BTCS Inc. - Quarter Report: 2010 September (Form 10-Q)

f10q0910_touchit.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

o 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.)

Istanbul Trakya Serbest Bölgesi Atatürk Bulvari Ali Riza Efendicd., A4 Blok Çatalca, Istanbul Turkey

(Address of Principal Executive Offices) (Zip Code)

00 90 212 786 6304

(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 x No o

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 o No o

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 o	Accelerated filer o
Non-accelerated filer o (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 o No x

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 61,630,001shares of common stock outstanding as of November 15, 2010

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 in a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on May 24, 2010. See “Recent Developments”. Subsequently, the Registrant amended its Articles of Incorporation to change its name to TouchIT Technologies, Inc., as disclosed in a Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 24, 2010.

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.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

TOUCHIT TECH KS AND TOUCHIT ED COMBINED BALANCE SHEETS

AT SEPTEMBER 30, 2010 & 2009 AND FINANCIAL YEAR ENDS, DECEMBER 31, 2009 & 2008

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

	09/30/2010			12/31/2009			09/30/2009			12/31/2008
CURRENT ASSETS
Cash and banks		41,966			54,845			9,979			24,015
Trade receivables		822,894			274,802			193,705			84,986
Due from related parties		674,602			130,594			20,243			333,876
Due from shareholders		53,888			-			-			12,258
Inventories		530,116			259,883			474,612			282,876
Other current assets		4,424			782			2,465			4,678

Total current assets		2,127,890			720,906			701,004			742,689

NON CURRENT ASSETS
Property, plant and equipment, net		60,440			29,872			47,568			21,188
Intangible assets, net		12,731			-						-
Other non current assets		1,116			3,725						-
Rights, net		8,400			14,976			18,736			23,468

Total non current assets		82,687			48,573			66,304			44,656


TOTAL ASSETS		2,210,577			769,479			767,308			787,345


CURRENT LIABILITIES
		5,471			11,282			20,790			4,467
Trade payables		176,114			70,619			110,740			343,544
Due to shareholders		59,241			75,584			108,777			40,077
Due to related parties		1,125,741			670,976			742,934			289,324
Other current liabilities		14,236			120,619			6,134			25,286

Total current liabilities		1,380,803			949,080			989,375			702,698


NON CURRENT LIABILITIES
					2,321			3,583			5,118
Reserve for retirement pay		933			1,041			848			314
Share purchase advances		750,000			-			-			-

Total non current liabilities		750,933			3,362			4,431			5,432


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Share capital		125,500			125,500			125,500			125,500
Retain earnings		(308,463	)		(46,285	)		(46,285	)		7,749
Net income for the period		261,804			(262,178	)		(305,713	)		(54,034	)

Total shareholders’ equity		78,841			(182,963	)		(226,498	)		79,215

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY		2,210,577			769,479			767,308			787,345

TOUCHIT TECH KS AND TOUCHIT ED COMBINED STATEMENTS OF COMPREHENSIVE INCOME

FOR NINE MONTHS ENDED SEPTEMBER 30, 2010 & 2009 & FINANCIAL YEARS ENDED DECEMBER 31 2009 & 2008

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

	01.01.- 09.30.2010		01.01.- 12.31.2009		01.01.- 09.30.2009		01.01.- 12.31.2008

NET SALES	2,676,936		2,029,074		1,807,348		1,752,442

COST OF SALES	(1,798,549	)	(1,742,047	)	(1,618,647	)	(1,540,132	)

Gross profit	878,387		287,027		188,702		212,310

SELLING EXPENSES	(349,041	)	(409,386	)	(423,242	)	(122,476	)

GENERAL AND ADMINISTRATIVE EXPENSES	(275,980	)	(140,121	)	(55,289	)	(164,652	)

Income from operations	253,366		(262,480	)	(289,830	)	(74,818	)

OTHER INCOME AND EXPENSES, NET	(31,276	)	6,621		(17,447	)	621

FINANCIAL INCOME AND EXPENSES , NET	(5,905	)	(8,741	)	13,842		(3,051	)

Income before taxation and currency translation gain/(loss)	216,185		(264,600	)	(293,434	)	(77,248	)

TAXATION CHARGE
Taxation current	--		--		--		--
Deferred	--		--		--		--

CURRENCY TRANSLATION GAIN/(LOSS)	45,619		2,422		(12,279	)	23,214

Net income for the period	261,804		(262,178	)	(305,713	)	(54,034	)

OTHER COMPREHENSIVE INCOME


Total comprehensive income	261,804		(262,178	)	(305,713	)	(54,034	)

TOUCHIT TECH KS AND TOUCHIT ED COMBINED STATEMENTS OF CASH FLOW

FOR NINE MONTHS ENDED SEPTEMBER 30, 2010 & 2009 AND FINANCIAL YEARS ENDED DECEMBER 31, 2009 & 2008

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

	09/30/2010			12/31/2009			09/30/2009			12/31/2008

CASH FLOWS FROM OPERATING ACTIVITIES
Net income		261,804			(262,178	)		(305,713	)		45,994
Adjustments to reconcile net income to net cash provided		--			--			--
By operating activities:		--			--			--
		10,250			8,640			9,395
Provision for retirement pay		(108	)		727			534			314
Depletion allowance		6,576			8,493			4,732			8,493
Changes in operating assets and liabilities		--			--			--
Trade receivables		(548,092	)		(189,816	)		(69,336	)		68,474
Due from related parties		(544,008	)		203,282			313,633			(273,150	)
Due from shareholders		(53,888	)		12,258			12,258			(12,258	)
Inventories		(270,233	)		22,993			(82,797	)		150,232
Other current assets		(3,642	)		3,896			4,251			(302	)
Borrowings		2,609			(3,725	)		--
Trade payables		96,471			(272,925	)		(238,040	)		47,713
Due to shareholders		(16,211	)		30,430			74,968			(10,231	)
Due to related parties		463,657			386,729			285,747			--
Other current liabilities		(106,383	)		95,332			(15,375	)		18,983

Net cash generated from (used for) operating activities		(701,198	)		44,136			(5,743	)		44,262

CASH FLOWS FROM FINANCING ACTIVITIES
		(5,811	)		6,815			14,035
		(2,321	)		(2,797	)		(4,157	)
Dividends paid		--			--			--			(37,219	)


Net cash (used for) provided from financing activities		(8,132	)		4,018			9,878			(37,219	)





Net cash provided from investing activities		696,451			(17,324	)		(22,966	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		(12,878	)		30,830			(18,831	)		7,043

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		54,845			24,015			28,810			7,613

CASH AND CASH EQUIVALENTS AT END OF PERIOD		41,967			54,845			9,979			14,656

INDEPENDENT AUDITORS REPORT

To the Board of Directors of

Touch IT Technologies Kollektif Sirketi

Ronald George Murphy ve Ortaklari

Report on the Financial Statements

We have reviewed the accompanying financial statements of Touch IT Technologies Kollektif Sirketi Ronald George Murphy ve Ortaklari (“the Company”) which comprise the financial position as of 30 September 2010 and statements of comprehensive income, changes in equity and cash flows for the period then ended, and a summary of significant accounting policies and other explanatory notes.

Management Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Generally Accepted Accounting Principles in the United States of America. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Scope of Review

Our responsibility is to express a conclusion on these financial statements based on our review. We conducted our review in accordance with International Standards on Auditing. These standards require that we comply with ethical requirements and plan and perform the review to obtain reasonable assurance whether the financial statements are free from material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not give a true and fair view of the financial position of the entity as at 30 September 2010, and of its financial performance and its cash flows for the nine months period then ended in accordance with Accounting Principles Generally Accepted in the United States of America.

We would like to draw your attention to the following matters:

The accompanying financial statements of the Company have been prepared on a going concern basis. However, in the accompanying financial statements, the Company's current liabilities exceed its current assets by an amount of USD 127,766. Accordingly, the continuity of the Company's operations is dependent on the profitability of future operations and the existence of necessary financial support by shareholders and other creditors.

The companies are required to present interim financial information comparative with the balance sheet as of the end of the immediately preceding year and statements of income for the comparable interim periods. However since the comparable interim period has not been reviewed the accompanying income statement as of 30 September 2010 has not been prepared on a comparative basis.

Istanbul, 5 November 2010

DENGE BAGIMSIZ DENETIM

SERBEST MUHASEBECI MALI MUSAVIRLI K A.S.

Member of MAZARS

Gokhan Almaci

Partner

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

STATEMENT OF FINANCIAL POSITION

AS OF 30 SEPTEMBER 2010 AND 31 DECEMBER 2009

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	Notes			30.09.2010			31.12.2009
ASSETS
Cash and cash equivalents		5	$	38,134		$	52,641
Trade receivables, net		6		811,767			269,394
Due from shareholders		7		43,404			--
Inventories, net		8		258,639			166,448
Other current assets		9		4,325			400
Total current assets				1,156,269			488,883
Property and equipment, net		10		60,440			29,872
Intangible assets, net		11		12,731			--
Other non-current assets		12		1,116			3,725
Total non-current assets				74,287			33,597

Total assets				1,230,556			522,480
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term bank loans		13		5,471			11,282
Trade payables		14		127,036			69,013
Due to shareholders		7		36,742			55,660
Due to related parties		7		1,106,631			642,160
Other current liabilities		15		8,155			71,516
Total current liabilities				1,284,035			849,631
Long-term bank loans		13		--			2,321
Employee termination benefits		16		247
Total long-term liabilities				247			2,321
Shareholders' Equity:
Share capital		17		90,000			90,000
Accumulated deficit				(419,472	)		(100,028	)
Net profit/(loss) for the period				275,746			(319,444	)

Total shareholders' equity				(53,726	)		(329,472	)

Total liabilities and shareholders' equity				1,230,556			522,480

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

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

STATEMENT OF COMPREHENSIVE INCOME AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	Notes		30.09.2010
Sales		18	1,842,913
Cost of sales		19	(1,207,022	)
Gross profit			635,891
Marketing, selling and distribution expenses		20	(212,766	)
General and administrative expenses		21	(139,389	)
Total operating profit			283,736
Financial income / (expense), net		23	(3,885	)
Other income / (expense), net		22	(40,938	)
Translation loss			36,833
Profit before provision for taxation			275,746
Provision for taxation
- Current
- Deferred
Net profit for the period			275,746
Other comprehensive income
Currency translation differences
Total comprehensive income for the period			275,746

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

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI RONALD

GEORGE MURPHY VE ORTAKLARI STATEMENT OF CASH

FLOW AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	30.09.2010
Cash flow from operating activities Net profit for the period	275,746
Adjustments to reconcile net profit to net cash provided by operating activities: Depreciation	10,250
Provision for employee termination benefit	247
Net profit adjusted to non-cash items	286,243
Changes in operating assets and liabilities:
Change in trade receivables	(542,373	)
Change in due from shareholders	(43,404	)
Change in inventories	(92,191	)
Change in other current assets	(3,925	)
Change in other non current assets	2,609
Change in trade payables	48,999
Change in due to shareholders	(9,894	)
Change in due to related parties	464,471
Change in other current liabilities	(63,361	)
Net cash used for operating activities	47,174
Cash flows from investing activities: Purchased of property and equipment and intangibles	(53,549	)
Net cash outflows from investing activities	(53,549	)
Cash flows from financing activities: Increase in short-term borrowings	(5,811	)
Decrease in long-term borrowings	(2,321	)
Cash outflows generated by financing activities	(8,132	)
Net decrease in cash and cash equivalents	(14,507	)
Cash and cash equivalents at the beginning of the year	52,641
Cash and cash equivalents at the end of the period	38,134

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

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

STATEMENT OF CHANGES IN EQUITY AS OF 30 SEPTEMBER 2010 AND 31 DECEMBER 2009

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	Share capital		Accumulated deficit			Net (loss) /profit for the year/ period			Total Shareholders' Equity
Opening balance as of 1 January 2009		90,000		(100,028	)		(100,028	)		(10,028	)
Transfer to accumulated deficit							(100,028	)
Net loss for the year 2009							(319,444	)		(319,444	)
Balances at 31 December 2009		90,000		(100,028	)		(319,444	)		329,472
Transfer to accumulated deficit		--		(319,444	)		319,444			275,746
Net profit for the nine months period of 2010		--		--			275,746
Balances at 30 September 2010		90,000		(419,472	)		275,746			53,726

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

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

1. OPERATIONS OF THE COMPANY:

General

The Company established as a form of partnership (kollektif Sirket). In Turkey, partnership is the association of two or more people who co-own a business for trading goods under a trade name. The co-owners have unlimited responsibility to their creditors. This form of companies does not have minimum capital requirements.

Nature of activities

Touch IT Technologies Kollektif Sirketi Ronald George Murphy ve Ortaklari (referred as "Touch IT Technologies ) was established in September 2008. Touch IT Technologies engages primarily in production and trade of technological blackboard runned by infrared system.

The Company has an operating license in Trakya, Istanbul free zone area for 15 years which commenced on 9 September 2008.

On May 7, 2010, Touch IT Education, Touch IT Technologies and their stockholders ("Touch IT 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 Touch IT Technology and Touch IT Education in exchange for

the transfer of 100% of the shares of TouchIT Tech and Touch IT Education to Hotel

Management. This exchange transaction resulted in Touch IT Technologies and Touch IT Education becoming Hotel Management. The wholly-owned subsidiaries and the stockholders of Touch IT 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, Hotel

Management entered into a Subscription Agreement (the "Subscription Agreement) with investors for the sale of shares up to the value of USD 1,500,000 (the "Purchase Price ). As a result, USD 750,000 of the Purchase Price has been recognized in Touch IT Education's balance sheet as a future obligation to one of the investors.

No changes in the shareholder structure of Touch IT Turkey have been made since the formal

registration has not yet been completed.

Average number of employees of the Company as of 30 September 2010 is xx while it was 6 as at December 31, 2009.

2. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued an amendment to ASC 820, "Fair Value Measurements and Disclosure , to require reporting 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 reporting periods beginning after 15 December 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after 15 December 2010, its adoption will not have a material impact on the Company's financial statements.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

3. BASIS OF PRESENTATION

The Company maintains its books of account and prepares its statutory financial statements in accordance with accounting principles in the Turkish Commercial Code and tax legislation and the uniform chart of accounts issued by the Ministry of Finance. The accompanying US Dollar financial statements are based on the statutory records which are obtained under the historical cost convention, with adjustments and reclassifications, for the purpose of fair presentation in accordance with Generally Accepted Accounting Principles in the United States of America (US GAAP). The Company's fiscal year ends on December 31.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

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.

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 determinable, and collectability is reasonably assured. Revenue typically is recognized at 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 held by the method most appropriate to the particular class of inventory being valued on the weighted average basis.

Related parties

Parties are considered to be related if one party 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 parties. Related parties also included individuals that are principle owners, management and members of the Company's Board of Directors and their families.

Property, plant and equipment

Property, plant and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Assets are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. If the fair value is less than the carrying amount of the asset, a loss is recognized for the difference.

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

Intangible assets

Intangible assets and related amortization: Intangible fixed assets are carried at cost and are depreciated by using straight-line method over three years.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Borrowing costs

The historical cost of acquiring an asset includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. If an asset requires a period of time in which to carry out the activities necessary to bring it to that condition and location, the interestcost incurred during that period as a result of expenditures for the asset is a part of the historical

cost of acquiring the asset.

All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

Taxation

Partnerships (kollektif sirket) are incorporated body according to Turkish Commercial Code; however, partnerships are not recognized as an incorporated body by income tax act. This fact results in paying individual income tax by partnerships, instead of being subject to corporate income tax. Moreover, services rendered by the Company in free zone area is excluded from paying both value added tax and individual income tax. The Company has Operating License for the exemption of income tax which has been taken from Undersecretariat of The Prime Ministry for Foreign Trade, numbered TRY-469, dated on 9 September 2008 and period of validation is 15 years.

Foreign currency transactions

The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated, using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate income and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

Following period rates are applicable as of 30 September 2010 and 31 December 2009:

	30.09.2010	31.12.2009
USD	1.4512	1.5057
EURO	1.9754	2.1603
GBP	2.2937	2.3892
Average USD	1.5143	1.5454

Comprehensive income

In September 1997, the Financial Accounting Standard Board issued SFAS No. 130, "Reporting Comprehensive Income . SFAS 130 is effective for years beginning after 15 September 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.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial instruments

Pursuant to ASC 820, "Fair Value Measurements and Disclosures , and ASC 825, "Financial Instruments , an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, trade receivables and payables, borrowings and amount due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on "Level 1 inputs, which consist of quoted prices in active markets for identical assets. It is assumed that carrying amounts of financial instruments approximate their current fair values in line with their short term nature.

5. CASH AND CASH EQUIVALENTS

As of 30 September 2010 and 31 December 2009 cash and cash equivalents comprised of the followings:

	30.09.2010	31.12.2009
Cash in hand Banks	34,808 3,326	9,621 43,020
Total	38,134	52,641

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

6. TRADE RECEIVABLES

As of 30 September 2010 and 31 December 2009 trade receivables comprised of followings:

	30.09.2010	31.12.2009
Trade receivables	811,767	269,394
Total	811,767	269,394

7. RELATED PARTY TRANSACTIONS


Due from shareholders has been presented as follows:
Due from shareholders	30.09.2010	31.12.2009
Recep Tanisman	43,404
Total	43,404

Due to related parties and shareholders has been presented as follows:

Due to related parties	30.09.2010	31.12.2009
Emko Emaye ve Yazi Tahtalari ve Egitim Gerecleri A.S . Touch IT Educations Technologies Di . Tic. Koll. Sirketi Kamron Inc	534,177 536,366 36,088	570,532 25,529 46,099
Total	1,106,631	642,160

Due to shareholders	30.09.2010	31.12.2009
Ali Riza Tanisman Andrew Brabin Stuart Recep Tanisman	23,731 12,809 202	22,657 33,003 --
Total	36,742	55,660

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

7. RELATED PARTY TRANSACTIONS (CONTINUED)

In the course of conducting its business, the Company conducted various business transactions with related parties on commercial terms

Major purchases from related parties have been presented as follows:

Major purchases from related parties
Trade goods	30.09.2010	31.12.2009
Emko Emaye ve Yazi Tahtalari ve Egitim Gerecleri A.S.	333,480	447,898
Touch IT Educations Technologies Dis. Tic. Koll.Sirketi	141,260	156,524
Total	474,740	604,422
Services provided
	30.09.2010	31.12.2009
Kamron Inc.	40,994	88,181
Emko Emaye ve Yazi Tahtalari ve Egitim Gerecleri A.S.	1,730	21,267
Total	42,724	109,448
Major sales to related parties have been presented as follows:
	30.09.2010	31.12.2009
Touch IT Educations Technologies Dis. Tic. Koll.Sirketi	148,756	179,035
Emko Emaye ve Yazi Tahtalari ve Egitim Gerecleri A.S.	3,999	--
	152,755	179,035

8. INVENTORIES:

As of 30 September 2010 and 31 December 2009 inventories comprised of the followings:

	30.09.2010	31.12.2009
Raw material and supplies	190,316	120,691
Finished goods	48,069	16,045
Advances given for purchases	11,196	22,632
Other inventories	8,288	7,080
Total	258,639	166,448

The insurance on the inventories as of 30 September 2010 and 31 December 2009 is USD 600,000.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

9. OTHER CURRENT ASSETS:

As of 30 September 2010 and 31 December 2009 other receivables and assets comprised of the followings:

	30.09.2010	31.12.2009
Prepaid Expenses Deposits and Guarantees given	3,925 400	-- 400
Total	4,325	400

10. PROPERTY, PLANT AND EQUIPMENT, NET

The movement of property, plant and equipment, net as of 30 September 2010 and 31 December 2009 is as follows;

	1 January 2009		Additions		31 December 2009		Additions		30 September 2010
Cost Machinery and equipment Vehicles Furniture and fixtures		3,655 12,522 5,911		-- 16,933 391		3,655 29,455 6,302		1,483 -- 37,406		5,139 29,455 43,708
Total		22,088		17,324		39,412		38,890		78,302
Depreciation Machinery and equipment Vehicles Furniture and fixtures		171 522 207		1,023 6,306 1,311		1,194 6,828 1,518		867 4,254 3,201		2,061 11,082 4,719
Total		900		8,640		9,540		8,323		17,862

Net book value		21,188				29,872				60,440

The insurance on property, plant and equipment as of 30 September 2010 and 31 December 2009 is USD 10,000.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

11. INTANGIBLE ASSETS, NET

The movement of intangible assets, net as of 30 September 2010 and 31 December 2009 is as follows;

	31 December 2009		Additions		30 September 2010
Cost Rights Other tangible assets		-- --		10,774 3,885		10,774 3,885
Total		--		14,659		14,659
Depreciation Rights Other tangible assets		-- --		1,496 432		1,496 432
Total		--		1,928		1,928

Net book value		--				12,731

12. OTHER NON CURRENT ASSETS:

As of 30 September 2010 and 31 December 2009 non-current assets comprised of the prepaid expenses of USD 1,116 and USD 3,725 respectively.

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

13. BANK LOANS

As of 30 September 2010 and 31 December 2009 bank loans comprised the followings:

	30.09.2010	31.12.2009
Short term borrowings
TRY bank loans	5,471	11,282
Sub total	5,471	11,282
Lone term borrowings
TRY bank loans	--	2,321
Sub total	--	2,321

Total	5,471	13,603
Analysis of bank loans' repayments is as follows:
	30.09.2010	31.12.2009
Within one year Between one to two years	5,471 --	11,282 2,321
Total	5,471	13,603

Bank Loans arise from purchases of two motor vehicles.

14. TRADE PAYABLES

As of 30 September 2010 and 31 December 2009, trade payables comprised the followings:

	30.09.2010	31.12.2009
Suppliers Other trade payables	126,874 162	65,831 3,182
Total	127,036	69,013

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

15. OTHER CURRENT LIABILITIES

As of 30 September 2010 and 31 December 2009 other current liabilities comprised the followings:

	30.09.2010	31.12.2009
Social security withholdings payable	1,819	685
Accrued expenses	1,250	--
Advances received	--	68,597
Other liabilities	5,086	2,234
Total	8,155	71,516

16. 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 30 September 2010, 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 semi annually, the maximum amount of TRY 2,517 effective from 1 July 2010 has been taken into consideration in calculation of provision from employment termination benefits (2009: TRY 2,365).

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

17. SHARE CAPITAL

The shareholders and their participation percentages as of 30 September 2010 and 31 December 2009 are as follows:

		30.09.2010					31.12.2009
	Shareholding					Shareholding
	Amount		%			Amount		%
Ali Riza Tam man		2,700		3	%		29,700		33	%
Andrew Stuart Brabin		30,600		34	%		30,600		34	%
Recep Tanisman		27,000		30	%		--		--
Ronald George Murphy		29,700		33	%		29,700		33	%
		90,000		100	%		90,000		100	%

Ali Riza Tam man, has transferred it shares valued USD 27,000 to Recep Tam man on 16 February 2010.

18. SALES

The composition of sales by principal operation for the period ended as at 30 September 2010 can be summarized as follows:

	30.09.2010
Clever board	631,121
Touch it board 78 inch	571,331
Touch it board 80 inch	180,825
Triumph board 78 inch	136,060
Electronic circuit	118,238
Touch it board 90 inch	93,042
Triumph board 80 inch	52,386
Touch it board 50 inch	34,484
Triumph board 50 inch	1,222
Others	26,421
Returns (-)	(2,217	)
Total	1,842,913

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

19. COST OF SALES

The composition of cost of sales by principal operations for the period ended as at 30 September 2010 can be summarized as follows:

	30.09.2010
Direct material cost	1,076,008
Direct labour cost	50,995
General production overheads	76,091
Ending inventory (trade goods)	(516	)
Depreciation	4,444
Total	1,207,022

20. MARKETING AND SELLING EXPENSES

The composition of marketing and selling expenses by principal operations for the period ended as at 30 September 2010 can be summarized as follows:

	30.09.2010
Export expenses Sales & marketing expenses of	(85,595	)
shareholders	(42,032	)
Software expenses	(32,906	)
Consultancy expenses	(20,358	)
Cargo expenses	(4,894	)
Depreciation	(1,211	)
Others	(25,770	)
Total	(212,766	)

21. GENERAL AND ADMINISTRATIVE EXPENSES

The composition of general and administrative expenses by principal operations for the period ended as at 30 September 2010 can be summarized as follows:

			30.09.2010
Shareholders expenses			94,606
Consulting expenses			28,841
Food expenses			2,369
Depreciation			4,595
Tax and duties			856
Retirement pay liability			247
Other			7,875
Total			139,389

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

22. OTHER INCOME AND (EXPENSES)AET

The composition of other income and (expenses), net for the period ended as at 30 September 2010 can be summarized as follows:

	30.09.2010
Provision for impairment of inventory	(38,092	)
Non tax deductable expenses	(4,566	)
Other, net	1,720
Total	(40,938	)

23. FINANCIAL EXPENSES

The composition of financial income / (expenses), net for the period ended at 30 September 2010 can be summarized as follows:

			30.09.2010
Interest expenses Other banking expenses			1,156 2,729
Total			3,885

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of debt, which includes the borrowings, cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings.

	Financial		Loans and Financial		liabilities at		Carrying		Fair		Note
	assets at		receivables		amortized cost		value		value
30 September 2010	amortized cost
Financial assets Cash and cash equivalents		--		38,134		--		38,134		38,134		5
Trade receivables		--		811,767		--		811,767		811,767		6
Financial liabilities Borrowings		--		5,471		--		5,471		5,471		13
Trade payables (including related parties)		--		1,233,677		--		1,233,677		1,233,677		7-14

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

	Financial assets at amortized		Loans and receivables		Financial liabilities at amortized cost		Carrying value		Fair value		Note
31 December 2009	cost
Financial assets Cash and cash equivalents		--		52,641		--		52,641		52,641		5
Trade receivables		--		269,394		--		269,394		269,394		6
Financial liabilities Borrowings		--		--		13,603		13,603		13,603		13
Trade payables(including related parties)		--		711,173		--		711,173		711,173		7-14

Financial risk factors

The Company's activities expose it to variety of financial risks; market risk, 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 period ended at 30 September 2010 and for the year ended 31 December 2009 can be summarized as follows:

				30.09.2010						31.12.2009
		F/C		Foreign					Foreign
	Type		Currency			TRY			Currency			TRY
Cash	USD			1,000			1,451			--			--
Banks	USD			1,398			2,028			41,901			63,090
Trade receivables	USD			811,767			1,178,037			269,394			405,628
Advances Given (inventories)	USD			--			--			10,774			16,222
Trade payables	USD			(97,920	)		(142,102	)		(553,238	)		(833,010	)
Due to related parties	EURO			--			--			(904	)		(1,953	)
	USD			(1,106,631	)		(1,605,943	)		--
Due to shareholders	USD			(12,809	)		(18,588	)		(33,003	)		(49,693	)
Other current liabilities	USD			--			--			(68,598	)		(103,288	)
Net F/C Assets and Liabilities							(585,117	)					(503,004	)

TOUCH IT TECHNOLOGIES KOLLEKTIF SIRKETI

RONALD GEORGE MURPHY VE ORTAKLARI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

24. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Credit risk management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in 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 its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Liquidity risk management.

Liquidity risk arises from the fact that the Company may not receive funds from its counterparties at the expected time. This risk is managed by maintaining a balance between continuity of funding and flexibility through the use of overdrafts and trade receivables.

The following tables details the Company's remaining contractual maturity for its non derivative financial liabilities. The tables have drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

	Current		Noncurrent		Total
30 September 2010 Borrowings		5,471		--		5,471
Trade payables		127,036		--		127,036
Due to related parties		1,106,631		--		1,106,631
31 December 2009 Borrowings		11,282		2,321		13,603
Trade payables		69,013		--		69,013
Due to related parties		642,160		--		642,160

25. SUBSEQUENT EVENTS

There is no subsequent event has occurred which might affect the financial statements.

INDEPENDENT AUDITORS REPORT

To the Board of Directors of

Touch It Education Technologies

Dis Ticaret Kollektif Sirketi Andrew Stuart Brabin ve Ortagi

Report on the Financial Statements

We have reviewed the accompanying financial statements of Touch IT Education Technologies DisTicaret Kollektif Sirketi Andrew Stuart Brabin ve Ortagi (“the Company”) which comprise the financial position as of 30 September 2010 and statements of comprehensive income, changes in equity and cash flows for the period then ended, and a summary of significant accounting policies and other explanatory notes.

Management Responsibility for the Financial Statements

Scope of Review

Conclusion

We would like to draw your attention to the following matter:

Istanbul, 5 November 2010

DENGE BAGIMSIZ DENETIM

SERBEST MUHASEBECI MALIMUSAVIRLIK

Member of MAZARS

Gokhan Almaci Partner

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGII

STATEMENT OF FINANCIAL POSITION

AS OF 30 SEPTEMBER 2010 AND 31 DECEMBER 2009

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	Notes		30.09.2010		31.12.2009
ASSETS
Cash and cash equivalents		5	3,832		2,204
Trade receivables, net		6	11,127		5,408
Due from related parties		7	674,602		130,594
Due from shareholders		7	10,484		--
Inventories, net		8	271,477		93,435
Other current assets		9	99		382

Total current assets			971,621		232,023
Rights, net		10	8,400		14,976
Total non-current assets			8,400		14,976

Total assets			980,021		246,999
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade payables		11	49,078		1,606
Due to shareholders		7	22,499		19,924
Due to related parties		7	19,110		28,816
Other current liabilities		12	6,081		49,103

Total current liabilities			96,768		99,449
Share purchase advances		14	750,000		-
Employee termination benefits		13	686		1,041
Total long-term liabilities			750,686		1,041
Shareholders' Equity:
Share capital		15	35,500		35,500
Retained Earnings			111,009		53,743
Net income for the period			(13,942	)	57,266

Total shareholders' equity			132,567		146,509

Total liabilities and shareholders' equity			980,021		246,999

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKET ANDREW STUART BRABIN VE ORTAGI

STATEMENTS OF INCOME AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	Notes	30.09.2010

Sales	16	834,023
Cost of sales	17	(591,527	)

Gross profit		242,496

Marketing, selling and distribution expenses	17	(136,275	)
General and administrative expenses	19	(136,591	)

Total operating income		(30,370	)

Financial income / (expense), net		(2,020	)
Other income / (expense), net		9,662

Profit before provision for taxation		(22,728	)

Provision for taxation - Current- Deferred

Net income for the period		(22,728	)

Other comprehensive income
Currency translation differences		8,786
Total comprehensive income for the period		(13,942	)

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

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

STATEMENT OF CASH FLOW AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	30.09.2010
Cash flow from operating activities
Net income for the period	(13,942	)

Adjustments to reconcile net profit to net cash provided by operating activities:

Depreciation	6,576
Provision for employee termination benefit	(355	)

Net income adjusted to non-cash items	(7,721	)

Changes in operating assets and liabilities:
Change in trade receivables	(5,719	)
Change in due from related parties	(544,008	)
Change in due from shareholders	(10,484	)
Change in inventories	(178,042	)
Change in other current assets	283
Change in trade payables	47,472
Change in due to related parties	(814	)
Change in due to shareholders	(6,317	)
Change in other current liabilities	(43,022	)

Net cash provided from operating activities	(748,372	)

Cash flows from investing activities:
Purchased of property and equipment
Change in share purchase advances	750,000

Net cash provided from investing activities	750,000

Cash flows from financing activities:
Increase/(decrease) in short-term borrowings
Increase/(decrease) in long-term borrowings

Cash flows provided by financing activities

Net decrease in cash and cash equivalents	1,628

Cash and cash equivalents at the beginning of the year	2,204

Cash and cash equivalents at the end of the period	3,832

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

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

STATEMENT OF CHANGES IN EQUITY AS OF 30 SEPTEMBER 2010 AND 31 DECEMBER 2009

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

	Share capital		Retained Earnings		Net income for the year / period			Total Shareholders' Equity
Balances at 31 December 2008		35,500		7,749		45,994			89,243

Transfer to retain earnings		--		45,994		(45,994	)

Net income for the year		--		--		57,266			57,266

Balances at 31 December 2009		35,500		53,743		57,266			146,509

Transfer to retain earnings		--		57,266		(57,266	)

Net income for the period		--		--		(13,942	)		(13,942	)

Balances at 30 September 2010		35,500		111,009		(13,942	)		132,567

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

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

1.	OPERATIONS OF THE COMPANY:

General

The Company established as a form of partnership (kollektif sirket). In Turkey, partnership is the association of two or more people who co-own a business for trading goods under a trade name. The co-owners have unlimited responsibility to their creditors. These forms of companies do not have minimum capital requirements.

Nature of Activities

Touch IT Education Technologies Di Ticaret Kollektif Sirketi Andrew Stuart Brabin ve Ortagi, formerly RT Lojistik Di Ticaret Kollektif Sirketi Recep Tanisman ve Ortagi; (referred as "Touch IT Education ) was established on 27 August 2007 with a "Share Transfer of Open Company and Amendment Agreement". Touch IT Education primarily engages in sales and purchases of the interactive writing board and all educational equipment.

On May 7, 2010, Touch IT Education, Touch IT Technologies and their stockholders (“Touch IT 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 Touch IT Technology and Touch IT Education in exchange for the transfer of 100% of the shares of TouchIT Tech and Touch IT Education to Hotel Management. This exchange transaction resulted in Touch IT Technologies and Touch IT Education becoming Hotel Management. The wholly-owned subsidiaries and the stockholders of Touch IT 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, Hotel Management entered into a Subscription Agreement (the "Subscription Agreement ) with investors for the sale of shares up to the value of USD 1,500,000 (the "Purchase Price ). As a result, USD 750,000 of the Purchase Price has been recognized in Touch IT Education's balance sheet as a future obligation to one of the investors.

No changes in the shareholder structure of Touch IT Turkey have been made since the formal registration has not yet been completed.

The average number of employees of the Company as of 30 September 2010 is 8 while it was 3 as at December 31, 2009.

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGIINOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

2. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

3. BASIS OF PRESENTATION

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGIINOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

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.

Revenue recognition

Inventories

Related parties

Rights

Rights are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Assets are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. If the fair value is less than the carrying amount of the asset, a loss is recognized for the difference.

Taxation

Partnerships (kollektif sirketi) are incorporated body according to Turkish Commercial Code; however, partnerships are not recognized as an incorporated body by income tax act. This fact results in paying individual income tax by partnerships, instead of being subject to corporate income tax. Moreover, services rendered by the Company in free zone area is excluded from paying both value added tax and individual income tax. The Company has an Operating Licence for the exemption of income tax which is taken from Undersecretariat of The Prime Ministry for Foreign Trade, numbered TRY-149, dated 1 November.2001 and period of validation is 10 years.

Retirement pay provision

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

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

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGIINOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Foreign currency transactions

Following period rates are applicable as of 30 September 2010 and 31 December 2009;

	30.09.2010	31.12.2009
USD	1.4512	1.5057
EURO	1.9754	2.1603
GBP	2.2937	2.3892
Average USD	1.5143	1.5454

Leasing - the Company as lessee

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 130 is effective for years beginning after 15 June 1997. This statement provides reporting standards of comprehensive income and its components and requires that all components of comprehensive income be reported in the financial statements in the period in which they are recognized. The Company has adopted the provisions of SFAS No. 130 in its financial statements and adoption of this statement did not have any effect.

Financial Instruments

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGIINOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial Instruments (continued)

Level 2

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, trade receivables and payables, borrowings and amounts due from and due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on "Level 1 inputs, which consist of quoted prices in active markets for identical assets.

5. CASH AND CASH EQUIVALENTS

As of 30 September 2010 and 31 December 2009 cash and cash equivalents comprised of the followings:

	30.09.2010	31.12.2009
Cash in hand	2,848	--
Banks	984	2,204

Total	3,832	2,204

6.	TRADE RECEIVABLES

As of 30 September 2010 and 31 December 2009 trade receivables comprised of followings:

	30.09.2010	31.12.2009
Trade receivables	11,127	5,408

Total	11,127	5,408

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

7. RELATED PARTY BALANCES AND TRANSACTIONS:

In the course of conducting its business, the Company conducted various business transactions with related parties on commercial terms.

Related parties and shareholders balances and transactions have been presented as follows:

Due from related parties	30.09.2010	31.12.2009
Touch IT Technologies Koll. Sir. Ronald George
Murphy ve Ortaklari	536,366	25,528
Emko Yazi Tahtalan ve Egitim Gerecleri A.S.	132,236	105,066
ASB Trading	6,000	--

Total	674,602	130,594

Due from shareholders	30.09.2010	31.12.2009
Andrew Stuart Brabin	10,484	--

Total	10,484	--

Due to related parties	30.09.2010	31.12.2009
Kamron	19,110	--
Emko Yazi Tahtalan ve Egitim Gerecleri A.S.	--	28,816

Total	19,110	28,816

Due to shareholders	30.09.2010	31.12.2009
Ali Riza Tanisman	22,499	19,924

Total	22,499	19,924
Major purchases from related parties have been presented as follows:
Major purchases from related parties	30.09.2010	31.12.2009
Touch It Technologies Koll. Sir. Ronald George
Murphy ve Ortaklari	148,756	179,035
Emko Yazi Tahtalan ve Egitim Gerecleri A.S.	--	15,734

Total	148,756	194,769

Major sales to related parties	30.09.2010	31.12.2009
Emko Yazi Tahtalan ve Egitim Gerecleri A.S.	368,957	280,000
Touch IT Technologies Koll. Sir. Ronald George
Murphy ve Ortaklari	127,340	156,524

Total	496,297	436,524

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

7.	RELATED PARTY BALANCES AND TRANSACTIONS:

Service provided	30.09.2010	31.12.2009
Kamron Inc.	68,222
Andrew Stuart Brabin	27,934
Total	96,156

8.	INVENTORIES

As of 30 September 2010 and 31 December 2009 inventories comprised of the followings:

	30.09.2010	31.12.2009
Advances given for purchases Trade goods	205,499 65,978	45,324 48,111
Total	271,477	93,435

The insurance on the inventories as of 30 September 2010 and 31 December 2009 is USD 100,000.

9. OTHER CURRENT ASSETS:

As of 30 September 2010 and 31 December 2009 other receivables and assets comprised of prepaid expenses of USD 99 and 382 respectively.

10.	NON-CURRENT ASSETS

As of 30 September 2010 and 31 December 2009 non-current assets comprised of followings:

	30.09.2010	31.12.2009
License right Depletion allowance	35,000 (26,600)	35,500 (20,524)
Total	8,400	14,976

Rights represent the operating license obtained from Under secretariat of The Prime Ministry for Foreign Trade.

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

11. TRADE PAYABLES

As of 30 September 2010 and 31 December 2009 trade payables comprised as of the followings:

	30.09.2010	31.12.2009
Trade payables	49,078	1,606
Total	49,078	1,606

12. OTHER CURRENT LIABILITIES

As of 30 September 2010 and 31 December 2009 other current liabilities comprised of the followings:

	30.09.2010	31.12.2009
Taxes and funds payable	2,758	--
Social security withholdings payable	2,073	929
Accrued expenses	1,250	--
Advances received	--	48,174
Total	6,081	49,103

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 30 September 2010, 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 semi annually, the maximum amount of TRY 2,517 effective from 1 January 2010 has been taken into consideration in calculation of provision from employment termination benefits (2009: TRY 2,365).

14. SHARE CAPITAL

As at 30 September 2010, the Company carries an amount of 750,000 relating to Share purchase advances. The balance is classified in the financial statements as a long-term liability.

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

15. SHARE CAPITAL

The issued share capital of the Company is respectively for the period ended at 30 September 2010 and for the year ended 31 December 2009 comprised as follows;

	30.09.2010		31.12.2009
	Shareholding Amount	%	Shareholding Amount	%
Andrew Stuart Brabin Ali Riza Tanisman	26,625 8,875	75% 25%	26,625 8,875	75% 25%
	35,500	100%	35,500	100%

16. SALES

The composition of sales by principal operation for the period ended as at 30 September 2010 can be summarized as follows:

	30.09.2010
Electronic set	592,546
Remote Control for classroom	140,906
Touch IT board	44,213
Writing pad	27,913
Others	36,718
Returns (-)	(8,273	)
Total	834,023

17. COST OF SALES

The composition of cost of sales by principal operations for the period ended as at 30 September 2010 can be summarized as follows:

	30.09.2010
Cost of sales (trade goods)	(591,527	)
Total	(591,527	)

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

18. MARKETING AND SELLING EXPENSES

The composition of marketing and selling expenses by principal operations for the period ended as at 30 September 2010 can be summarized as follows:

			30.09.2010
Consultancy expenses			100,995
Export expenses			20,362
Web site design expenses			8,908
Other expenses			6,010
Total			136,275

19. GENERAL AND ADMINISTRATIVE EXPENSES

The composition of general and administrative expenses by principal operations for the period ended as at 30 September 2010 can be summarized as follows:

			30.09.2010
Consultancy expenses			62,145
Salaries			38,561
Provision for doubtful receivables			18,727
Rental expenses			9,776
Depreciation expenses			6,576
Other expenses			806
Total			136,591

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

20.	FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Capital risk management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of debt, which includes the borrowings, cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings.

	Financial assets at				Financial
30 September 2010	amortized cost		Loans and receivables		liabilities at amortized cost		Carrying value		Fair value		Note
Financial assets Cash and cash equivalents		--		3,832		--		3,832		3,832		3,832
Trade receivables (including related parties)		--		685,729		--		685,729		685,729		685,729
Financial liabilities Trade payables (including related parties)		--		68,188		--		68,188		68,188		68,188

	Financial assets at				Financial
31 December 2009	amortized cost		Loans and receivables		liabilities at amortized cost		Carrying value		Fair value		Note
Financial assets Cash and cash equivalents		--		2,204		--		2,204		2,204		5
Trade receivables (including related parties)		--		136,002		--		136,002		136,002		6-7
Financial liabilities Trade payables (including related parties)		--		21,530		--		21,530		21,530		7-11

Financial risk factors

Market risk

The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates.

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGIINOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

21.	FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Foreign currency risk management

		30.09.2010		31.12.2009
	F/C TYPE	Foreign Currency	TRY	Foreign Currency	TRY
Cash		150	218
Banks	USD	620	900	2,157	3,248
Due from related parties	USD	674,602	978,982	123,953	186,636
Trade receivables	USD	4,102	5,953	3,843	5,786
Due from shareholders	USD	10,484	15,214	--	--
Advances given (Inventories)	USD	67,225	97,557	45,324	68,244
Trade payables	USD	(42,953)	(61,811)
Advances received (Other current liabilities)	USD	--	--	(48,173)	(72,534)
Due to related party	USD	(19,110)	(27,732)
Share purchase advances	USD	750,000	(1,088,400)
Net F/C Assets and Liabilities			(79,119)		191,380

TOUCH IT EDUCATION TECHNOLOGIES DIS TICARET KOLLEKTIF SIRKETI ANDREW STUART BRABIN VE ORTAGI

NOTES TO FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2010

(All amounts are expressed in US Dollars (USD) in full, unless otherwise indicated)

20.	FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)

Credit risk management

Liquidity risk management

	Current Noncurrent	Total
30 September 2010 Trade payables (including related parties) 31 December 2009 Trade payables (including related parties)	68,188 21,530	68,188 21,530

21.	SUBSEQUENT EVENTS

There is no subsequent event has occurred which might affect the financial statements.

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, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Quarterly Report.

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 “Risk Factors,” “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, including the factors described in the section entitled “Risk Factors” in this Report. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this Report.

Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Report.

Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside of our control, and involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made, including, but not limited to, the following:

● actual or anticipated fluctuations in our quarterly and annual operating results;

● actual or anticipated product constraints;

● decreased demand for our products resulting from changes in consumer preferences;

● product and services announcements by us or our competitors;

● loss of any of our key executives;

● regulatory announcements, proceedings or changes;

● announcements in the touch technology community;

● competitive product developments;

● intellectual property and legal developments;

● mergers or strategic alliances in the touch technology industry;

● any business combination we may propose or complete;

● any financing transactions we may propose or complete; or

● broader industry and market trends unrelated to its performance.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

Plan of Operation

The ability of the Company to achieve its business objectives is contingent upon its success in raising additional capital until adequate revenues are realized from operations.

We are a manufacturer of touch based visual communication products for the 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 LCD displays. Our products stand out from the competition in terms of their 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.

In the past ___, we have designed, manufactured, launched, developed and sold 4 new products as well as established the business from scratch and equipped a factory.

COMPANY OVERVIEW

The Company manufactures touch-based visual communication products for the education and corporate worldwide marketplaces. Our products stand out from the competition in terms of their 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.

In our first year of trading we exceeded revenues of $2m USD and we have designed, manufactured, launched and sold 4 new products as well as established the business and equipped a factory.

We believe that we are on target for annual revenue for 2010 of $4m USD. We continued to work to our forecasts with a combined Q1 through Q3 revenue of $2,676,936 The strongest quarter for our market is typically Q4. Company results for 2009 comply with this trend.

Our keys to success are:

1. Establishing and maintaining working relationships and contractual agreements with distribution and OEM customers;

2. Increasing our profit margin by lowering the import and raw material costs by bulk purchasing from vendors;

3. By increasing our purchasing power, increasing our stock holding and lowering delivery times to customers thus enabling further sales growth; and

4. Effectively communicating to 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, the Company (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 together with TouchIT Tech KS, “TouchIT”), and the stockholders of Touch Ed. Both TouchIT Tech 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”).

The Company as yet has not received the second tranche of funding in connection with the Share Exchange Agreement and subsequent Subscription Agreement.

The 1st of September saw Mr. Sean Paradis start as Director of Business Development for North America. Sean duties include the management of the new distribution partners, Douglas Stewart and D&H as well as pursuing new OEM opportunities for the Company in the USA. Sean reports directly to Ronald Murphy, President of Sales for the Company.

Q3 saw new distribution partners being appointed in the USA. There, a number of sales and OEM contracts are being concluded presently and will be announced upon signing. The Expansion in the Middle East continues to be strong with Saudi Arabia becoming an important market for the Company. The Company has seen organic growth across all of its accounts.

The Company continues its development of a new range of Interactive LCD products which are planned for launch in Q4 2010. These will include a 42” and 55” and a 65” LCD. All will be Full HD and touch-based, and may include options of multiple input “multi-touch” on these models. These models will replace the 57” which we will see an end of life during the same period. Management took the decision to broaden the LCD range due to feedback and growing demand from the markets.

The Company has almost finished the development of the TouchIT Transcribe annotation software that is aimed at the corporate market. This is scheduled to be released December 1, 2010. It will be a free download for all existing TouchIT Board and TouchIT LCD users.

The Company continues to look into the viability of an OEM offering of a content software that is suitable for both 7-11 and 11-16 age groups. If concluded, the software will be sold in conjunction with our existing products to strengthen the product line.

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 referred to as the Company.

This management's discussion and analysis of our financial condition and results of operations are based on the financial statements of both TouchIT Tech 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:

The Company maintains its books of account and prepares its statutory financial statements in accordance with accounting principles in the Turkish Commercial Code 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.

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.

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:

The company uses a calendar year as its fiscal year ending December 31.

RESULTS OF OPERATIONS

TOUCHIT TECH KS AND TOUCHIT ED COMBINED STATEMENTS OF COMPREHENSIVE INCOME

FOR QUARTER ENDED SEPTEMBER 30, 2010 & 2009

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

	01.01.- 09.30.2010		01.01.- 09.30.2009

NET SALES	2,676,936		1,807,348

COST OF SALES	(1,798,549	)	(1,618,647	)

Gross profit	878,387		188,702

SELLING EXPENSES	(349,041	)	(423,242	)

GENERAL AND ADMINISTRATIVE EXPENSES	(275,980	)	(55,289	)

Income from operations	253,366		(289,830	)

OTHER INCOME AND EXPENSES, NET	(31,276	)	(17,447	)

FINANCIAL INCOME AND EXPENSES , NET	(5,905	)	13,842

Income before taxation and currency translation gain/(loss)	216,185		(293,434	)

TAXATION CHARGE
Taxation current	--		--
Deferred	--		--

CURRENCY TRANSLATION GAIN/(LOSS)	45,619		(12,279	)

Net income for the period	261,804		(305,713	)

OTHER COMPREHENSIVE INCOME


Total comprehensive income	261,804		(305,713	)

NET SALES (REVENUE) – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, revenue has increased 48.11% or by $869,588 from $1,807,348 to $2,676,936. This increase can be attributed to an increase in sales activities from all customers on a worldwide basis, both distribution and original equipment manufacture (OEM). We are also operating in markets where we did not have any activity in 2009, for example the USA. In Q3 2009 the Company was operating on a much smaller customer base. There were no tenders or similar large ‘one-off’ sales during this period in 2010; it was regular run-rate business, which we expect to continue to grow during the remainder of 2010.

GROSS PROFIT – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, gross profit has increased by 365.49% or $689,685 from $188,702 to $878,387. This is primarily due to an increase in sales revenue, but also the fact that costs have been stabilized and production streamlined now that the product development for our core four products has been completed. We expect to continue to develop our product range throughout the course of 2010, most notably with the introduction of the new LCD range.

INCOME FROM OPERATIONS – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, income from operations has increased $543,196. This can be attributed to the setup of the factory being complete (it was still being equipped from being a shell in Q3 2009) but also product development costs were still being incurred in Q3 2009 for the core products whereas these costs have been reduced and ongoing research and development costs have been streamlined. As previously mentioned, sales efforts have increased and the number of customers on a worldwide basis for quarter ended September 30, 2010 was greater than the number of customers in the same period in 2009.

NET INCOME FOR THE PERIOD – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, NET income for the period has increased by $567,517. This was and increase from $(305,713) to $261,804. This increase can be attributed to the maintenance of margin whilst increasing sales revenue.

TOUCHIT TECH KS AND TOUCHIT ED COMBINED BALANCE SHEETS

AT SEPTEMBER 30, 2010 & 2009

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

	09/30/2010			09/30/2009
CURRENT ASSETS
Cash and banks		41,966			9,979
Trade receivables		822,894			193,705
Due from related parties		674,602			20,243
Due from shareholders		53,888			-
Inventories		530,116			474,612
Other current assets		4,424			2,465

Total current assets		2,127,890			701,004

NON CURRENT ASSETS
Property, plant and equipment, net		60,440			47,568
Intangible assets, net		12,731
Other non current assets		1,116
Rights, net		8,400			18,736

Total non current assets		82,687			66,304


TOTAL ASSETS		2,210,577			767,308


CURRENT LIABILITIES
Borrowings		5,471			20,790
Trade payables		176,114			110,740
Due to shareholders		59,241			108,777
Due to related parties		1,125,741			742,934
Other current liabilities		14,236			6,134

Total current liabilities		1,380,803			989,375


NON CURRENT LIABILITIES
					3,583
Reserve for retirement pay		933			848
Share purchase advances		750,000			-

Total non current liabilities		750,933			4,431


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Share capital		125,500			125,500
Retain earnings		(308,463	)		(46,285	)
Net income for the period		261,804			(305,713	)

Total shareholders’ equity		78,841			(226,498	)

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY		2,210,577			767,308

CURRENT ASSETS – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, total current assets have increased by 303% or $1,426,886. This increase is due to an increase in inventory holding, but also due to an increase in receivables as the sales revenue has grown. We still have to offer our customers credit to win the business. Monies due from related parties has also increased. There are some inter-company sales but also the monies due from Emko Emaye, who purchases our electronics, form a large proportion of this. There is also a large receivable from the USA where we have sent a large volume of stock to start the business.

NON-CURRENT ASSETS – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, total non-current assets have increased by 124% or $16,383. $21,188 of this increase can be attributed to plant equipment in the factory where extra production stations have been created as the factory has continued to develop to meet the sales increase. There have also been two new offices constructed, a computer server added, a show room equipped and constructed and a new LCD production area fitted out. This is to meet future demand for the products.

TOTAL ASSETS – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, total assets have increased by 288% or $1,443,269 from $521,676 to $2,210,577.

CURRENT LIABILITIES – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to quarter ended September 30, 2009, total current liabilities have increased by 139% or $391,428 from $989,375 to $1,380,803. Borrowings for the quarter ended 2010 have decreased by 26% or $15,319 compared to quarter ended September 30, 2009. Trade payables have increased by 159% or $65,374 which can be attributed to an increase in inventory required to service the sales demand. Monies due to related parties have increased by 151% or $382,807 which can be attributed to an increase in raw materials purchased from Emko Emaye to service growing sales demand, along with inter-company transactions. Other current liabilities have increased by 232% or $8,102.

TOUCHIT TECH KS AND TOUCHIT ED COMBINED STATEMENTS OF CASH FLOW

FOR QUARTERS ENDED SEPTEMBER 30, 2010 & 2009

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

	09/30/2010			09/30/2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net income		261,804			(305,713	)
Adjustments to reconcile net income to net cash provided		--			--
By operating activities:		--			--
		10,250			9,395
Provision for retirement pay		(108	)		534
Depletion allowance		6,576			4,732
Changes in operating assets and liabilities		--			--
Trade receivables		(548,092	)		(69,336	)
Due from related parties		(544,008	)		313,633
Due from shareholders		(53,888	)		12,258
Inventories		(270,233	)		(82,797	)
Other current assets		(3,642	)		4,251
		2,609			--
Trade payables		96,471			(238,040	)
Due to shareholders		(16,211	)		74,968
Due to related parties		463,657			285,747
Other current liabilities		(106,383	)		(15,375	)

Net cash generated from (used for) operating activities		(701,198	)		(5,743	)

CASH FLOWS FROM FINANCING ACTIVITIES
		(5,811	)		14,035
		(2,321	)		(4,157	)
Dividends paid		--			--


Net cash (used for) provided from financing activities		(8,132	)		9,878





Net cash provided from investing activities		696,451			(22,966	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		(12,878	)		(18,831	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		54,845			28,810

CASH AND CASH EQUIVALENTS AT END OF PERIOD		41,967			9,979

NET CASH USED FOR OPERATING ACTIVITIES – For the first nine months of the financial year, quarter ended September 30, 2010 as compared to the quarter ended September 30, 2009, NET cash used for operating activities was $(701,198) compared to $(5,743) which is an increase of $695,455. This increase is due to having to extend credit to customers, notably the USA where the payment cycle due to long delivery times from Turkey is much increased.

CASH FLOW FROM INVESTING ACTIVITIES – For the first nine months of the financial year, quarter ended September30, 2010 there was a NET cash flow of $696,451 generated from financing activities. The gross of this amount $750 000 came from an advance stock purchase relating to the reverse merger transaction that occurred on May7, 2010. The details of this transaction are detailed in the explanatory notes of this document and also in the 8K filed with the SEC on May 12, 2010.

CASH FLOW FROM FINANCING ACTIVITES – For the first nine months of the financial year, quarter ended September 30, 2010, cash flow from financing activities was $(8,132)

CASH POSITION. There was a net increase in the cash and cash equivalents of $26,035 for the beginning of the period, compared to the same period in 2009. Cash and cash equivalents at the end of the period has increased by $31,988 for quarter ended September 30, 2010 as compared to quarter ended September 30, 2009.

Quantitative and Qualitative Disclosures about Market Risk

Financial risk factors

The Company’s activities expose it to variety of financial risks; including, market risk, credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects of such risks on the Company’s overall 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.

Credit risk management

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in 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 its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Liquidity risk management

Liquidity risk primarily 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a “smaller reporting company” (as defined by Rule 12b-2 of the Exchange Act) and are not required to provide the information required under this item.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934 require public companies to maintain “disclosure controls and procedures,” which are defined to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2010, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following three material weaknesses in our disclosure controls and procedures:

1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

3. We do not have review and supervision procedures for financial reporting functions. The review and supervision function of internal control relates to the accuracy of financial information reported. The failure to review and supervise could allow the reporting of inaccurate or incomplete financial information. Due to our size and nature, review and supervision may not always be possible or economically feasible. Management evaluated the impact of our significant number of audit adjustments and has concluded that the control deficiency that resulted represented a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

(b) Changes in internal control over financial reporting

During the three months ended September 30, 2010, the Company has not made any changes to internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is 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 1A. Risk Factors.

Risks Relating to Our Business

WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY.

We were incorporated in Nevada in November 2008, under the name “Hotel Management Systems, Inc.” Following the transactions described herein, we are now a manufacturer of touch based communication products for the education and corporate marketplaces. As such, we have a limited operating history, and historical operating results may not provide a meaningful basis for evaluating the business, financial performance and prospects. We have limited assets or financial resources and/or limited operating history. Therefore, the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate.

WE NEED TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND ACHIEVE OUR EXPECTED REVENUES AND OUR FAILURE TO MANAGE GROWTH WILL CAUSE A DISRUPTION OF OUR OPERATIONS RESULTING IN THE FAILURE TO GENERATE REVENUE.

In order to maximize potential growth in our current and potential markets, we believe that we must expand our marketing operations. This expansion will place a significant strain on our management and our operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems. We will also need to effectively train, motivate, and manage our employees. Our failure to manage our growth will disrupt our operations and ultimately prevent us from generating the revenues we expect.

In order to achieve the above mentioned targets, the general strategies of our company are to maintain and search for hard-working employees who have innovative initiatives; on the other hands, our company will also keep a close eye on expanding opportunities.

IF WE NEED ADDITIONAL CAPITAL TO FUND OUR GROWING OPERATIONS, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR OPERATIONS.

If adequate additional financing is not available on favorable terms or we are unable to secure additional financing, we may not be able to undertake expansion, continue our marketing efforts and we would have to modify our business plans accordingly. There is no assurance that additional financing will be available to us or financing on favorable terms.

In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the release of competitive products by our competition; (iii) the level of our investment in research and development; and (iv) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

NEED FOR ADDITIONAL EMPLOYEES.

The Company’s future success also depends upon its continuing ability to attract and retain highly qualified personnel. Expansion of the Company’s business and the management and operation of the Company will require additional managers and employees with industry experience, and the success of the Company will be highly dependent on the Company’s ability to attract and retain skilled management personnel and other employees. Competition for such personnel is intense. There can be no assurance that the Company will be able to attract or retain highly qualified personnel.

Competition for skilled personnel in our industry is significant. This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees. The Company’s inability to attract skilled management personnel and other employees as needed could have a material adverse effect on the Company’s business, operating results and financial condition. The Company’s arrangement with its current employees is at will, meaning its employees may voluntarily terminate their employment at any time. The Company anticipates that the use of stock options, restricted stock grants, stock appreciation rights, and phantom stock awards will be valuable in attracting and retaining qualified personnel. However, the effects of such plan cannot be certain.

OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF OUR MANAGEMENT TEAM.

We are presently dependent to a great extent upon the experience, abilities and continued services of Andrew Brabin, Ronald Murphy, and Recep Tanisman, our management team. The loss of services of Mr. Brabin, Mr. Murphy, or Mr. Tanisman could have a material adverse effect on our business, financial condition or results of operation.

WE ARE IN AN INTENSELY COMPETITIVE INDUSTRY AND THERE CAN BE NO ASSURANCE THAT WE WILL BE ABLE TO COMPETE WITH OUR COMPETITORS WHO MAY HAVE GREATER RESOURCES.

The Company could face strong competition within the local area by competitors in the touch technology industry who could duplicate the model. These competitors may have substantially greater financial resources and marketing, development and other capabilities than the Company. In addition, there are very few barriers to enter into the market for our products. There can be no assurance, therefore, that any of our competitors, many of whom have far greater resources will not independently develop products that are substantially equivalent or superior to our products. Therefore, an investment in the Company is very risky and speculative due to the competitive environment in which the Company intends to operate.

OUR ABILITY TO CONTINUE TO DEVELOP AND EXPAND OUR PRODUCT OFFERINGS TO ADDRESS EMERGING CONSUMER DEMANDS AND TECHNOLOGICAL TRENDS WILL IMPACT OUR FUTURE GROWTH. IF WE ARE NOT SUCCESSFUL IN MEETING THESE BUSINESS CHALLENGES, OUR RESULTS OF OPERATIONS AND CASH FLOWS WILL BE MATERIALLY AND ADVERSELY AFFECTED.

Our ability to implement solutions for our customers incorporating new developments and improvements in technology which translate into productivity improvements for our customers and to develop product offerings that meet the current and prospective customers’ needs are critical to our success. The markets we serve are highly competitive. Our competitors may develop solutions or products which make our offerings obsolete. Our ability to develop and implement up to date solutions utilizing new technologies which meet evolving customer needs in touch technology solutions will impact our future revenue growth and earnings.

OUR FUTURE SUCCESS IS DEPENDENT UPON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

The Company may not be able to protect unauthorized use of its intellectual property and take appropriate steps to enforce its rights. Although management does not believe that its products infringe on the intellectual rights of others, there is no assurance that the Company may not be the target of infringement or other claims. Such claims, even if not true, could result in significant legal and other costs associated and may be a distraction to management. We plan to rely on a combination of copyright, trade secret, trademark laws and non-disclosure and other contractual provisions to protect our proprietary rights. We use and intend to use the trademark “TouchIT Technology” name and logo. We intend to file federal trademark applications for “TouchIT Technology” and to secure the Internet trade domain “TouchITtechnologies.com” and related logo. There can be no assurance that the registrations applied for will be accepted. Because the policing of intellectual and intangible rights may be difficult and the ideas and other aspects underlying our business model may not in all cases be protectable under intellectual property laws, there can be assurance that we can prevent competitors from marketing the same or similar products and services.

Risks Associated with Our Shares of Common Stock

BROAD DISCRETION OF MANAGEMENT TO USE OF PROCEEDS FROM FINANCING.

The Company’s management will have broad discretion with respect to the expenditure of the net proceeds from the financing that closed in connection with the Share Exchange Agreement. Accordingly, Subscribers will be entrusting their funds to the Company’s management, upon whose judgment they must depend, with limited information concerning the specific working capital requirements and general corporate purposes to which the funds will be ultimately applied.

THE SECURITIES BEING ISSUED IN CONNECTION WITH AND FOLLOWING THE SHARE EXCHANGE AGREEMENT ARE RESTRICTED SECURITIES AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF A RESALE EXEMPTION.

The shares of Common Stock, Notes and Warrants being issued in connection with the Share Exchange Agreement and financing described herein are being issued in reliance on an exemption from the registration requirements of the Securities Act under Section 4(2) of the Securities Act and Regulation D promulgated under the Securities Act. Consequently, these securities will be subject to restrictions on transfer under the Securities Act and may not be transferred in the absence of registration or the availability of a resale exemption. In particular, in the absence of registration, such securities cannot be resold to the public until certain requirements under Rule 144 promulgated under the Securities Act have been satisfied, including certain holding period requirements. Furthermore, we are under no obligation to file a resale registration statement with respect to those securities except in connection with an unrelated secondary offering. As a result, a purchaser who receives any such securities issued in connection with the Share Exchange Agreement or the financing may be unable to sell such securities at the time, or at the price or upon such other terms and conditions, as the purchaser desires, and the terms of such sale may be less favorable to the purchaser than might be obtainable in the absence of such limitations and restrictions.

RESTRICTED SECURITIES; LIMITED TRANSFERABILITY.

Purchase of the Securities should be considered a long-term, illiquid investment. The Securities have not been registered under the Act, are being offered by reason of a specific exemption from registration and are “restricted securities” under Rule 144 promulgated under the Act, and cannot be sold without registration under the Act or any exemption from registration. In addition, the Securities will not be registered under any state securities laws that would permit their transfer. Because of these restrictions and the absence of a trading market for the Securities, a Subscriber will likely be unable to liquidate an investment even though other personal financial circumstances would dictate such liquidation.

OUR COMMON STOCK IS QUOTED ON THE OTC BULLETIN BOARD WHICH MAY HAVE AN UNFAVORABLE IMPACT ON OUR STOCK PRICE AND LIQUIDITY.

Our common stock is quoted on the OTC Bulletin Board (the “OTCBB”). The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or Nasdaq system. The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

IF WE FAIL TO ESTABLISH AND MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROL, WE MAY NOT BE ABLE TO REPORT OUR FINANCIAL RESULTS ACCURATELY OR TO PREVENT FRAUD. ANY INABILITY TO REPORT AND FILE OUR FINANCIAL RESULTS ACCURATELY AND TIMELY COULD HARM OUR REPUTATION AND ADVERSELY IMPACT THE TRADING PRICE OF OUR COMMON STOCK.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. We have not performed an in-depth analysis to determine if in the past un-discovered failures of internal controls exist, and may in the future discover areas of our internal control that need improvement.

OUR SHARES OF COMMON STOCK ARE VERY THINLY TRADED, AND THE PRICE MAY NOT REFLECT OUR VALUE AND THERE CAN BE NO ASSURANCE THAT THERE WILL BE AN ACTIVE MARKET FOR OUR SHARES OF COMMON STOCK EITHER NOW OR IN THE FUTURE.

Our shares of common stock are very thinly traded, and the price if traded may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for any loans.

THERE IS CURRENTLY NO LIQUID TRADING MARKET FOR OUR COMMON STOCK AND WE CANNOT ENSURE THAT ONE WILL EVER DEVELOP OR BE SUSTAINED.

To date there has been no liquid trading market for our common stock. We cannot predict how liquid the market for our common stock might become. We anticipate having our common stock continue to be quoted for trading on the OTC Bulletin Board, however, we cannot be sure that such quotations will continue. We currently do not satisfy the initial listing standards, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remain listed on the OTC Bulletin Board or suspended from the OTC Bulletin Board, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

Furthermore, for companies whose securities are traded in the OTC Bulletin Board, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.

In addition, the price at which our common stock may be sold is very unpredictable because there are very few trades in our common stock. Because our common stock is so thinly traded, a large block of shares traded can lead to a dramatic fluctuation in the share price.

OUR STOCK PRICE MAY BE VOLATILE.

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:

-	limited “public float” following the Share Exchange, in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

-	sales of our common stock; and

-	our ability to execute our business plan.

Our shares of common stock are very thinly traded, and the price may not reflect our value and there can be no assurance that there will be an active market for our shares of common stock either now or in the future. Our shares of common stock are very thinly traded, only a small percentage of our common stock is available to be traded and is held by a small number of holders and the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business, among other things. We will take certain steps including utilizing investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require we compensate consultants with cash and/or stock. There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business and trading may be at an inflated price relative to the performance of our company due to, among other things, availability of sellers of our shares. If a market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms or clearing firms may not be willing to effect transactions in the securities or accept our shares for deposit in an account. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of low priced shares of common stock as collateral for any loans.

WE CURRENTLY HAVE A LIMITED PUBLIC FLOAT HELD BY A LIMITED NUMBER OF PERSONS.

Of our 61,630,001 issued and outstanding shares of common stock, only 12,900,000 shares are presently eligible for resale without further registration by the holders thereof or pursuant to an exemption from registration. In addition, these 12,900,000 shares are presently held by a limited number of shareholders. As a result of the relatively small size of our public float and its initial concentration in the hands of only a few people, the liquidity of the market for our common stock may be both severely limited and subject to high levels of volatility.

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 Education, (“TouchIT Ed” and together with 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 of our Current Report 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 (the “Subscription Agreement”) with certain investors for the sale of up to $1,500,000 (the "Purchase Price") of principal amount convertible promissory notes of the Company convertible into up to 6,000,000 shares of our Common Stock (“Note” or “Notes”) and share purchase warrants (the “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 of our Current Report 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.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved).

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

(a) Exhibits

Exhibit Number		Description of Exhibit

31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).

32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).

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 Financial Officer Dated: November 17, 2010