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BTCS Inc. - Quarter Report: 2013 September (Form 10-Q)

f10q0913_touchittechnologies.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, 2013
 
¨   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.)
 
101 West Big Beaver Road, Suite 1400, Troy, MI, 48084, USA
 (Address of Principal Executive Offices) (Zip Code)

248 764 1084
(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 ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 228,864,419 shares of common stock outstanding as of November 13, 2013.
 


 
 

 

TOUCHIT TECHNOLOGIES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013

INDEX
 
PART I - FINANCIAL INFORMATION
 
     
Item 1. 
Financial Statements.
4
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
17
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
24
     
Item 4.
Controls and Procedures.
24
     
PART II - OTHER INFORMATION
 
     
Item 1.
Legal Proceedings.
25
     
Item 6.
Exhibits.
26
     
PART III – REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM
 
   
Signature
28

 
 

 
 
EXPLANATORY NOTE
 
TouchIT Technologies, Inc. (the “Company”) was incorporated in the State of Nevada as “Hotel Management Systems, Inc.”  On May 7, 2010, the Company entered into a share exchange agreement, with TouchIT Technologies Koll Sti (“TouchIT Tech KS”), TouchIT Education Koll Sti (“TouchIT Ed”)(“TouchIT Ed” and together with TouchIT Tech KS, “TouchIT”), and the stockholders of TouchIT Tech KS and Touch Ed.  Both TouchIT Tech KS and TouchIT Ed are corporations formed under the laws of Turkey and are based in Istanbul, Turkey. The closing of the transaction (the “Closing”) took place on May 7, 2010 (the “Closing Date”), all as disclosed on Form 8-K filed by the Company with the Securities and Exchange Commission on May 24, 2010.  See “Recent Developments”.  Subsequently, the Registrant amended its Articles of Incorporation to change its name to TouchIT Technologies, Inc., as disclosed on Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 24, 2010.
 
Unless otherwise specified or required by context, as used in this Quarterly Report on Form 10-Q, the terms “we,” “our,” “us” and the “Company” refer collectively to (i) TouchIT Technologies, Inc., a Nevada corporation (“TouchIT”), (ii) TouchIT Tech KS and TouchIT Ed, both being wholly-owned subsidiaries of TouchIT.  In this Quarterly Report on Form 10-Q, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the shares of our common stock, $0.001 par value per share. All financial information presented is for the combined entity TouchIT, which comprises of TouchIT Tech KS and TouchIT Ed. They have not been consolidated and inter-company transactions, although not significant, do exist.
 
CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS
 
In addition to historical information, this Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  The forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in such forward looking statements.  Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management’s opinions only as of the date thereof. 
 
In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “proposed,” “intended” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other forward-looking information. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, growth rates, and levels of activity, performance or achievements. There may be events in the future that we are not able to accurately predict or control.

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

 
3

 
 
PART I - FINANCIAL INFORMATION
 
TOUCHIT TECHNOLOGIES, INC
   BALANCE SHEETS
FOR THE PERIODS ENDED 30 SEPTEMBER 2013 & 2012 AND 31 DECEMBER 2012 & 2011
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

   
30/09/2013
   
31/12/2012
   
30/09/2012
   
31/12/2011
 
CURRENT ASSETS
                       
                         
Cash and cash equivalents
    95,717       6,413       10,596       70,289  
Trade receivables, net
    440,309       64,170       216,796       240,867  
Due from related parties
    -       -       -       -  
Due from Shareholders
    -       -       -       -  
Inventories
    51,112       111,461       83,783       55,689  
Prepaid Inventory
    28,000               -          
                                 
Total current assets
    615,138       182,043       311,175       366,845  
                                 
NON CURRENT ASSETS
                               
                                 
Property, plant and equipment, net
    8,724       6,076       6,930       1,027  
Other Assets
                            -  
Other non current assets
    400,000       400,000       400,000       -  
                                 
Total non current assets
    408,724       406,076       406,930       1,027  
                                 
TOTAL ASSETS
    1,023,862       588,119       718,105       367,872  
                                 
CURRENT LIABILITIES
                               
Borrowings
    -       -       -       -  
Trade payables
    400,250       274,352       314,372       181,984  
Due to shareholders
    -       -       -       -  
Due to related parties
    121,499       261,499       289,449       265,318  
Other current liabilities
    284,240       11,310       81,788       27,390  
                                 
Total current liabilities
    805,989       547,161       685,609       474,692  
                                 
NON CURRENT LIABILITIES
                               
Borrowings
    -       -       -       250,000  
Employee termination benefits
    -       -       -       -  
Reserve for retirement pay
    -       -       -       -  
Share purchase advances
    -       -       -       -  
                                 
Total non current liabilities
    -       -       -       250,000  
                                 
COMMITMENTS AND CONTINGENCIES
                               
                                 
SHAREHOLDERS' EQUITY
                               
Share capital
    127,570       544,303       127,570       127,570  
Pain in Excess
    416,733               416,733          
Retained earnings
    (501,291 )     (521,403 )     (520,455 )     (137,698 )
Net income / (loss) for the period
    174,861       18,058       8,647       (346,692 )
                                 
Total shareholders’ equity
    217,873       40,958       32,495       (356,820 )
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
    1,023,862       588,119       718,105       367,872  
 
 
4

 
 
TOUCHIT TECHNOLOGIES, INC
  COMBINED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED 30 SEPTEMBER 2013 & 2012
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

   
3 Months
Ended
Sept 30
2013
   
3 Months
Ended
Sept 30
2012
   
6 Months
Ended
Sept 30
2013
   
6 Months
Ended
Sept 30
2012
 
                         
NET SALES
    673,806       478,264       1,473,995       983,949  
COST OF SALES
    444,211       332,487       994,700       685,489  
Gross profit
    229,595       145,777       479,295       298,460  
MARKETING AND SELLING EXPENSE
    11,395       8,924       26,112       46,382  
GENERAL AND ADMINISTRATIVE  EXPENSES
    124,745       83,305       288,344       248,622  
Profit from operations
    93,455       53,549       164,839       3,457  
OTHER INCOME AND EXPENSES, net
    1,000       3,990       10,021       5,190  
FINANCIAL INCOME AND EXPENSES, net
    --       --       --       --  
Profit Loss before taxation and currency translation gain/(loss)
    94,455       57,539       174,861       8,647  
TAXATION CHARGE
    --       --                  
Taxation current
    --       --                  
Deferred
    --       --                  
CURRENCY TRANSLATION GAIN/(LOSS)
    --       --                  
Net income/(loss) for the period
    94,456       57,539       174,861       8,647  
OTHER COMPREHENSIVE INCOME
    --       --                  
Total comprehensive income
    94,456       57,539       174,861       8,647  
 
 
5

 
 
TOUCHIT TECHNOLOGIES, INC
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED 30 SEPTEMBER 2013 & 2012
(Amounts expressed in US Dollars (USD) in full unless otherwise indicated)

   
6 Months
Ended
Sept 30
2013
   
6 Months
Ended
Sept 30
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net income
    174,861       8,647  
Adjustments to reconcile net income to net cash provided
    -       (436,865 )
By operating activities:
               
Depreciation and amortisation
    -       (428,218 )
Provision for employee benefit
    -          
                 
Changes in operating assets and liabilities
               
Trade receivables, net
    (376,139 )     24,072  
Due from shareholders
    -       --  
Due from related parties
    -       --  
Inventories
    58,969       (28,095 )
Other current assets
    (19,541 )     --  
Other non current assets
            --  
Trade payables
    56,340       156,519  
Due to shareholders
    -       --  
Due to related parties
    -       --  
Other current liabilities
    11,264       54,399  
Share Purchase Advances
    -          
                 
Net cash generated from (used for) operating activities
    (269,106 )     (221,323 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Increase/(decrease) in short-term borrowings
    191,134       166,733  
Increase/(decrease) in long-term  borrowings
               
Dividends paid
               
                 
Net cash (used for) provided from financing activities
    191,134       166,713  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchases of property, plant and equipment and intangible assets
    (2,203 )     (5,103 )
Share capital increase
    -          
                 
Net cash used for investing activities
    -       (5,103 )
                 
NET INCREASE / (DECREASE) IN CASH AND BANKS
    25,428       (59,693 )
                 
CASH AND BANKS AT BEGINNING OF THE YEAR
    70,289       70,289  
                 
CASH AND BANKS AT END OF THE PERIOD
    95,717       10,596  

 
6

 
   
TOUCHIT TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE PERIOD ENDED SEPTEMBER 30, 2013 & 2012

                                                         
Total
 
                                                   
Retained
   
Stockholder's
 
   
Common Stock
   
Preferred Stock
   
Paid-in Capital
   
Treasury Stock
   
Earnings
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Amount
   
Amount
 
                                                             
Balance at January 1, 2013
    137,220,000     $ 127,570     $ -     $ -       137,220,000     $ 416,733       -     $ -     $ (502,461 )   $ 41,842  
                                                                                 
Net Income
    -       -       -       -       -       -       -       -       174,861       174,861  
                                                                                 
Capital Transactions
    -       -       -       -       -       -       -       -       -       -  
                                                                                 
Prior Period Adjustments
    -       -       -       -       -       -       -       -       1,170       1,170  
                                                                                 
Balance at September 30, 2013
    137,220,000     $ 127,570     $ -     $ -       137,220,000     $ 416,733       -     $ -     $ (327,600 )   $ 217,873  

                                                         
Total
 
                                                   
Retained
   
Stockholder's
 
   
Common Stock
   
Preferred Stock
   
Paid-in Capital
   
Treasury Stock
   
Earnings
   
Equity
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Shares
   
Amount
   
Amount
   
Amount
 
                                                             
Balance at January 1, 2012
    74,189,419     $ 127,570     $ -     $ -       127,570     $ 416,733       -     $ -     $ (484,389 )   $ 59,914  
                                                                                 
Net Income
    -       -       -       -       -       -       -       -       8,647       8,647  
                                                                                 
Capital Transactions
    -       -       -       -       -       -       -       -       -       -  
                                                                                 
Prior Period Adjustments
    -       -       -       -       -       -       -       -       (36,065 )     (36,065 )
                                                                                 
Balance at September 30, 2012
    74,189,419     $ 127,570     $ -     $ -       127,570     $ 416,733       -     $ -     $ (511,807 )   $ 32,496  

 
7

 
 
TOUCHIT TECHNOLOGIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2013

1.  
OPERATIONS OF THE COMPANY:

General

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

Organization

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

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

Pursuant to the terms of the Share Exchange Agreement, Hotel Management issued a total of 48,330,000 shares of their common stock, par value USD 01 per share (the “Common Stock”) to the shareholders of TouchIT Technologies and TouchIT Education in exchange for the transfer of 100% of the shares of TouchIT Tech and TouchIT Education to Hotel Management. This exchange transaction resulted in TouchIT Technologies and TouchIT Education becoming Hotel Management. The wholly-owned subsidiaries and the stockholders of TouchIT Turkey own approximately 78.93% of the Hotel Management’s issued and outstanding stock, prior to any financing.

Simultaneously with the closing of the Share Exchange Agreement, on May 7, 2010, Management entered into a Subscription Agreement (the “Subscription Agreement”) with investors for the sale of shares up to the value of USD 1,500,000 (the Purchase Price”). As a result USD 750,000 of the Purchase Price was recognized in TouchIT Education’s balance sheet as a future obligation to one of the investors.

The Turkish subsidiaries were officially closed in August 2011.

Average number of employees of the Company as of September 30, 2012 was five and September  30, 2013 is six.

Description of Business

TouchIT Technologies, Inc is a designer and manufacturer (via 3rd party) of Interactive Products, namely, Interactive Whiteboards and Interactive LEDs.
 
See Accountant’s Report
 
8

 
 
 
2.  
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued an amendment to ASC, “Fair Value Measurements and Disclosure,” to require entities to separately disclose the amounts and business rationale for significant transfers  in and out of Level 1 and Level 2  fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair measures which are effective for fiscal years beginning after December 15, 2010, its adoption will not have a material impact on the Company’s financial statements.

3.  
BASIS OF PRESENTATION

The Company maintains its books of account and prepares financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in the United States of America. The Company’s fiscal year ends on December 31.

4.  
SIGNIFICANT ACCOUNTING POLICIES:

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments, which are readily convertible into, cash, with original maturities of three months or less.

Basis of Accounting

The Company uses the accrual basis of accounting.

Accounts Receivable – Recognition of Bad Debt

The Corporation considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts become uncollectible, they will be charged to operations when that determination is made.

Revenue recognition

The company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services are rendered, the sales price is terminable, and collectability is reasonably assure. Revenue typically is recognized at the time of shipment. Sales are recorded net of discounts, rebates, and returns.

Inventories

Inventories are stated at the lower of cost or market. Costs, including an appropriate portion of fixed and variable overhead expenses are assigned to inventories by the method most appropriate to the particular class of inventory being valued on the weighted average basis.
 
See Accountant’s Report
 
9

 
 
Related Parties

Parties are considered to be related if one parry has the ability to control the other party or exercise significant influence over the other party in making the financial and operating decisions. For the purpose of these financial statements shareholders are referred to as related parities. Related parties are also included individuals that are principle owners, management and members of the Company’s Board of Directors and their families.

Capitalization

All costs incurred over $500 are capitalized. Costs which lengthen the life of a fixed asset are capitalized and depreciated over the extended life of the asset.

Depreciation

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

Taxation

The Company has elected to be treated as a regular “C” corporation; therefore, the corporation , not the stockholders, will pay income taxes.

Leases

Leases are classified as capital leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Comprehensive Income

In June 1997, the Financial Accounting Standard Board issued SFAS No. 130, “Reporting Comprehensive Income.” SFAS No. 130 is effective for years beginning after June 15, 1997. This statement provides reporting standards of comprehensive income and its components and requires that all components of comprehensive income be reported in the financial statements in the period in which they are recognized. The Company has adopted the provisions of SFAS No. 130 in its financial statements and adoption of this statement did not have any effect.
 
See Accountant’s Report
 
10

 
 
Financial Instruments

Fair value is defined as the price that would be received to sell an assets or paid to transfer a a liability in an orderly transaction between participants at the measurement date (i.e., an exit price). The guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority
 
To unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 – Quoted, active market prices for identical assets or liabilities. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers of brokers in active markets. Valuation are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The Company did not have any Level 1 assets or liabilities.

Level 2 – Observable inputs other than Level 1, such as quoted market prices for similar assets or liabilities, quoted for identical or similar assets in inactive markets, and model derived valuations in which all significant inputs are observable in active markets. The Company did not have any Level 2 assets or liabilities.

Level 3 – Valuation techniques in which one or more significant inputs are observable in the marketable. The company did not have any Level 3 assets or liabilities.

5.  
CASH AND CASH EQUIVALENTS

As of September 30, 2013 and September 30, 2012, cash and cash equivalents comprised were comprised of the following:

     30.09.2013      30.09.2012  
                 
Cash on Hand
  $ 0     $ 0  
Banks
  $ 95,717       10,596  
                 
Total
  $ 95,717     $ 10,596  

6.  
TRADE RECEIVABLES

As of September 30, 2012 and September 30, 2011, trade receivables comprised were comprised of the following:

     30.09.2013      30.09.2012  
                 
Trade Receivables
  $ 440,309     $ 218,796  
Provision for doubtful accounts
  $ 0       (2,000 )
                 
Total
  $ 440,309     $ 216,796  

7.  
RELATED PARTY TRANSACTIONS:

In the course of conducting its business, the Company conducted various business transactions with related parities on commercial terms.
 
See Accountant’s Report
 
11

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

Due from related parties
   30.09.2013      30.09.2012  
                 
Total
  $ 0     $ 0  


Due from shareholders
   30.09.2013      30.09.2012  
                 
Total
  $ 0     $ 0  


Due to related parties
   30.09.2013      30.09.2012  
                 
Kamron, Inc.
  $ 74,413     $ 158,413  
ASB Trading
  $ 47086     $ 131,086  
                 
Total
  $ 121,499     $ 289,449  


Due to shareholders
   30.09.2013      30.09.2012  
                 
Total
  $ 0     $ 0  


Major purchases from related parties
   30.09.2013      30.09.2012  
                 
Total
  $ 0     $ 0  


Major sales  to related parties
   30.09.2013      30.09.2012  
                 
Total
  $ 0     $ 0  


Service provided by
   30.09.2013      30.09.2012  
                 
Kamron, Inc.
  $ 74,413     $ 158,413  
ASB Trading
  $ 47,085     $ 131,086  
                 
Total
  $ 121,499     $ 289,499  
 
See Accountant’s Report
 
12

 
 
8.  
INVENTORIES
 
     30.09.2013      30.09.2012  
                 
Trade goods
  $ 51,112     $ 83,944  
Advances given for purchases
  $ 28,000     $ 0  
                 
Total
  $ 79,112     $ 83,944  
 
9.  
OTHER CURRENT ASSETS

As of September 30, 2013 and September 30, 2012, other receivables comprised of the following:

     30.09.2013      30.09.2012  
                 
Prepaid Expense
  $ 0     $ 0  
Advances given to personnel
  $ 0     $ 0  
                 
Total
  $ 0     $ 0  
 
10.  
NON-CURRENT ASSETS

As of September 30, 2013 and September 30, 2012, noncurrent assets comprised of the following:

     30.09.2013      30.09.2012  
                 
Fixed Assets
  $ 8,724     $ 6,930  
Accumulated Depreciation
  $ 0     $ 0  
Other
  $ 400,00     $ 400,000  
Total
  $ 408,724     $ 406,930  
 
See Accountant’s Report
 
13

 
 
11.  
TRADE PAYABLES

As of September 30, 2013 and September 30, 2012, trade payables were comprised of the following:

     30.09.2013      30.09.2012  
                 
Trade payables
  $ 400,250     $ 603,827  
                 
Total
  $ 400,250     $ 603,827  
 
12.  
OTHER CURRENT LIABILITIES

As of September 30, 2013 and September 30, 2012, other current liabilities of the following:

     30.09.2013      30.09.2012  
                 
Accrued Payroll
  $ 25,267     $ 8,127  
Accrued Expenses
  $ 34,457     $ 33,414  
Other Liabilities
  $ 224,516     $ 40,248  
                 
Total
  $ 284,240     $ 81,789  

13.  
CAPITAL STOCK

The issued share capital of the Company is respectively for the period ended at September 30, 2013 and September 30, 2012 is comprised of the following:

 
 
     30.09.2013      30.09.2012  
   
Insider
   
Insider
 
   
Holdings
   
Holdings
 
Andrew Stuart Brabin
    68,610,000       23,610,000  
Ronald George Murphy
    68,610,000       23,610,000  
                 
Total Insider Holdings
    137,220,000       47,220,000  
 
14.  
SALES

The composition of sales by principal for the periods ended September 30, 2013 and September 30, 2012 can be summarized as follows:

   
30/09/2013
   
30/09/2012
 
             
Interactive Whiteboards
  $ 184,999     $ 371,290  
Interactive LCD/LEDs
  $ 1,109,778     $ 525,961  
Wireless Tablets
  $ 4,805     $ 3,363  
Others
  $ 172,013     $ 86,161  
                 
Returns (-)
  $ 0     $ (2,825 )
                 
Total
  $ 1,473,995     $ 983,949  
 
See Accountant’s Report
 
14

 
 
15.  
COST OF SALES

The composition of cost of sales by principal for the periods ended September 30, 2013 and September 30, 2012 can be summarized as follows:

     30.09.2013      30.09.2012  
                 
Purchases
  $ 994,700     $ 685,489  
                 
Total
  $ 994,700     $ 685,489  
 
16.  
MARKETING AND SELLING EXPENSES

The composition of marketing and selling expenses by principal for the periods ended September 30, 2013 and September 30, 2012 are summarized as follows:

     30.09.2013      30.09.2012  
                 
Marketing and Selling Expenses
  $ 26,112     $ 43,382  
                 
Total
  $ 26,112     $ 43,382  

17.  
GENERAL AND ADMINISTRATIVE EXPENSES

The composition of general and administrative expenses by the principal operations for the periods ended September 30, 2013 and September 30, 2012 are as follows:

     30.09.2013      30.09.2012  
                 
General and Administrative Expenses
  $ 288,344     $ 248,622  
                 
Total
  $ 288,344     $ 248,622  
 
See Accountant’s Report
 
15

 
 
18.  
OTHER INCOME AND (EXPENSES), net

The composition of other income and expenses for the years September 30, 2013 and September 30, 2012 can be summarized as follows:
 
     30.09.2013      30.09.2012  
                 
    $ 10,021     $ 5,190  
                 
Total
  $ 10,021     $ 5,190  
 
19.  
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
 
Financial risk factors

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

Market risk

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

Foreign currency risk management

The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Foreign currency position, net for the periods ended September 30, 2013 and 2012 can be summarized as follows:

Credit risk management

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in a financial loss to the company. The Company has adopted a policy of only dealing with creditworthy counterparties. The Company’s exposure and the credit ratings of it counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Liquidity risk management

Liquidity risk arises from the fact that the Company may not receive funds from its counterparties at the expected time. This risk is managed by maintaining a balance between  continuity of funding and flexibility through the use of overdrafts and trade receivables.
 
  See Accountant’s Report
 
16

 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Quarterly Report. This discussion and analysis may contain forward-looking statements based on assumptions about our future business. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Management’s Discussion and Analysis or Plan of Operation,” “Business” and those listed in our other Securities and Exchange Commission filings.  Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking.
 
Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this Report.
 
Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Report.

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

●        actual or anticipated fluctuations in our quarterly and annual operating results;
●        actual or anticipated product constraints;
●        decreased demand for our products resulting from changes in consumer preferences;
●        product and services announcements by us or our competitors;
●        loss of any of our key executives;
●        regulatory announcements, proceedings or changes;
●        announcements in the touch technology community;
●        competitive product developments;
●        intellectual property and legal developments;
●        mergers or strategic alliances in the touch technology industry;
●        any business combination we may propose or complete;
●        any financing transactions we may propose or complete; or
●        broader industry and market trends unrelated to its performance.

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

Plan of Operation

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

We are a manufacturer (via 3rd party contract manufacture) of touch based visual communication products for education and corporate worldwide marketplaces. Our mission is to design and manufacture high quality technology products. We manufacture a large range of touch screen and touch board products to suite all types of application from pen input wireless tablets, to large enameled steel touch-sensitive interactive whiteboards and large interactive Liquid Crystal Displays (“LCD”). Our products stand out from our competition in terms of our design, functionality and price offering. Our customers seek our products as they provide them with a different point of entry to the market in terms of price, quality of design and margin. Currently, demand for our products is exceeding our ability to supply.
 
 
17

 
 
COMPANY OVERVIEW

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

1. Establish and maintain working relationships and contractual agreements with distribution and Original Equipment Manufacturer (“OEM”) customers;
2. Increase our profit margin by lowering the import and raw material costs by bulk purchasing from vendors;
3. By increasing our purchasing power, we can increase our stock holding and lowering delivery times to customers thus enabling further sales growth; and
4. Effectively communicate with our current and potential customers, through targeted efforts, our position as a differentiated provider of the highest quality of margin laden touch-based communication products.

Recent Developments

On April 11, 2012, we borrowed Two Hundred Fifty Thousand Dollars ($250,000) (the “Advance”) from Bibby International Trade Finance (the “Lender”) pursuant to a revolving credit facility evidenced by a Master Purchase Agreement with an effective date of April 11, 2012 (the “MPA”).

The MPA evidences a revolving credit facility for the purchase of the Company’s accounts receivable up to the principal amount of $250,000, which subject to Lender approval, may be increased. The outstanding principal amount is due on April 11, 2013. This facility was renewed for a further year on April 11, 2013.

The Advance is secured by, among other things, (i) the MPA made by and between our Company and the Lender pursuant to which the Borrower has granted a security interest in all of the Borrower's assets to the Lender (the "Security Agreement"), (ii) a personal guaranty and validity guaranty executed by Andrew Brabin, Chief Executive Officer of our Company.

The MPA also includes customary representations and warranties and affirmative and negative covenants, including, among others, payment of certain customary fees and expenses, covenants relating to financial reporting, maintenance of property and insurance, incurrence of liens and/or other indebtedness. The MPA also contains customary provisions for events of default, remedies in circumstances of default, required notices, governing law and jurisdiction of governance.

We have now completed the development and the establishment of a production line in Taiwan for a new range of Interactive LED products. Supply of LCD panels has become challenging as panel manufacturers have sent many models end of life in favor of the LED equivalent. These products include Interactive LEDs, with and without an embedded PC in sizes from 32” to 84”. The unique feature for the range of LEDs is that they do not require a driver to be installed, nor do they require any form of calibration by the user. These are true plug and play devices. All of these products are full high definition and touch-based and include options of multiple input “multi-touch”. We have also launched the TouchIT LED Fusion which is three interactive products in one. An Interactive LED, and Interactive Easel and an Interactive Table. This is a revolutionary product as it takes us into new group collaboration markets. Management believes the LED range of product will give us an advantage in the marketplace as the competition try and catch up with their own development.

We have finished the development of a new range of four point touch models of LED. These models were launched at the beginning of the quarter. These models have some unique features especially concerning the Apple Macintosh Operating System (“MAC OS”). Traditionally, MAC OS only allows for third party touch screens to operate in single touch mode. However, we have developed a range of LED screens that allow for multi-touch gesture support in MAC OS. Management believes that this new feature will give the Company a unique sales point in the marketplace and will also appeal the growing number of MAC users World-Wide. These models are now sold in all our markets world-wide.

TouchIT has been awarded with the CTICK standard mark for its range of LED product in Australia. After several weeks of testing the standard can now be applied to its products. Furthermore, the product has also been approved for governmental use during the same testing procedure. Management believes that this will give the Company a competitive advantage in governmental tenders where the competition does not have such suitability certification.

 
18

 

During the period we have launched the TouchIT 84” – this is an 84” Interactive LED that has replaced the 80” as the largest LED that we currently sell. This price point of the 84” is such that we have been able to launch this product at a greatly reduced cost yet are still able to maintain our margins. Management expects this model to become a top seller in 2014 as the price point removes the barrier to purchase large format screens.

We have launched the TouchIT Digital Signage player and software to the world-wide markets. The aim of the Digital Signage product is to capitalize on the Signage vertical market where we have been getting interest to sell our LED panels. Not only is the TouchIT Digital Signage player web enabled so it can be remotely monitored and updated, it is also touch compatible so can be used in conjunction with our touch screens to enable way finder applications for example.

We have added to the TouchIT Technologies sales team in the shape of a US Channel Sales Manager and an ASIA PAC Sales Manager based in USA and Taiwan respectively. Our US Channel Sales Manager has been tasked with enlisting the national resellers and distributors in the USA. Whereas our ASIA PAC sales manager is responsible for growing the sales channels in Asia Pacific.

We exhibited at the Integrate Trade Show in Darling Harbor Sydney in August. We increased our presence at the trade show and had a larger booth than in previous years. The show represents an opportunity to meet with existing reselling partners as well as attract new ones. Management expects to see a return on the investment made in the show.

We are currently evaluating new accessories that will be added to the TouchIT Technologies line up in 2014. These include items such as android-based tablets and speaker accessories, which compliment the current LED products.

We are due to sign an OEM agreement with a software manufacturer to update the current software offering that accompanies our products. We will launch TouchIT Notes in Quarter 4, 2014 that will enable wireless desktop control, screen sharing with 40+ devices and also cross-platform collaboration. This software is ideal for both the education and the corporate user and Management believe that it will assist with LED sales by strengthening the overall package offered to the user.

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 Technologies, Inc

This management's discussion and analysis of our financial condition and results of operations are based on the financial statements of TouchIT Technologies, Inc, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we will evaluate these estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis:

Basis of presentation financial statements:
 
Our Company maintains its books of account and prepares its statutory financial statements in accordance with accounting principles in the United States of America and tax legislation. The accompanying financial statements are based on the statutory records, with adjustments and reclassifications, for the purpose of fair presentation in accordance with United States generally accepted accounting principles (“US GAAP”).

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.
 
 
19

 
 
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:

We use a calendar year as our fiscal year ending December 31.
 
 
20

 
 
RESULTS OF OPERATIONS


TOUCHIT TECHNOLOGIES, INC STATEMENTS OF COMPREHENSIVE INCOME
FOR QUARTER ENDED SEPTEMBER 30, 2013 & 2012

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

   
Sept 30 2013
   
Sept 30 2012
 
             
NET SALES
    1,473,995       983,949  
COST OF SALES
    994,700       685,489  
Gross profit
    479,295       298,460  
MARKETING AND SELLING EXPENSE
    26,112       46,382  
GENERAL AND ADMINISTRATIVE  EXPENSES
    288,344       248,622  
Profit from operations
    164,839       3,457  
OTHER INCOME AND EXPENSES,net
    10,021       5,190  
FINANCIAL INCOME AND EXPENSES, net
    -       --  
Profit Loss before taxation and currency translation gain/(loss)
    174,861       8,647  
TAXATION CHARGE
               
Taxation current
               
Deferred
               
CURRENCY TRANSLATION GAIN/(LOSS)
               
Net income/(loss) for the year
    174,861       8,647  
OTHER COMPREHENSIVE INCOME
               
Total comprehensive income
    174,861       8,647  
 
NET SALES (REVENUE) – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, revenue has increased by 50% or by $490,046 from 983,949 to $1,473,995. This increase can be attributed to a change in strategy by Management. Our going forward sales activity reflects our management’s plan of increasing focus on the development of recurring business in existing and new markets for the new Interactive LED Line. Our management does anticipate that revenues will continue to grow for the balance of the year due to the LED product line which represents a much larger value ticket item which will drive revenues higher and the current back order that the Company has built up.

GROSS PROFIT – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, gross profit has increased by $180,835 from $298,460 to $479,295. This is primarily due to the restructuring of the business over the last year and the focus on the more profitable LED product line. Our management does anticipate gross profits to continue to rise for the balance of the year.

OPERATIONAL PROFIT – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, operational profit has increased from $3,457 to $164,839 an increase of $161,382. This can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.

   
30/09/2013
   
30/09/2012
 
             
MARKETING AND SELLING EXPENSE
  $ 26,112     $ 46,382  
As a percentage of revenue
    2 %     5 %
GENERAL AND ADMINISTRATIVE EXPENSES
  $ 288,344     $ 248,622  
As a percentage of revenue
    19 %     25 %
 
NET INCOME FOR THE PERIOD – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, NET income for the period has increased by $166,214 from $8,647 to $174,861. This can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.

 
21

 
 
TOUCHIT TECHNOLOGIES, INC BALANCE SHEET AT SEPTEMBER 30, 2013 & 2012

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

CURRENT ASSETS
 
30/09/2013
   
30/09/2012
 
             
Cash and cash equivalents
    95,717       10,596  
Trade receivables, net
    440,309       216,796  
Due from related parties
    -       -  
Due from Shareholders
    -       -  
Inventories
    51,112       83,783  
Prepaid Inventory
    28,000       -  
                 
Total current assets
    615,138       311,175  
                 
NON CURRENT ASSETS
               
                 
Property, plant and equipment,net
    8,724       6,930  
Other Assets
               
Other non current assets
    400,000       400,000  
                 
Total non current assets
    408,724       406,930  
                 
TOTAL ASSETS
    1,023,862       718,105  
                 
CURRENT LIABILITIES
               
Borrowings
    -       -  
Trade payables
    400,250       314,372  
Due to shareholders
    -       -  
Due to related parties
    121,499       289,449  
Other current liabilities
    284,240       81,788  
                 
Total current liabilities
    805,989       685,609  
                 
NON CURRENT LIABILITIES
               
Borrowings
    -       -  
Employee termination benefits
    -       -  
Reserve for retirement pay
    -       -  
Share purchase advances
    -       -  
                 
Total non current liabilities
    -       -  
                 
COMMITMENTS AND CONTINGENCIES
               
                 
SHAREHOLDERS' EQUITY
               
Share capital
    127,570       127,570  
Pain in Excess
    416,733       416,733  
Retained earnings
    (501,291 )     (520,455 )
Net income / (loss) for the period
    174,861       8,647  
                 
Total shareholders’ equity
    217,873       32,495  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
    1,023,862       718,105  
 
CURRENT ASSETS – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, total current assets have increased by $303,963 or 98%. This increase is primarily due to an increase in Trade Receivables which have increased by 103% when compared to the same period in 2012.

NON-CURRENT ASSETS – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, total non-current assets have increased by $1,794. This is mainly due to a small increase in fixed assets on the Company’s balance sheet.

TOTAL ASSETS – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, total assets have increased by $305,757 or 43% from $718,105 to $1,023,862. The reason for the increase in assets is primarily due to an increase in Trade Receivables which have increased by 65% when compared to the same period in 2012.

 
22

 

CURRENT LIABILITIES – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, total current liabilities have increased by $120,380 from $685,609 to $805,989, a 18% increase. Trade payables have increased by 27% or $85,878, which can be attributed to the trade credit that is being offered to the Company from the LED supplier.

NON-CURRENT LIABILITIES - For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012 non-current liabilities have remained at zero.

TOUCHIT TECHNOLOGIES, INC STATEMENT OF CASH FLOW FOR QUARTERS ENDED
SEPTEMBER 30, 2013 & 2012

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

   
Sept 30 2013
   
Sept 30 2012
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net income
    174,861       8,647  
Adjustments to reconcile net income to net cash provided
    -       (436,865 )
By operating activities:
               
       Depreciation and amortisation     -       (428,218 )
       Provision for employee benefit     -          
                 
Changes in operating assets and liabilities
               
Trade receivables, net
    (376,139 )     24,072  
Due from shareholders
    -       --  
Due from related parties
    -       --  
Inventories
    58,969       (28,095 )
Other current assets
    (19,541 )     --  
Other non current assets
            --  
Trade payables
    56,340       156,519  
Due to shareholders
    -       --  
Due to related parties
    -       --  
Other current liabilities
    11,264       54,399  
Share Purchase Advances
    -          
                 
Net cash generated from (used for) operating activities
    (269,106 )     (221,323 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Increase/(decrease) in short-term borrowings
    191,134       166,733  
Increase/(decrease) in long-term  borrowings
               
Dividends paid
               
                 
Net cash (used for) provided from  financing activities
    191,134       166,713  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchases of property, plant and equipment and intangible assets
    (2,203 )     (5,103 )
Share capital increase
    -          
                 
Net cash used for investing activities
    -       (5,103 )
                 
NET INCREASE / (DECREASE) IN CASH AND BANKS
    25,428       (59,693 )
                 
CASH AND BANKS AT BEGINNING OF THE YEAR
    70,289       70,289  
                 
CASH AND BANKS AT END OF THE PERIOD
    95,717       10,596  

 
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NET INCOME FOR THE PERIOD – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, NET income for the period has increased by $166,214 from $8,647 to $174,861. This can be attributed to the Management’s focus on reducing overhead costs to maximize profitability when revenues increase.

NET CASH GENERATED FOR OPERATING ACTIVITIES – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, NET cash generated for operating activities was $(269,106) compared to $(221,323) which is an increase of $47,783. This can be attributed primarily in the increase of credit from Trade Payables and Other Liabilities.

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

CASH FLOW FROM FINANCING ACTIVITES – For the first nine months of the year, quarter ended September 30, 2013, as compared to the nine months ended September 30, 2012, cash flow from financing activities was $191,134 compared to $166,713 at September 30, 2012. This was due to increasing our credit lines with suppliers

CASH POSITION. There was a NET increase in the cash and cash equivalents of $25,428 from the beginning of the period through September 30, 2013. This change in cash position can be attributed to being normal in course of regular business We generally pay our suppliers on 30 day terms and as a business, remain to be cash poor with low cash reserves.
 
Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

We are a “smaller reporting company” (as defined by Rule 12b-2 of the Exchange Act) and are not required to provide the information required under this item.
 
 Item 4.  Controls and Procedures.

(a) Disclosure Controls and Procedures

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

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the period covered by this Report.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2013, our disclosure controls and procedures were effective at the reasonable assurance level, but we did identify 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 six material weaknesses in our disclosure controls and procedures:
 
1.           We do not have written documentation of our internal control policies and procedures.  Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act.  Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
 
2.           We do not have sufficient segregation of duties within accounting functions, which is a basic internal control.  Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.  However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
 
 
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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 nine months ended September 30, 2013, our Company has not made any changes to internal control over financial reporting.
 
PART II - OTHER INFORMATION
 
On August 5th 2013, pursuant to the Advance from Bibby International Trade Finance, the Lender, the Lender agreed to increase the MPA from $250,000 to $500,000. All other terms of the MPA remained unchanged. Management requested this increase in order to capitalize on sales that will be recognized in Quarter 3 2013.

Item 1.     Legal Proceedings.

We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.
 
On May 7, 2010, we entered into a Share Exchange Agreement with TouchIT Tech KS, the stockholders of TouchIT Tech KS, TouchIT, and the stockholders of Touch Ed, pursuant to which we issued 48,330,000 shares of our Common Stock to the shareholders of TouchIT Tech KS and TouchIT Ed in exchange for all shares held by these shareholders in TouchIT Tech KS and TouchIT Ed.   The issuance of these shares was exempted from registration pursuant to Section 4(2) of the Securities Act of 1933.   The terms of the Share Exchange Agreement are discussed more fully in Item 1.01 and 2.01 on Form 8-K, filed with the SEC on May 12, 2010.
 
In connection with the closing of the Share Exchange Agreement, on May 7, 2010, we entered into a Subscription Agreement with certain investors for the sale of up to $1,500,000 of principal amount convertible promissory notes of the Company convertible into up to 6,000,000 shares of our Common Stock and share purchase warrants to purchase up to 6,000,000 shares of our Common Stock.  The terms of the Subscription Agreement, Notes and Warrants (including the terms of conversion and/or exercise of the Notes and Warrants) are discussed more fully in Item 1.01 and 2.01 on Form 8-K, filed with the SEC on May 12, 2010.   The issuance of these securities was exempted from registration pursuant to Section 4(2) of the Securities Act of 1933.

On April 10th 2013 The Company entered into an agreement with Ronald George Murphy to convert debt for services as an Officer and President of World Wide Sales for the period April 1, 2012 to March 31, 2013 in exchange for the Company’s restricted Common Stock in the aggregate of 45,000,000 shares for an accrued amount of $10,000. The company owed him a balance of $59,114.15 at September 30, 2013

On April 10th 2013 The Company entered into an agreement with Andrew Stuart Brabin to convert debt for services as Chief Executive Officer for the period April 1, 2012 to March 31, 2013 in exchange for the Company’s restricted Common Stock in the aggregate of 45,000,000 shares for an accrued amount of $10,000. The company owed him a balance of $47,085.79 at September 30, 2013

 
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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 (Principal Executive Officer).
     
   
101.INS tucn-20130930.xml XBRL Instance Document
     
   
101.SCH tucn-20130930.xsd XBRL Taxonomy Extension Schema Document
     
   
101.CAL tucn-20130930_cal.xml XBRL Taxonomy Extension Calculation Linkbase Document
     
   
101.DEF tucn-20130930_def.xml XBRL Taxonomy Extension Definition Linkbase Document
     
   
101.LAB tucn-20130930_lab.xml XBRL Taxonomy Extension Labels Linkbase Document
     
   
101.PRE tucn-20130930_pre.xml XBRL Taxonomy Extension Presentation Linkbase Document

 
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PART III – REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTING FIRM

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

To the Board of Directors
TouchIT Technologies, Inc.
101 West Beaver Road
Suite 1400, Troy, MI. 48084

I have reviewed the accompanying balance sheet of TouchIT Technologies, Inc. as of September 30, 2013 and 2012, and the related statements of income and retained earnings and cash flows for the period then ended, and the accompanying supplementary information, which is presented only for supplementary analysis purposes, in accordance with the standards of the Public Company Accounting Oversight Board (United States). All information included is the representation of the Board of Directors of TouchIT Technologies.

A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an examination in accordance with US Generally Accepted Accounting Principles (“US GAAP”) standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion.

Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with US GAAP standards.

My review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with US GAAP. The information in the accompanying statements and schedules is presented only for supplementary analysis purposes. Such information has been subject to the inquiry and analytical procedures applied in the review of the basic financial statements, and I am not aware of any material medications that should be made thereto.
 
/S/ Edward Richardson Jr., CPA

November 11, 2013

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