1,764)  (8,931)
                 
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchases of property, plant and equipment and  (1,805)  (797)  (15,245)  (62,304)
intangible assets                
Share  capital increase      --         
                 
Net cash used for investing activities  (1,805)  (797)   (15,245)  (62,304)
                 
NET INCREASE / (DECREASE) IN CASH AND BANKS  (66,645)  19,733   (22,602)  (4,289)
                 
CASH AND BANKS AT BEGINNING OF THE YEAR  70,289   50,556   50,556   54,845 
                 
CASH AND BANKS AT END OF THE PERIOD  3,644   70,289   27,954   50,556 

F-5
 
 
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)
TOUCHIT TECHNOLOGIES, INC. 
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY 
FOR THE PERIOD ENDED MARCH 31, 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 December 31, 2011  55,839,419  $127,570  $-  $-   -  $-   -  $-  $(1,024,390) $(896,820)
                                         
Net Income  -   -   -   -   -   -   -   -   (84,958)  (84,958)
                                         
Capital Transactions  -   -   -   -   -   -   -   -   -   - 
                                         
Prior Period Adjustments  -   -   -   -   -   -   -   -   (0)  - 
                                         
Balance at March 31, 2011  55,839,419  $127,570  $-  $-   -  $-   -  $-  $(1,809,348) $(981,778)
 
  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)
 
 
5F-6
TOUCHIT TECHNOLOGIES, INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED MARCH 31, 2012

1.  OPERATIONS OF THE COMPANY:

General

The Company was established as a form of partnership. In Turkey, partnership is the association of two or people who co-own a business for trading goods under a trade name. The owners have unlimited responsibility to their creditors. This form of company does not have minimum capital requirements. On May 7, 2010, the company became TouchIT Technologies, Inc, a Nevada domiciled company in the United States of America by means of a reverse merge transaction detailed herewith.

Organization

TouchIT Education Technologies Dis Ticaret Killektik Sirketi Andrew Stuart Brabin ve Ortagi formerly RT Lojistik Dis Ticaret Recep Tanisman ve Ortagi (referred as “TouchIT Education”) was established on August 27, 2007 with a “Share Transfer of Open Company and amendment Agreement.”

On May 7, 2010 TouchIT Education, TouchIT Technologies and their stockholders (“TouchIT Turkey”) entered into a Share Exchange Agreement with Hotel Management Systems, Inc. (“Hotel Management”), a Nevada corporation.

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 Technologies and TouchIT Education in exchange for the transfer of 100% of the shares of TouchIT Tech and TouchIT Education to Hotel Management. This exchange transaction resulted in TouchIT Technologies and TouchIT Education becoming Hotel Management. The wholly-owned subsidiaries and the stockholders of TOUCHIT Turkey 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 was recognized in TouchIT Education’s balance sheet as a future obligation to one of the investors.

The Turkish subsidiaries were officially closed in August 2011.

Average number of employees of the Company as of March 31, 2011 was 6 and March  31, 2012 is five.

Description of Business

TouchIT Technologies, Inc is a designer and manufacturer (via 3rd party) of Interactive Products, namely, Interactive Whiteboards and Interactive LCDs.
F-7

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.

3.  BASIS OF PRESENTATION

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.

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.
F-8
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.

Retirement Pay Provision

Under Turkish laws, lump sum payments are made to employees retiring or involuntary leaving the Company. Such payments are considered as being part of a defined retirement benefit plan.

The retirement benefit obligation recognized in the balance sheet represents the present value of defined benefit obligation as adjusted for unrecognized actuarial gains and losses.

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.

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.
F-9
Financial Instruments

Fair value is defined as the price that would be received to sell an assets or paid to transfer a 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. Valuation 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.

5.  CASH AND CASH EQUIVALENTS

As of March 31, 2011 and March 31, 2012, cash and cash equivalents comprised were comprised of the following:

   31.03.2012   31.03.2011 
         
Cash on Hand $0  $0 
Banks $3,644  $27,954 
         
Total $3,644  $27,954 

6.  TRADE RECEIVABLES

As of March 31, 2011 and March 31, 2012, trade receivables comprised were comprised of the following:

   31.03.2012   31.03.2011 
         
Trade Receivables $97,257  $365,234 
Provision for doubtful accounts  (0)  (0)
         
Total $97,257  $365,234 
F-10
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  31.03.2012   31.03.2011 
         
EmkoYazi Tahalari ve Egitim Gerecleri A.S. $0  $321,494 
TouchIT Technologies Koll. Sti.. Ronald George Murphy ve Ortaklari $0  $162,965 
         
Total $0  $484,459 
Due from shareholders  31.03.2012   31.03.2011 
         
Andrew Stuart Brabin $0  $9,287 
Recep Tanisman $0  $40,000 
         
Total $0  $49,827 


Due to related parties  31.03.2012   31.03.2011 
         
Kamron, Inc. $184,913  $86,102 
ASB Trading $158,086  $50,349 
EmkoYaziTahalariveEgitimGerecleri A.S. $0  $336,172 
TouchIT Education Koll. Sti $0  $319,497 
International RT $0  $12,000 
Other $0  $3000 
         
Total $342,999  $807,120 


Due to Shareholders  31.03.2012   31.03.2011 
         
Ali RizaTanisman $0  $44,663 
Andrew Stuart Brabin $0  $14,795 
RecepTanisman $0  $990 
         
Total $0  $60,448 
F-11
Major purchases from related parties  31.03.2012   31.03.2011 
         
TouchIT Technologies Koll Sti $0  $57,211 
TouchIT Education Koll Sti $0  $78,225 
EmkoYaziTahalariveEgitimGerecleriA.S $0  $139,583 
         
Total $0  $275,019 


Major sales to related parties  31.03.2012   31.03.2011 
         
EmkoYazi Tahalari ve Egitim Gerecleri A.S $0  $102,189 
TouchIT Technologies Koll. Sti $0  $78,225 
TouchIT Education Koll Sti $0  $57,211 
         
Total $0  $237,625 


Service provided by  31.03.2012   31.03.2011 
         
Kamron, Inc. $184,913  $49,578 
Andrew Stuart Brabin $0  $52,213 
ASB Trading $158,086  $0 
Other $0  $36,372 
         
Total $342,999  $138,163 

8.  INVENTORIES


   31.03.2012   31.03.2011 
         
Trade goods $51,568  $454,763 
Advances given for purchases $0  $205,770 
Finished goods $0  $201 
Other inventories $0  $3008 
Provision for damaged slow moving stock $0  $(50,751)
         
Total $51,568  $612,991 


9.  OTHER CURRENT ASSETS

As of March 31, 2011 and March 31, 2012, other receivables comprised of the following:

   31.03.2012   31.03.2011 
         
         
Prepaid Expense $0  $4,561 
         
Total $0  $4,561 

F-12

10.  NON-CURRENT ASSETS

As of March 31, 2011 and March 31, 2012,  non-currents comprised of the following:

   31.03.2012   31.03.2011 
         
Fully Reporting Public Shell $400,000  $0 
Other $0  $153 
         
Total $400,000  $153 


11.  TRADE PAYABLES

As of March 31, 2011 and March 31, 2012, trade payables were comprised of the following:

   31.03.2012   31.03.2011 
         
Trade payables $577,546  $205,295 
         
Total $577,546  $205,295 


12.  OTHER CURRENT LIABILITIES

As of March 31, 2011 and March 31, 2012, other current liabilities of the following:

   31.03.2012   31.03.2011 
         
Social Security & Withheld Taxes Payable $4,961  $7,015 
Due to personnel $0  $9,168 
Accrued Expenses $33,905  $3,250 
Advances received $0  $32,266 
Other Liabilities $0  $2,510 
         
Total $38,866  $54,209 


13.  RESERVE FOR EMPLOYMENT TERMINATION BENEFITS

The principal assumption is that the maximum liability for each year of service will increase parallel with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, in the accompanying financial statements as at June 30, 2011, the provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. The anticipated rate of forfeitures is considered. As the maximum liability is revised semiannually, the maximum amount of TRY 2,623 effective from January 1, 2011 has been taken into consideration in calculation of provision from employment termination benefits (2010: TRY 2,517)
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   31.31.2012   31.03.2011 
         
Reserve for Employment Termination $0  $1,373 
         
Total $0  $1,373 


14.  CAPITAL STOCK

The issued share capital of the Company is respectively for the period ended at March 31, 2011 and 2012 is comprised of the following:


   31.03.2012   31.03.2011 
  Insider  Insider 
  Holdings  Holdings 
Andrew Stuart Brabin  16,110,000   16,110,000 
Ronald George Murphy  16,110,000   16,110,000 
Recep Tanisman  0   16,110,000 
         
Total Insider Holdings  32,220,000   48,330,000 
Total Outstanding  55,839,419   64,549,419 


15.  SALES

The composition of sales by principal for the periods ended March 31, 2011 and 2012 can be summarized as follows:

   31.03.2012   31.03.2011 
         
CleverBoard $17,000  $337,124 
TouchIT Board 50” $1,270  $3,242 
TouchIT Board 78” $119,502  $73,514 
TouchIT Board 80”
 $6,823  $2,540 
TouchIT Board 90”
 $32,263  $1,911 
TouchIT Stands
 $7,568  $0 
Voting Systems
 $0  $4,345 
Electronic Circuits
 $0  $341,840 
42” TouchIT LCD
 $1,999  $0 
55” TouchIT LCD
 $18,794  $0 
65” TouchIT LCD
 $9,998  $0 
TouchIT Document Camera
 $1,226  $0 
TouchIT RF Tablet
 $825  $0 
Others
 $2,614  $9,142 
         
Total $219,882  $773,658 

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16.  COSTOF SALES

The composition of cost of sales by principal for the periods ended March 31, 2011 and 2012 can be summarized as follows:

   31.03.2012   31.03.2011 
         
Purchases $150,256  $556,766 
         
Total $150,256  $556,766 


17.  MARKETING AND SELLING EXPENSES

The composition of marketing and selling expenses by principal for the periods ended March 31, 2011 and 2012 are summarized as follows:

   31.03.2012   31.03.2011 
         
Marketing and Selling Expenses $33,783  $578,887 
         
Total $33,783  $578,887 

18.  GENERAL AND ADMINISTRACTIVE EXPENSES

The composition of general and administrative expenses by the principal operations for the periods ended March 31, 2011 and 2012 are as follows:

   31.03.2012   31.03.2011 
         
General and Administrative Expenses $110,801  $86,852 
         
Total $33,783  $86,852 


19.  OTHER INCOME AND (EXPENSES), net

The composition of other income and expenses for the years March 31, 2011 and 2012 can be summarized as follows:


   31.03.2012   31.03.2011 
         
Other Income and Expenses $0  $(46,836)
         
Total $0  $(46,836)

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20.  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
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.

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:

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.


F-16
 
 
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 
6
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)
7
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 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.

8
Plan of Operation

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.
1
In the past three years, we have designed, manufactured, launched, developed and sold four new products as well as established the business from scratch.

COMPANY OVERVIEW

We manufacture touch-based visual communication products for the education and corporate worldwide marketplaces. Our products stand out from our competition in terms of design, functionality and price offering. Our customers seek our products as they provide them a different point of entry to the market in terms of price, quality of design and margin. 
 
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.

In connection with the closing of the Share Exchange Agreement, on May 7, 2010, we entered into a Subscription Agreement (the “Subscription Agreement”) with certain investors for the sale of up to $1,500,000 (the “Purchase Price”), which was represented by the convertible promissory notes of our Company (“Note” or “Notes”) and share purchase warrants (the “Warrants”) to purchase shares of Common Stock (the “Warrant Shares”).  Due to the non-provision of the second $750,000 by certain investors, we cancelled the promissory Notes for $250,000 and $500,000 including the underlying Warrant Shares.

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 MPACredit Agreement evidences a revolving credit facility forin the purchase of the Company’s accounts receivable up to theminimum principal amount of $250,000, which subject to Lender approval may be increased.increased up to One Million Dollars ($1,000,000) (the “Loan”). Interest on the Advance accrues at the rate of eight percent (8%) per annum and the outstanding and accrued interest is due and payable on a bi-monthly basis. The outstanding principal amount is due on April 11, 2013. This facility was renewed for a further year on April 11, 2013.February 16, 2012.

The AdvanceLoan is also evidenced by a revolving note (the “Note”). The Credit Agreement and Note are secured by, among other things, (i) the MPASecurity Agreement made by and between our Company and the Lender pursuant to which the Borrower has granted a security interest in all of the Borrower's assets to the Lender (the "Security Agreement"), (ii) a personal guaranty and validity guaranty executed by Andrew Brabin, Chief Financial Officer of our Company, and (iii) a personal guaranty and validity guaranty executed by RecepTanisman, the then Chief Executive Officer of our Company.

Pursuant 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 the 28th of June 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 slow sales period.
2
The MPACredit Agreement also includes customary representations and warranties and affirmative and negative covenants, including, among others, payment of certain customary fees and expenses (including commitment, monitoring and diligence fees), covenants relating to financial reporting, maintenance of property and insurance, incurrence of liens and/or other indebtedness. The MPACredit Agreement also contains customary provisions for events of default, remedies in circumstances of default, required notices, governing law and jurisdiction of governance.

Upon the occurrence of an event of default (as defined in the Credit Agreement), the Lender may, at its option, declare its commitments to us to be terminated and all obligations and commitments to be immediately due and payable. 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 Securities and Exchange Commission on February 23, 2011. All statements made herein concerning the foregoing document are qualified by reference to said Exhibits.

On March 1, 2012 we terminated the CreditAgreement with TCA Global Credit Master Fund LLP (“TCA”) by paying off the principal of $250 000. Management decided not to renew the agreement as we were actively seeking areplacement credit facility for the year ahead. The decision to close the credit line from TCA is due to Management’s belief that we were in a position to secure a similar arrangement with another Lender that could provide better rates than TCA. Subsequently, on April 11, 2012 the company entered into a factoring agreement by means of a Master Purchase Agreement (“MPA”) with Bibby International Trade Finance (“BITF”) for a receivables facility of up to $250 000.The MPA evidences a revolving credit facility in the maximum principal amount of $250,000, which subject to Lender approval may be increased. The MPA details the facility that has no management fees, and initial setup fee of $1000 was paid to BITF and that the Lender must be presented with a minimum of $50 000 of receivables each month in order not to attract a $600 penalty fee. Receivables sold to BITF under the MPA are guaranteed by the Company as well as personally by Andrew Stuart Brabin.

We have now completed the development and the establishment of a production line in Taiwan for a new range of Interactive LEDLCD products. Supply of LCD panels has become challenging as panel manufacturers have sent many models end of life in favor of the LED equivalent. These products include Interactive LEDs,includeInteractive LCDs, with and without an embedded PC in sizes from 32” to 80”. The82”.The unique feature for the range of LEDsLCDs 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. All of these products are full high definition and touch-based and 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,LCD, 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.

We have finished the development of a new range of four point touch models of LED. These models were launched at the beginning 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 point in the marketplace and will also appeal the growing number of MAC users World-Wide. These models are now sold in all our markets world-wide.

9
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 look to expand this category later in the year.

We have soldseeded units into the United States, Australia and the Middle East for the new LEDLCD product line. The company has received excellent feedback on these models and Management expects that by Quarter 4 2013,2012, the LEDLCD range will be 75%40% of revenue. The LEDLCD 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.

WithWe have continued our partner DEMCO, we participatedefforts of expanding our product line through the K thru 12 markets as well as the higher Educational market. We are working on opportunities in Michigan, Mississippi, Los Angeles and higher educational institutions in Upstate NY and NJ. 

We have expanded our reseller base with PCMall.gov, Cascade, US Markerboard and look to expand further into the Canadian and South American marketplaces 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. Subsequently, the US Government has purchased sample units of the new TouchIT LCD Duo.

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 TouchIT Technologies' 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 American Library Association showUSA.Companies that have expressed initial interest are Tech Depot, Tiger Direct and Sam’s Club. We have singed initial vendor agreements with Costco and Sam’s Club.Sam’s Club are currently uploading the products into their online portfolio ready for resale in Chicago 27th June 2nd July. Management believes that weQ2 2012.

We have signed a vendor agreement with Office Max in the United States of America. Office Max is currently undergoing a training program and the product line is being loaded into their website. We have also committed to being in the Office Max Maxi Catalogue which is released in Q4 2012 ready for 2013.

We entered the Australian market place by partnering with Ingram Micro PTY late in 2011. Ingram Micro is currently working on several large projects which encompass both the Interactive Whiteboard and the LCD product lines.
3
We entered into discussions with a new partner for the Italian market place, Satnet SRL. Satnetare due to receive their first order in Q2 2012.

We have continued our expansion into the Middle East with presentations made directly to the Ministry of Education and the company has also seen success in equipping the Tabuk University throughout with Interactive Whiteboards.

We 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 the product portfolio.

SalesLast, we have undertaken and completed significant research and development of TouchIT WIS continuenew technologies for a low cost interactive whiteboard. We are evaluating both electromagnetic and CCD camera systems to increase. TouchIT WIS TouchIT "WIS" (Wirelessenable our future Interactive Screen, pronounced "WIZ") is a wireless presentation system. TouchIT "WIS" allows a groupWhiteboards to remain very competitive on price. We are also ready to launch an LED range of studentsInteractive Touch Screens in a class or business professionals in a meeting roomsizes from 42” to take turns in presenting from their Windows or MAC computer or even a mobile device, which are connected wirelessly to 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 variant of the TouchIT LED product line.80”

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.”

10
This management's discussion and analysis of our financial condition and results of operations are based on the financial statements of both TouchIT Tech 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 its books of account and prepares its 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”).

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.

4
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

-Motor vehicles: 4 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.

11
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, INC STATEMENTS OF COMPREHENSIVE INCOME
FOR QUARTER ENDED JUNE 30, 2013MARCH 31, 2012 & 20122011

(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)
  31/03/2012  31/03/2011 
       
NET SALES  219,882   773,658 
COST OF SALES  150,256   (556,766)
Gross profit  59,626   216,892 
MARKETING AND SELLING EXPENSE  33,783   (293,399)
GENERAL AND ADMINISTRATIVE  EXPENSES  110,801   (86,852)
Profit from operations  (84,958)  (163,359)
OTHER INCOME AND EXPENSES, net  --   (46,836)
FINANCIAL INCOME AND EXPENSES, net  --   (1,449)
Profit Loss before taxation and currency translation gain/(loss)  (84,958)  (211,644)
TAXATION CHARGE  --   -- 
Taxation current  --   -- 
Deferred  --   -- 
CURRENCY TRANSLATION GAIN/(LOSS)  --   (9,039)
Net income/(loss)  for the year  (84,958)  (211,644)
OTHER COMPREHENSIVE INCOME  --   -- 
Total comprehensive income  (84,958)  (220,683)

  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)
5
 
NET SALES (REVENUE)– For the first sixthree months of the year, quarter ended June 30, 2013,March 31, 2012, as compared to the sixthree months ended June 30, 2012,endedMarch 31, 2011, revenue has increaseddecreased by 58%72% or by $294,504$553,776 from $505,685$773,658 to $800,189.$219,882. This increasedecrease can be attributed firstly, to a changeslow down in strategy by Management.the market due to uncertain budgetary commitments from certain of our customers. 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 LEDLCD Line. 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 does anticipate that revenues will continue to grow for the balance of the year due to the LEDtothe LCD product line which representswhichrepresents a much larger value ticket item which will drive revenues higher and the current back order that the Company has built up.higher.

GROSS PROFIT – For the first sixthree months of the year, quarter ended June 30, 2013,March 31, 2012, as compared to the sixthree months ended June 30, 2012,March 31, 2011, gross profit has increaseddecreased by $97,017$157,356 from $152,683$216,982 to 249,700.$59,626. 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.decrease in sales revenue.

OPERATIONAL PROFITLOSS – For the first sixthree months of the year, quarter ended June 30, 2013,March 31, 2012, as compared to the sixthree months ended June 30,March 31, 2011, operational loss has decreased from $(163,359) to (84,958) a decrease of $78,401. This can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.
  30/03/2012  30/03/2012 
       
MARKETING AND SELLING EXPENSE  (33,783)  (293,399)
As a percentage of revenue  15%  38%
GENERAL AND ADMINISTRATIVE EXPENSES  (110,801)  (86,852)
As a percentage of revenue  50%  11%
NET INCOME FOR THE PERIOD – For the first three months of the year, quarter ended March 31, 2012, operational profitas compared to the three months ended March 31, 2011, NET income for the period has increased by $135,725 from $(50,092)$(220,683) to $71,384 an increase of $121,476.(84,958). 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%

 
126
TOUCHIT TECHNOLOGIES, INC BALANCE SHEET AT MARCH 31, 2012 & 2011

(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

CURRENT ASSETS 31/03/2012  31/03/2011 
       
Cash and cash equivalents  3,644   27,954 
Trade receivables, net  97,257   365,234 
Due from related parties  -   484,459 
Due from Shareholders  -   49,827 
Inventories  51,568   612,991 
Other current assets  -   4,561 
         
Total current assets  152,469   1,545,026 
         
NON CURRENT ASSETS        
         
Property, plant and equipment,net  2,832   64,051 
Intangible assets, net  -   33,403 
Rights  -   - 
Other non current assets  400,000   153 
         
Total non current assets  402,832   97,607 
         
         
TOTAL ASSETS  555,301   1,642,633 
         
CURRENT LIABILITIES        
Borrowings  -   587 
Trade payables  234,546   205,295 
Due to shareholders  -   60,448 
Due to related parties  342,999   807,120 
Other current liabilities  38,866   54,209 
         
Total current liabilities  616,411   1,127,659 
         
         
NON CURRENT LIABILITIES        
Borrowings  380,668   - 
Employee termination benefits  -   1,373 
Reserve for retirement pay  -   - 
Convertible Notes
  540,000   750,000 
         
Total non current liabilities  920,668   751,373 
         
         
COMMITMENTS AND CONTINGENCIES  -     
         
SHAREHOLDERS' EQUITY        
Share capital  127,570   127,570 
Retained earnings  (1,028,390)  (143,285)
Net income / (loss) for the period  (84,958)  (220,684)
         
Total shareholders’ equity  (981,778)  (236,399)
         
TOTAL LIABILITIES AND        
SHAREHOLDERS' EQUITY  555,301   (1,642,633)
7
 
 
CURRENT ASSETS – For the first three months of the year, quarter ended March 31, 2012, as compared to the three months ended March 31, 2011, total current assets have decreased $1,392,557. This decrease is due to a decrease in sales revenue resulting in a decrease in trade receivables. These decreased from $1,545,026 at March 31, 2011 to $152,469atMarch 31, 2012. The company has also decreased its 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 has also decreased representing a reduction in assets of $534,286
NON-CURRENT ASSETS – For the first three months of the year, quarter ended March 31, 2012, as compared to the three months ended March 31, 2011, total non-current assets have increased by $305,225. This is mainly due to the recognition of the value of the Full Reporting Public Shell on the Company’s balance sheet.

TOTAL ASSETS – For the first three months of the year, quarter ended March 31, 2012, as compared to the three months ended March 31, 2011, total assets have decreased by $1,087,332 from $1,642,633 to $555,301.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 first three months of the year, quarter ended March 31, 2012, as compared to the three months ended March 31, 2011, total current liabilities have decreased by $511,248 from $1,127,659 to $616,411. Trade payables have increased by 13% or $29,251, which can be attributed to a large $100k order from Hoshan in Saudi Arabia which was secured by a letter of credit to our supplier.
NON-CURRENT LIABILITIES - For the first three months of the year, quarter ended March 31, 2012, as compared to the three months ended March 31, 2011 they have decreased by $169,295 from $920,668 to $751,373. This can be attributed to the Share Purchase Advance brought forward on TouchIT Education’s balance sheet not being shown on TouchIT Technologies Inc now the subsidiary has been closed.
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 March 31, 2012, we owed approximately $500,000 in aggregate principal amount and $40,000 in accrued interest.
8
TOUCHIT TECHNOLOGIES, INC STATEMENT OF CASH FLOW FOR QUARTERS ENDED
MARCH 31, 2012 & 2011

(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

  31/03/2012  31/03/2011 
CASH FLOWS FROM OPERATING  ACTIVITIES      
Net income  (84,958)  (220,683)
Adjustments to reconcile net income to net cash provided  (400,000)     
By operating activities:        
Depreciation and amortisation  --   7,431 
Provision for employee benefit  --   (469)
         
         
Changes in operating assets and liabilities        
Trade receivables, net  143,610   339,990 
Due from shareholders  --   (33,340)
Due from related parties  --   379,679 
Inventories  4,121   (217,422)
Other current assets  --   3,376 
Other non current assets  --     
Trade payables  130,244   92,934 
Due to shareholders  --   (336,735)
Due to related parties  --   (1,330)
Other current liabilities  11,475   (19,024)
Convertible Notes  --     
         
Net cash generated from (used for) operating activities  (195,508)   (5,593)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Increase/(decrease) in short-term borrowings      (1,764)
Increase/(decrease) in long-term  borrowings  130,668   -- 
Dividends paid        
         
Net cash (used for) provided from financing activities  130,668   (1,764)
         
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchases of property, plant and equipment and  (1,805)  (15,245)
intangible assets        
Share  capital increase        
         
Net cash used for investing activities  (1,805)  (15,245)
         
NET INCREASE / (DECREASE) IN CASH AND BANKS  (66,645)  (22,602)
         
CASH AND BANKS AT BEGINNING OF THE YEAR  70,289   50,556 
         
CASH AND BANKS AT END OF THE PERIOD  3,644   27,954 
9
NET INCOMELOSS FOR THE PERIOD – For the first sixthree months of the year, quarter ended June 30, 2013,March 31, 2012, as compared to the sixthree months ended June 30, 2012,March 31, 2011, NET incomeloss for the period has increased by $129,297$135,725 from $(48,892)$(220,683) to $80,405.(84,958). This 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 expressed 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 
13

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 to an increase in Trade Receivables which have increased by 65% when compared to the same period in 2012.

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 
14
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 sixthree months of the year, quarter ended June 30, 2013,March 31, 2012, as compared to the sixthree months ended June 30, 2012,March 31, 2011, NET cash generated for operating activities was $264,808$195,508 compared to $(293,074)$(5,593) which is ana increase of $557,882.$189,915. This can be attributed primarily in the increasedecrease of credit from Trade Payables and Other Liabilities.accrued liabilities which were cancelled following the closure of the Turkish Subsidiaries.

Cash flow in general has improved as we make use of the Credit Facility from our Lender. Our management expects to utilize the facility to its full extent as our business grows.

CASH FLOW FROM FINANCING ACTIVITES – For the first sixthree months of the year, quarter ended June 30, 2013,March 31, 2012, as compared to the sixthree months ended June 30, 2012,March 31, 2011, cash flow from financing activities was $(261,499)130,668 compared to $238,574$(1,764) at June 30, 2012.March 31, 2011. This wasis due to the restructuring of our credit lines and the switch from TCA’s structure to that of our current Lender BITF.an increase in long term borrowings.

CASH POSITION. There was a NET decrease in the cash and cash equivalents of $5862$66,645 from the beginning of the period through June 30, 2013.March 31, 2012. This change in cash position can be attributed to being normal in course of regular business 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 ControlsManagement’s annual report on internal control over financial reporting.
Our Chief Executive Officer/Chief Financial Officer is responsible for establishing and Procedures

Regulationsmaintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controlsas a process designed by, or under the supervision of, our principal executive and procedures,” which are defined to mean a company’s controlsprincipal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that are designed to ensure that information requiredthat:
·
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
·
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and
·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be disclosedeffective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the reports that it filesdegree of compliance with the policies 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.procedures may deteriorate.

We carried out an evaluation ofOur Chief Executive Officer/Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of September 30, 2011. In making this assessment, management used the design and operationcriteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control — Integrated Framework.
Based on our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) with the participation ofassessment, our Chief Executive Officer and Officer/Chief Financial Officer believe that, as of March 31,2012, our internal control over financial reporting is not effective based on those criteria, due to the following:
·  
Deficiencies in Segregation of Duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel.
·  
Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.
In light of this conclusion and as part of the effectivenesspreparation of this report, we have applied compensating procedures and processes as necessary to ensure the design and operationreliability of our disclosure controls and procedures asfinancial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the period covered by this Report.  Based on that evaluation, our Chief Executive Officerreport, and Chief Financial Officer have concluded that as of June 30, 2013, our disclosure controls and procedures were effective at the reasonable assurance level, but we did identify the material weaknesses described below.

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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 six 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(2) the financial statements, and other financial information included hereinin this report, fairly present in all material respects our financial position,condition, results of operations and cash flows for the years and periods presented.then ended.

(b) This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this report.
Changes in internal control over financial reportingreporting.

During the six months ended June 30, 2013,There were no significant changes in our Company has not made any changes to internal control over financial reporting during the fourth quarter of the year ended March 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
 
On August 5Subsequently, on April 10th2012 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 January 1, 2012 to March 31, 2012 in exchange for the Company’s restricted Common Stock in the aggregate of 7,500,000 shares for an accrued amount of $37,500. The company owed him a balance of $184,913.40 at March 31, 2011

Subsequently, on April 10th 2013, pursuant2012 The Company entered into an agreement with Andrew Stuart Brabin to convert debt for services as Chief Executive Officer for the Advance from Bibby International Trade Finance,period January 1, 2012 to March 31, 2012 in exchange for the Lender,Company’s restricted Common Stock in the Lender agreed to increase the MPA from $250,000 to $500,000. All other termsaggregate of the MPA remained unchanged. Management requested this increase in order to capitalize on sales that will be recognized in Quarter 3 2013.7,500,000 shares for an accrued amount of $37,500. The company owed him a balance of $158,085.79 at March 31, 2011

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.

 
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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
Item 6.      Exhibits


(a)  Exhibits
Exhibit
Number
Description of Exhibit

  
31.1Certification 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.
  
31.2Certification 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).
101.INS tucn-20130630.xmltucn-20111231.xml XBRL Instance Document
101.SCH tucn-20130630.xsdtucn-20111231.xsd XBRL Taxonomy Extension Schema Document
101.CAL tucn-20130630_cal.xmltucn-20111231_cal.xml XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF tucn-20130630_def.xmltucn-20111231_def.xml XBRL Taxonomy Extension Definition Linkbase Document
101.LAB tucn-20130630_lab.xmltucn-20111231_lab.xml XBRL Taxonomy Extension Labels Linkbase Document
101.PRE tucn-20130630_pre.xmltucn-20111231_pre.xml XBRL Taxonomy Extension Presentation Linkbase Document
PART III – REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM
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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

 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 TouchIT Technologies, Inc. 
    
 By:/s/ Andrew Brabin 
  
Andrew Brabin
Chief Executive Officer
Dated: November 13, 2013January 27, 2014
 
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