UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]
QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013
 
 
 
OR
 
 
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number:   000-54918

TOUCHPOINT METRICS, INC.
(Exact name of registrant as specified in its charter)

California
(State or other jurisdiction of incorporation or organization)

26-0030631
(I.R.S. Employer Identification No.)

201 Spear Street, Suite 1100
San Francisco, CA   94105
(Address of principal executive offices, including zip code)

(415) 526-2655
(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 last 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 [X]

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 the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 
Large Accelerated Filer
[   ]
 
Accelerated Filer
[   ]
 
Non-accelerated Filer
[   ]
 
Smaller Reporting Company
[X]
 
(Do not check if smaller reporting company)
     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES [   ]     NO [X]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicated the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
16,081,158 as of November 12, 2013.



 
 



Touchpoint Metrics, Inc.
Form 10-Q Quarterly Report

TABLE OF CONTENTS

   
Page No.
 
   
   
 
   
Financial Statements.
3
 
   
 
Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012.
3
 
   
 
Statements of Operations for the Three and Nine Months ended September 30, 2013
and September 30, 2012 (unaudited).
4
 
   
 
Statements of Cash Flows for the Nine Months ended September 30, 2013 and
September 30, 2012 (unaudited).
5
 
   
 
Notes to Financial Statements.
6
 
   
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
13
 
   
Quantitative and Qualitative Disclosure about Market Risk.
19
 
   
Controls and Procedures.
19
 
   
 
   
   
 
   
Risk Factors.
20
 
   
Exhibits.
20
 
   
23
 
 
24







 
-2-


PART I. FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS.

Touchpoint Metrics, Inc.
Balance Sheets
 
 
   
September 30,
 
December 31,
   
2013
 
2012
   
(unaudited)
   
Assets
       
Current assets:
       
Cash and cash equivalents
 $
783,446
 $
106,999
Accounts receivable
 
79,513
 
110,720
Accounts receivable-related party
 
-
 
1,527
Total current assets
 
862,959
 
219,246
Long term assets:
       
Property and equipment, net
 
90,146
 
152,724
Capitalized software development costs, net
 
182,756
 
188,371
Intangible assets, net
 
61,234
 
59,151
Other assets
 
5,953
 
11,622
Total assets
 $
1,203,048
 $
631,114
Liabilities and Shareholders’ Equity
       
Current liabilities:
       
Accounts payable
 $
80,501
 $
50,866
Accrued liabilities
 
-
 
1,452
Deferred revenue
 
3,000
 
-
Other current liabilities, accrued interest
 
12,000
 
-
Notes payable
 
50,000
 
-
Notes payable - related party
 
100,000
 
-
Total current liabilities
 
245,501
 
52,318
Long-term liabilities:
       
Other noncurrent liabilities, accrued interest
 
-
 
7,500
Notes payable
 
-
 
50,000
Notes payable-related party
 
-
 
100,000
Total liabilities
 
245,501
 
209,818
Commitments and contingencies
       
Shareholders’ equity:
       
Common stock, $0 par value, 30,000,000 shares authorized, 16,081,158 and
13,132,302 shares issued and outstanding at September 30, 2013 and
December 31, 2012, respectively
 
2,574,751
 
1,542,651
Accumulated deficit
 
(1,651,678)
 
(1,145,758)
Additional paid-in capital
 
34,472
 
24,403
Total shareholders’ equity
 
957,547
 
421,296
Total liabilities and shareholders’ equity
 $
1,203,048
 $
631,114




The accompanying notes are an integral part of these statements.




Touchpoint Metrics, Inc.
Statements of Operations
(unaudited) 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2013
 
2012
   
2013
 
2012
Revenue
                 
Consulting services
$
140,965
$
138,424
 
$
658,690
$
389,098
Products & other
 
11,772
 
20,243
   
33,759
 
57,693
Total revenue
 
152,737
 
158,667
   
692,449
 
446,791
Cost of goods sold
                 
Labor
 
14,321
 
34,208
   
148,006
 
93,800
Services
 
3,099
 
-
   
21,035
 
7,566
Products and other
 
25,348
 
19,734
   
77,821
 
54,101
Total cost of goods sold
 
42,768
 
53,942
   
246,862
 
155,467
 
                 
Gross profit
 
109,969
 
104,725
   
445,587
 
291,324
 
                 
Expenses
                 
Salaries and wages
 
175,668
 
142,662
   
501,600
 
338,104
Contract services
 
47,236
 
27,345
   
83,396
 
127,147
Other general and administrative
 
94,380
 
43,687
   
294,217
 
233,267
Total expenses
 
317,284
 
213,694
   
879,213
 
698,518
Net operating income
 
(207,315)
 
(108,969)
   
(433,626)
 
(407,194)
Interest expense
 
(2,734)
 
(2,881)
   
(9,312)
 
(8,129)
Other income (expense)
 
-
 
-
   
(62,982)
 
5,675
Loss before income taxes
 
(210,049)
 
(111,850)
   
(505,920)
 
(409,648)
Income tax provision
 
-
 
-
   
-
 
-
Net loss
$
(210,049)
$
(111,850)
 
$
(505,920)
$
(409,648)
 
                 
Net loss per share-basic and diluted
$
(0.01)
$
(0.01)
 
$
(0.04)
$
(0.03)
Weighted average common shares
outstanding-basic and diluted
 
16,081,158
 
13,132,302
   
14,115,254
 
13,132,302















The accompanying notes are an integral part of these statements.




Touchpoint Metrics, Inc.
Statements of Cash Flows
(unaudited)
 
 
   
Nine Months Ended September 30,
   
2013
 
2012
Cash flows from operating activities:
       
Net loss
 $
(505,920)
 $
(409,648)
Adjustments to reconcile net income to net cash provided by operations:
       
Depreciation and amortization
 
40,205
 
5,838
Stock compensation expense
 
10,069
 
9,505
Loss on disposal of assets
 
62,982
 
-
Changes in operating assets and liabilities:
       
Accounts receivable
 
31,207
 
33,552
Accounts receivable-related party
 
1,527
 
(10,629)
Work-in-process
 
-
 
(3,561)
Other assets
 
5,669
 
(1,452)
Accounts payable
 
29,635
 
22,516
Accrued liabilities
 
1,548
 
-
Accrued interest
 
4,500
 
4,500
Net cash used in operating activities
 
(318,578)
 
(349,379)
 
       
INVESTING ACTIVITIES
       
Purchase of intangible assets
 
(2,500)
 
-
Equipment purchases
 
(3,638)
 
-
Capitalized software development costs
 
(30,937)
 
(146,936)
Net cash used in investing activities
 
(37,075)
 
(146,936)
 
       
FINANCING ACTIVITIES
       
Proceeds from the issuance of common stock
 
1,032,100
 
595,000
Net cash provided by financing activities
 
1,032,100
 
595,000
 
       
Increase in cash and cash equivalents
 
676,447
 
98,685
Cash and cash equivalents, beginning of period
 
106,999
 
52,109
 
       
Cash and cash equivalents, end of period
 $
783,446
 $
150,794




 







The accompanying notes are an integral part of these statements.


TOUCHPOINT METRICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2013

Note 1: Organization and Basis of Presentation

Touchpoint Metrics, Inc. (the “Company”) is a for profit corporation established under the corporation laws in the State of California, United States of America on December 14, 2001. The corporation operated as The Innes Group, Inc., dba MCorp Consulting until filing a Certificate of Amendment to the Articles of Incorporation renaming the company Touchpoint Metrics, Inc., effective October 18, 2011.

The Company develops and delivers technology-enabled products and services that improve customer experience management capabilities for corporations. Their focus assists companies who wish to improve business performance by measuring and transforming the ways they interact with customers.

The Company services a wide variety of industries and customer size.

The Financial Statements and related disclosures as of September 30, 2013 and for the three and nine months ended September 30, 2013, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The December 31, 2012, Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These financial statements should be read in conjunction with the financial statements included in our Annual Report for the year ended December 31, 2012, filed on Form 10-K with the SEC on March 27, 2013. The results of operations for the three and nine months ended September 30, 2013, are not necessarily indicative of the results to be expected for the full year. Unless the context otherwise requires, all references to “Touchpoint Metrics,” “we,” “us,” “our” or the “company” are to Touchpoint Metrics, Inc. and our subsidiaries.

Note 2: Recent Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, (“ASU 2011-11”). ASU 2011-11 requires an entity to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Retrospective disclosure is required for all comparative periods presented. The adoption of ASU 2011-11 did not have a material impact on the Company’s financial statements.

In October 2012, the FASB issued ASU No. 2012-04, Technical Corrections and Improvements, (“ASU 2012-04”). This update includes source literature amendments, guidance clarification, reference corrections and relocated guidance affecting a variety of topics in the Codification. The update also includes conforming amendments to the Codification to reflect ASC 820’s fair value measurement and disclosure requirements. The amendments in this update that will not have transition guidance are effective upon issuance. The amendments in this update that are subject to the transition guidance will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 did not have a material impact on the Company’s financial statements.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”).  This update clarifies that ordinary trade receivables and receivables are not in the scope of ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). Specifically, ASU 2011-11 applies only to derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending



transactions that are either offset in accordance with specific criteria contained in the FASB Accounting Standards Codification or subject to a master netting arrangement or similar agreement. The Company is required to apply the amendments in ASU 2013-01 beginning January 1, 2013. The adoption of ASU 2013-01 by the Company did not have a material impact on the consolidated financial statements.

In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update, or ASU, 2013-02, Comprehensive Income (Topic 220), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update requires companies to provide information regarding the amounts reclassified out of accumulated other comprehensive income by component. In addition, companies are required to present, either on the face of the statement where net income is presented or in the accompanying notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income.  ASU 2013-02 is effective for annual reporting periods beginning on or after December 15, 2012, and interim periods within those annual periods. ASU 2013-02 was adopted January 1, 2013 and did not have a significant impact on our financial statements.

Note 3: Property and Equipment

Property and equipment consist of:

   
September 30,
 
December 31,
   
2013
 
2012
Computers and hardware
$
46,668
$
43,029
Software
 
38,646
 
38,646
Equipment
 
2,359
 
2,359
Furniture
 
31,731
 
31,731
Leasehold improvements
 
-
 
95,608
Land
 
85,000
 
85,000
Land improvements
 
4,000
 
4,000
 
 
208,404
 
300,373
Less: accumulated depreciation
 
(118,258)
 
(147,649)
 
$
90,146
$
152,724

Depreciation expense incurred during the three and nine months ended September 30, 2013 was $570 and $3,237, respectively.  Depreciation expense for the three and nine months ended September 30, 2012 was $1,838 and $5,838, respectively.  During the nine months ended September 30, 2013, the company disposed of leasehold improvements with a net book value of approximately $62,900, which were written off as the lease term of the subject property had been terminated.

Note 4: Stock-Based Compensation

The Company’s stock-based compensation program was established in 2008. Plan Shares cannot exceed 30% of any outstanding issue or 2,500,000 shares, whichever is the lower amount.

All stock option grants have an exercise price equal to the fair market value of our common stock on the date of grant and have a 10-year term.

In order to calculate the fair value of stock options at the date of grant, we use the Black-Scholes option pricing model. The volatility used was based on historical volatility of similar sized companies due to lack of historical data of the Company’s stock price.  The expected term was determined based on the simplified method outlined in Staff Accounting Bulletin No. 110.  The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.




The company currently has two active option commitments. The first option commitment was granted February 7, 2011 with an option for 300,000 shares at an exercise price of $0.35. The options have a graded vesting schedule and a ten-year term.

The second grant date was on September 3, 2013 with an option for 300,000 shares at an exercise price of $0.40.  These options have a graded vesting schedule and a ten-year term.

At September 30, 2013, 240,000 stock options were exercisable and $34,472 of total compensation cost related to vested share-based compensation grants had been recognized.  Unrecognized compensation expense from stock options was $66,327 at September 30, 2013, which is expected to be recognized over a weighted-average vesting period of 2.76 years beginning October 1, 2013.

The following table summarizes our stock option activity for the nine months ended September 30, 2013:

 
Number of
Shares
 
Weighted
Avg EP per
Share
Weighted Avg
Remaining
Contractual
Term (Yrs)
 
Aggregate
Intrinsic
Value
Outstanding at December 31, 2012
320,000
$
0.34
     
Granted
300,000
$
0.40
     
Exercised
—
 
—
     
Forfeited or expired
(20,000)
$
0.25
     
Outstanding at September 30, 2013
600,000
$
0.38
8.65
$
519,000
Fully vested and expected to vest at
September 30, 2013
240,000
$
0.35
7.36
$
 
 
213,600
Non-exercisable at September 30, 2013
360,000
$
0.39
9.50
$
306,000

The following assumptions were used to calculate weighted average fair values of the options granted in the three and nine months ended September 30, 2013 and 2012:

 
For the Three Months
Ended September 30,
For the Nine Months
Ended September 30,
 
2013
2012
2013
2012
Expected life (in years)
6.00
-
6.00
-
Risk-free interest rate
2.00%
-
2.00%
-
Volatility
65.99%
-
65.99%
-
Dividend yield
-
-
-
-
Weighted average grant date fair value per option granted
$0.24
-
$0.24
-

Note 5: Concentrations

The Company sells services to a broad range of clients under various terms. The mix of clients ranges from start-ups to Fortune 500 companies across multiple industries.

Sales are concentrated among a few large clients. For the nine months ended September 30, 2013 and 2012, the percentage of sales and the concentrations are as follows:

 
2013
2012
Largest client
54.87%
41.88%
Second largest client
33.37%
17.30%
Third largest client
10.39%
11.05%
Next three largest clients
1.37%
21.28%
All other clients
0.0%
8.49%
 
100.0%
100.0%



 
During 2012, the Company entered a consulting services agreement with mfifty, which is a related party. The President of the Company is also the owner of mfifty. During the nine months ended September 30, 2013 and 2012, the company earned consulting revenues of approximately $0 and $44,264, respectively, from this related party.

Sales are made without collateral and the credit-related losses have been insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.

Note 6: Capitalized Software Development Costs

Costs incurred to develop Software as a Service (SaaS) technology consist of external direct costs of materials and services and payroll and payroll-related costs for employees who directly devote time to the project. Research and development costs incurred during the preliminary project stage were expensed as incurred. Capitalization begins when technological feasibility is established. Costs incurred during the operating stage of the software application relating to upgrades and enhancements are capitalized to the extent that they result in the extended life of the product. All other costs are expensed as incurred.

Amortization of software development costs commences when the product is available for general release to customers. The capitalized costs are amortized on a straight line basis over the three year expected useful life of the software. Capitalized software development costs, net of amortization, were $182,756 and $188,371 as of September 30, 2013 and December 31, 2012, respectively. Amortization expense incurred during the three and nine months ended September 30, 2013 was $18,276 and $36,551, respectively.  No amortization expense was incurred for the three and nine months ended September 30, 2012.

Note 7: Intangible Assets

Intangible assets include an online media asset, Petro Portfolio, rights, title and interest in a LinkedIn group, and fully amortized organization costs. Petro Portfolio is an online media asset with a website and registered domain name, newsletter, and a database of registered subscribers. The LinkedIn group is utilized to build brand awareness and reach out to LinkedIn members who have relevant roles in target companies through managing the discussion regarding social media and customer experience.

The Petro Portfolio assets are periodically reviewed for indicators of impairment. Should an impairment indicator be present, a test for recoverability is conducted including 1) analysis of undiscounted future cash flows, 2) the fair market cost of recreating the assets, and 3) an analysis of costs to return the assets to their relative market position at the time operations ceased, based on management’s opinion. In the event that the recoverability tests result in values less than the asset’s carrying amount, management determines the fair value of the asset and recognizes an impairment loss as the difference between the carrying amount and its fair value.

The LinkedIn Group will be amortized over 36 months, management’s best estimate of its useful life and periodically reviewed for impairment. Amortization expense incurred during the three and nine months ended September 30, 2013 was $208 and $417, respectively.  No amortization expense was incurred for the three and nine months ended September 30, 2012.

Note 8:  Commitments and Contingencies

Leases

The Company leases one facility in northern California under an operating lease that expires in 2016.  Rent expense under operating leases was $5,724 and $16,764 for the three and nine months ended September 30, 2013.  Rent expense under operating leases was $5,468 and $16,196 for the three and nine months ended September 30, 2012, respectively.




 
As of September 30, 2013, the estimated future payments under this operating lease (including rent escalation clauses) for each of the next five years is as follows:

2013
$
6,132
2014
 
24,732
2015
 
25,346
2016
 
17,170
2017
 
-
Total minimum lease payments
$
73,380

Purchase Obligations

The Company has entered into non-cancelable service contracts related to SaaS licenses and access to marketing research services which expire in the year ended December 31, 2014. As of September 30, 2013, future payments under these contractual obligations were as follows:

2013
$
12,719
2014
 
7,717
2015
 
-
2016
 
-
2017
 
-
Total purchase obligations
$
20,436

Legal Matters

The Company has no known legal issues pending.

Note 9: Debt

On September 16, 2011, a $100,000 CDN note was executed with Brad Holland, an 8.09% shareholder.  The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest on its maturity date of September 16, 2014.  As of September 30, 2013, principal and accrued interest was $100,000 and $8,000, respectively.

On September 7, 2011, a $50,000 USD note was executed with McLellan Investment Corporation, an unrelated party.  The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest on its maturity date of September 7, 2014.  As of September 30, 2013, principal and accrued interest was $50,000 and $4,000, respectively.

Note 10:  Shareholders’ Equity

On July 2, 2013 the Company completed a private placement of 2,948,856 restricted shares of common stock for a purchase price of $0.35 per share.  The Company received aggregate gross proceeds of $1,032,100 from the private placement.  The total shares issued and outstanding on that date were 16,081,158.

Note 11:  Interest Expense

Interest expense consists of interest on the Company’s debt, short-term promissory note, and credit card balances.  Interest expense was $2,734 and $9,312 for the three and nine months ended September 30, 2013 and $2,881 and $8,129 for the three and nine months ended September 30, 2012, respectively.





 
Note 12:  Advertising Expenses

Advertising is expensed as incurred. Advertising expense incurred during the three and nine months ended September 30, 2013 was $1,847 and $7,371, respectively.  Advertising expense was $2,933 and $10,813 for the three and nine months ended September 30, 2012, respectively.

Note 13: Income Taxes

Income taxes are summarized as follows for the nine months ended September 30, 2013:

   
September 30, 2013
Current benefit
$
(505,920)
Deferred benefit
 
505,920
Net income tax (benefit) expense
$
-

The Company has historically experienced operating losses in most of its operating periods since inception. A full valuation allowance has been established for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carry forward periods provided in the tax law. While the Company’s statutory tax rate is 35%, its effective tax rate is 0% due to the effects of the valuation allowance described above. The Company does not have any material uncertainties with respect to its provisions for income taxes.

Note 14: Net Loss per Share

Net loss per share was computed by dividing the net loss by the weighted average number of common shares outstanding during the period.  The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding.  For the three and nine months ended September 30, 2013 and 2012, the assumed exercise of share options are anti-dilutive due to the Company’s net loss and are excluded from the determination of net loss per share – basic and diluted.  Accordingly, net loss per share basic and diluted are equal in all periods presented.

 
Three and Nine Months
Ended September 30,
 
2013
 
2012
Share Options
240,000
 
120,000

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
   
2013
   
2012
   
2013
   
2012
Net loss
$
(210,049)
 
$
(111,850)
 
$
(505,920)
 
$
(409,648)
Basic and diluted weighted average
common shares outstanding
 
16,081,158
   
13,132,302
   
14,115,254
   
13,132,302
Net loss per share
                     
Basic and diluted
$
(0.01)
 
$
(0.01)
 
$
(0.04)
 
$
(0.03)

Note 15: Related Party Transactions

The Company has a related party transaction involving a significant shareholder. The nature and details of the transaction are described in Note 9. The Company also has two related party transactions with its President, the nature, description and details of the transaction are described in Note 5 and this note.





 
IREMCO, a controlling shareholder, provides the company with office space on a month-to-month basis at no charge under a verbal agreement. The office space was vacant and not in use by IREMCO. This space provides the company with office space in Canada and will be eliminated if IREMCO has a need for the space.

On January 31, 2013, the Company entered into an agreement with Michael Hinshaw, President, to loan $25,000 to the Company. The loan was a non-convertible Promissory Note with an interest rate of 3.25%.  The note was structured to incur a balloon payment of the principal and non-compounding accrued interest. Interest began accruing on the unpaid balance thirty (30) days from the date of the note. The note was paid in full in August, 2013.

Note 16: Going Concern

The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.

For the nine months ended September 30, 2013, the Company had a net loss of $505,920.  In addition, the Company had a net loss of $306,948 for the year ended December 31, 2012. These circumstances result in substantial doubt as to the Company’s ability to continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock.

The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.














ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management’s Discussion and Analysis includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project,” “will,” “should” and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results, or from our predictions. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

Overview

We are engaged in the business of developing and delivering technology-enabled products and services that improve customer experience management capabilities for corporations.

Customer experience management is the collection of processes a company uses to track, oversee and organize interactions between a customer and the organization throughout the customer lifecycle. The goal of customer experience management is to optimize interactions from the customer’s perspective and as a result, foster customer loyalty.‬

In 2012, we narrowed our service offerings to consulting services in order to focus more resources on developing our software product, Touchpoint Mapping® On-Demand. All of our professional services are software-enabled, using technology to more efficiently deliver solutions supporting customer experience improvement initiatives.

Touchpoint Mapping On-Demand is a data gathering and analytical software that gathers and analyzes feedback on customer interactions from a client’s customers, employees and their prospective customers' perspectives, and delivers the results to our clients over the Internet as a SaaS (software-as-a-service) based technology platform that helps companies automate and systematize customer experience feedback. Touchpoint Mapping On-Demand has been customized and pre-populated for small and medium enterprises in the banking and home building industries, and as a “semi-custom” offering for medium enterprises across multiple industries.

Development is ongoing, as Touchpoint Mapping On-Demand is refined and improved based on customer feedback, and as it is customized for specific industry sectors. The services delivered with Touchpoint Mapping On-Demand may include consulting and additional research services, as well as planned services such as assessment, integration, implementation and additional offline analysis and reporting of data.

Although we began sales and marketing activities for Touchpoint Mapping On-Demand in Q4 2012, we cannot predict the timing, nor probability, of generating sales revenue from the product as we currently do not have dedicated sales professionals on staff to identify and develop sales opportunities.

Sources of Revenue

During the nine months ended September 30, 2013 and 2012, our revenue consisted primarily of professional and software-enabled consulting services, product sales and other revenues. Consulting services include strategy, planning, education, training and best practices consulting. Product revenue is from productized and software-enabled service sales not elsewhere classified, while other revenue includes reimbursement of related travel costs and out-of-pocket expenses.





While our plan of operations is based on migrating the majority of our service revenue from these categories to recurring SaaS subscription fees, we anticipate that fees for professional and software-enabled consulting services will remain a significant revenue source in the near future. As of September 30, 2013, we have successfully delivered certain features and functionality of our software product, Touchpoint Mapping On-Demand, to several clients. However, we have not obtained material stand-alone sales commitments for Touchpoint Mapping On-Demand, and do not anticipate being able to do so until we engage the necessary sales staff to develop and execute product sales opportunities. At this time, we cannot predict when those positions will be filled.

Should we successfully launch Touchpoint Mapping On-Demand as a stand-alone software product, we anticipate that subscription agreements and related professional services associated with delivering our software solutions will become a source of significant revenue. Subscriptions and associated professional services pricing will be based upon our gross margin objectives, growth strategies and the specific needs of our clients’ organizations, measured primarily by the following metrics: industry type, size of company, number of locations and number of seats. Additional fees will be assessed based on the number and type of customer, non-customer and employee records uploaded to our software portal, and subsequently surveyed by our customers.

We anticipate that subscription agreements for our software solutions will be offered as monthly term agreements which contain a minimum commitment period of at least 12 months, and which include related setup, upgrades, hosting and support. Professional services will likely include consulting fees related to implementation, customization, configuration, training and any other value added services.

Based on data gathered during setup of our beta client engagements, we believe the average time it will take our clients from placing an order to live deployment of our products is between 30 and 45 days. We plan to invoice clients upon inception of their subscription agreements for setup and total subscription fees contracted over the term of the agreements, with payment due within 30 days. Professional services related to the subscription agreements will be invoiced at the inception of the professional services agreement at one-third or fifty percent of total fees, with the balance of payments due over the duration of the contract as project milestones are met. Amounts invoiced will be recorded in accounts receivable and deferred revenue or revenue, depending on whether revenue recognition criteria have been met.

Cost of Revenue and Operating Expenses

Our costs of revenue and operating expenses are detailed at the sub-category level in our Income Statements. And while the financial results for these categories are further explained in the Results of Operations section below, a general description of these categories follows:

1)
Cost of Goods Sold. Cost of goods sold consists primarily of expenses directly related to providing professional and consulting services. Those expenses include contract labor, third-party services and subscriptions, and materials and travel expenses related to providing professional services to our clients.

As Touchpoint Mapping® On-Demand continues to be launched, costs of goods will include all product-related hosting and monitoring costs, service support, amortization of capitalized software development costs, licenses for products embedded in the application, account management and credit card fees.

Should our client base grow, we intend to continue to invest additional resources in our hosting, technical support and professional services, as well as our utilization of third-party licensed software. We expect our professional services costs to increase in absolute dollars as we increase our overall revenue, but expect that professional services as a percentage of total revenue will decrease as we continue to shift our business towards sales of on-demand software solutions and software-enabled services. Because cost as a percentage of revenue is higher for professional services revenue than for software, hosting and support revenue, a decrease in professional services as a percentage of total revenue will likely increase gross profit as a percentage of total revenue.




2)
General and Administrative Expenses. General and administrative expenses consist primarily of salary and related expenses for management, finance and accounting, legal, information systems and human resources personnel. Expenses also include contract services, administrative costs, automobile expenses, computer and software expenses, insurance, marketing and promotion, professional fees, rent and a portion of travel expenses and other overhead.

Sales and marketing expenses are currently reflected in contract labor, salaries and wages, marketing and promotion and other related overhead expense categories. Since we will be recognizing revenue over the terms of the subscriptions or professional services engagements, we expect to experience a delay between increases in selling and marketing expenses and the recognition of revenue. We expect significant increases in sales and marketing expenses in both absolute dollars and as a percentage of expenses as we hire sales and additional marketing personnel and increase the level of marketing activities.

During the first quarter of 2012, research and development expenses incurred to establish technological feasibility were expensed when incurred and are reflected in contract labor, salaries and wages and other related overhead expense categories. The majority of product development expenses during the last three quarters of 2012 and the quarter ending March 31, 2013, related to production costs incurred subsequent to establishing technological feasibility, and were capitalized on our balance sheet, to be amortized over the estimated useful life of the software.  Capitalization of software development costs of certain features of Touchpoint Mapping On-Demand ended in April, 2013, when those product functionalities were made available for general release to customers.

We expect that total general and administrative expenses will increase as we continue to add personnel in connection with the growth of our business. In addition to increases in sales and marketing and research and development expenses, we anticipate we will also incur additional employee salaries and related expenses, professional service fees and insurance costs related to the growth of our business and operations to meet the requirements of a public company.

Results of Operations

Revenue
 
2013
 
2012
 
Change from
Prior Year
Percent Change
from Prior Year
Three Months Ended September 30,
$
152,737
$
158,667
$
5,930
(4%)
Nine Months Ended September 30,
$
692,449
$
446,791
$
245,658
55%

Revenues increased for the three and nine months ended September 30, 2013 as compared to the three and nine months ended September 30, 2012, due to increased sales of our consulting and software-enabled services, including delivery of Touchpoint Mapping ® On-Demand, to a greater number of large business clients.

Cost of Goods Sold
 
2013
 
2012
 
Change from
Prior Year
Percent Change
from Prior Year
Three Months Ended September 30,
$
42,768
$
53,942
$
(11,174)
(21%)
Nine Months Ended September 30,
$
246,862
$
155,467
$
91,395
59%

Cost of goods sold decreased for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012, primarily due to a decrease in travel-related expenses that were incurred in 2012 while delivering services at a client’s overseas offices.  As a percentage of revenues, cost of goods sold were 28% and 34% of revenues for the three months ended September 30, 2013 and 2012, respectively.  Cost of goods sold increased for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012, primarily due to increased revenues and amortization of capitalized software development costs.  The company began amortizing capitalized software development costs of certain features of Touchpoint Mapping On-Demand during the nine months ended September 30, 2013.  In addition, computer and software expenses directly related to the delivery of our software product were no longer capitalized in the second and third quarters of 2013 as certain functionality of the product was attained and available for general release.  As a percentage of revenues, cost of goods sold were 36% and 35% of revenues for the nine months ended September 30, 2013 and 2012, respectively.




Salaries and Wages
 
2013
 
2012
 
Change from
Prior Year
Percent Change
from Prior Year
Three Months Ended September 30,
$
175,668
$
142,662
$
33,006
23%
Nine Months Ended September 30,
$
501,600
$
338,104
$
163,496
48%

Salaries and wages expenses increased for the three and nine months ended September 30, 2013 as compared to the three and nine months ended September 30, 2012. The increases in salaries and wages expenses were primarily due to the addition of marketing and research staff in accordance with our strategic plan.  These increases also resulted from a decrease in the capitalization of certain employee payroll costs during the three and nine months ended September 30, 2013.

Contract Services
 
2013
 
2012
 
Change from
Prior Year
Percent Change
from Prior Year
Three Months Ended September 30,
$
47,236
$
27,345
$
19,891
73%
Nine Months Ended September 30,
$
83,396
$
127,147
$
(43,751)
(34%)

Contract services expenses increased for the three months ended September 30, 2013 as compared to the same period in 2012.  This increase was primarily due to investment of resources in marketing Touchpoint Mapping ® On-Demand as well as product development costs relating to minor modifications and maintenance activities.  Direct product development contract labor expenses were capitalized during the third quarter of 2012, while such capitalization was discontinued by the second quarter of 2013 when certain features of the product were available for general release.  Increases in contract marketing and product development expenses were partially offset by a decrease in business development and sales personnel expenses which was due to a change in payment structure from hourly to commission based.

Contract services decreased for the nine months ended September 30, 2013 as compared to the same period in 2012. This decrease was primarily due to a change in payment structure of business development and sales personnel from hourly to commission based.  The decrease in contract services also resulted from a decrease in direct product development contract labor expenses.  Significant product development contract labor costs were incurred to establish technological feasibility during the first quarter of 2012 and were expensed as incurred.  While direct product development contract labor costs were capitalized during the second and third quarters of 2012, as well as the first quarter of 2013, costs expensed in 2013, after certain features of the product were available for general release, related to minor modifications and maintenance activities and were significantly less than costs expensed in the first quarter of 2012.   These contract personnel were redeployed to client engagement work as well as more general and administrative tasks, as necessary.  Decreases in contract business development and sales personnel expenses and contract product development expenses were partially offset by increases in marketing costs incurred during this period.

Other General and Administrative
 
2013
 
2012
 
Change from
Prior Year
Percent Change
from Prior Year
Three Months Ended September 30,
$
94,380
$
43,687
$
50,693
116%
Nine Months Ended September 30,
$
294,217
$
233,267
$
60,950
26%

General and administrative expenses increased for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 based on the following:

·
An increase of approximately $28,000 in sales and marketing expenses related to lead generation, copywriting, marketing content development, pay-per-click (PPC) management referral fees and commissions, and market research.
·
An increase of approximately $9,000 in professional fees as a direct result of the increased use of legal and advisory services related to SEC and SEDAR filings and completion of a private placement of common stock.



·  
An increase of approximately $6,100 in insurance premium expenses due to increases in business auto, errors and omission and employee health coverage.
·  
An increase of approximately $4,000 in sales and marketing SaaS subscription costs related to marketing automation services.

General and administrative expenses increased for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 based primarily on the following:

·  
An increase of approximately $40,000 in marketing expenses related to lead generation, copywriting, marketing content development, pay-per-click (PPC) management referral fees and commissions, and market research.
·  
A decrease of approximately $38,200 in in software license expenses related to costs incurred to establish technological feasibility in the first quarter of 2012.
·  
An increase of approximately $31,000 in professional fees as a direct result of the increased use of legal and advisory services related to SEC and SEDAR filings, completion of a private placement of common stock, as well as our application for eligibility to distribute new and secondary offerings.
·  
An increase of approximately $14,600 in insurance premium expenses due to increases in business auto, errors and omission and employee health coverage.
·  
An increase of approximately $9,100 in third-party administrative costs associated with two consulting services engagements.
·  
An increase of approximately $4,900 in SEC and SEDAR filing fees.

Other Income/Expense
 
2013
 
2012
 
Change from
Prior Year
Percent Change
from Prior Year
Three Months Ended September 30,
$
-
$
-
$
-
-
Nine Months Ended September 30,
$
(62,982)
$
5,675
$
(68,657)
(1,210%)

Other income/expense decreased for nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012, primarily due to the write off of leasehold improvements with a net book value of approximately $62,900, which were written off as the lease term of the subject property had been terminated.

Liquidity and Capital Resources

We measure our liquidity in a variety of ways, including the following:

   
September 30,
 
December 31,
   
2013
 
2012
Cash and Cash Equivalents
$
783,446
$
106,999
Working Capital
$
617,458
$
166,928

During the nine months ended September 30, 2013 we were able to finance our operations, including capital expenditures for infrastructure, product development and marketing through operating activities, private sales of common stock, and cash on hand.

      On July 2, 2013 the Company completed a private placement of 2,948,856 restricted shares of common stock.  Gross proceeds from that private placement totaled $1,032,100.

In September, 2011, two non-convertible, long-term debt instruments totaling $150,000 were executed.  The notes are structured to incur balloon payments of the principal and 4% APR non-compounding accrued interest with maturity dates in September, 2014.  The principal and accrued interest payable at maturity will total $168,000.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.   As reflected in the consolidated financial statements included in this report, for the nine months ended September 30, 2013, we had a net loss of $505,920, and a net loss of $306,948 for the year ended December 31, 2012. We have had material operating losses and have not yet created positive cash flows.  These factors raise substantial doubt as to our ability



 
to continue as a going concern.  Our ability to continue as a going concern is dependent upon our ability to achieve a level of profitability, or raise additional capital through debt financing and/or through sales of common stock.  We cannot provide any assurance that profits from operations will generate sufficient cash flow to meet our working capital needs and service our existing debt, nor that sufficient capital can be raised through debt or equity financing.  The consolidated financial statements do not include adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

Anticipated Uses of Cash

In 2013, our primary areas of investment have been, and are expected to continue to be, additional product development, supporting sales and marketing activities, including sales and marketing staff, advertising services and media, marketing and sales automation software and other related services to support our initiative to successfully launch our SaaS product. A secondary area of investment is anticipated to include strengthening infrastructure by hiring client support staff to support deployment and delivery of the SaaS product offering and the management of ongoing client relationships.

During this period, we plan to fund these expenditures with cash flows generated from ongoing operations and proceeds from the private placement closed July 2, 2013.

We do not intend to pay dividends in the foreseeable future.

Cash Flow

Nine months Ended September 30, 2013 and 2012

Operating Activities.   During the nine months ended September 30, 2013, we reported negative cash flows from operations of $318,578. This consisted of our net loss of $505,920 adjusted primarily by a loss on asset disposal of $62,982, depreciation and amortization of $40,205, stock compensation expense of $10,070, decreases in accounts receivable of $32,734 and increases of $29,635 in accounts payable.

The decrease in accounts receivable was due primarily to the timing of invoicing significant clients.  At September 30, 2013, one material engagement invoice was outstanding, while multiple material consulting services invoices were outstanding at the beginning of the period.

Increase in accounts payable was primarily due to increased spending associated with the marketing of our product.

Days Sales Outstanding (DSO) during the nine months ended September 30, 2013 was approximately 31 days, up from approximately 23 days during the nine months ended September 30, 2012. During the first three quarters of 2013, the company was engaged in two substantial consulting services projects that required the use of a third-party contract administrator.  The processes employed by this administrator have caused our payment terms with the related client to effectively be Net 45.

We reported negative cash flows from operations during the nine months ended September 30, 2012. Our net cash used in operating activities of $349,379 consisted of a net loss of $409,648, adjusted primarily by depreciation and amortization of $5,838, stock compensation expense of $9,505 and decreases in accounts receivable of $22,923 and increases in accounts payable of $22,516.

In general, the accounts receivable decrease was due to a period of time between the completion of a substantial consulting services agreement and entering another significant consulting engagement during the third quarter ended September 30, 2012.



Increases in accounts payable were directly due to increased costs associated with the development of our products during this period.

Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2013 and 2012 amounted to $37,075 and $146,936, respectively. Net cash used in investing activities for both periods related primarily to capitalization of software costs for the development of the SaaS product offering.

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2013 and 2012 amounted to $1,032,100 and $595,000, respectively. For the nine months ended September 30, 2013, net cash provided by financing activities resulted from proceeds from the private placement of common stock of $1,032,100 that closed on July 2, 2013.  Net cash provided by financing activities during the first six months of 2012 was due primarily to proceeds from the private placement of common stock of $595,000.

Off Balance Sheet Arrangements

We did not have any off balance sheet arrangements as of September 30, 2013.

Contractual Obligations

The following table summarizes the payments due by fiscal year for our outstanding contractual obligations as of September 30, 2013:

   
Total
 
Less than
1 Year
 
1-3 Years
 
3-5 Years
 
More than
5 Years
Operating lease obligations (a)
$
73,380
$
24,579
$
48,801
$
-
$
-
Purchase obligations (b)
$
20,436
$
20,436
$
-
$
-
$
-
Totals
$
93,816
$
45,015
$
48,801
$
-
$
-

(a)  
The operating lease obligations presented reflect future minimum lease payments due under the non-cancelable portions of our operating lease.

(b)  
Purchase obligations primarily represent non-cancelable contractual obligations related to SaaS licenses and access to marketing research services.

ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.           CONTROLS AND PROCEDURES.

Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of September 30, 2013, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) accumulated and communicated to our management, including our principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1A.         RISK FACTORS.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 6.            EXHIBITS.

   
Incorporated by reference
Filed
Exhibit
Document Description
Form
Date
Number
herewith
3.1
Articles of Incorporation (12/14/2001).
S-1
4/25/12
3.1
 
 
         
3.2
Amended Articles of Incorporation (4/08/2006).
S-1
4/25/12
3.2
 
 
         
3.3
Amended Articles of Incorporation (10/17/2011).
S-1
4/25/12
3.3
 
 
         
3.4
Amended and Restated Bylaws.
S-1
4/25/12
3.4
 
 
         
4.1
Specimen Stock Certificate.
S-1
4/25/12
4.1
 
 
         
10.1
Lease Agreement for San Anselmo office.
S-1
4/25/12
10.1
 
 
         
10.2
Lease Agreement for North Carolina office.
S-1
4/25/12
10.2
 
 
         
10.3
Lease Agreement for San Francisco office.
S-1
4/25/12
10.3
 
 
         
10.4
Deed covering Lake County Real Property.
S-1
4/25/12
10.4
 
 
         
10.5
Stock Option Plan.
S-1
4/25/12
10.5
 
 
         
10.6
Promissory Note – McLellan Investment Corporation.
S-1/A-2
7/24/12
10.6
 
 
         
10.7
Promissory Note – Brad Holland.
S-1/A-2
7/24/12
10.7
 
 
         
10.8
Employment Agreement – Lynn Davison.
S-1/A-3
9/12/12
10.8
 
 
         
10.9
Services Agreement with mfifty dated March 2, 2012.
S-1/A-3
9/12/12
10.9
 
 
         
10.10
Letter of Agreement with TAG Oil, Ltd. dated February 1, 2010.
S-1/A-4
10/16/12
10.1
 
 
         
10.11
Letter of Agreement TAG Oil, Ltd. with dated September 1, 2010.
S-1/A-4
10/16/12
10.2
 
 
         
10.12
Letter of Agreement with Infinitee dated May 26, 2011.
S-1/A-4
10/16/12
10.3
 
 
         
10.13
Letter of Agreement with Dolce Vita Homes LP dated May 31,
2011.
S-1/A-4
10/16/12
10.4
 
 
         



10.14
Letter of Agreement with Labrador Technology, Inc. dated June 3,
2011.
S-1/A-4
10/16/12
10.5
 
 
         
10.15
Letter of Agreement with Infinitee dated July 15, 2011.
S-1/A-4
10/16/12
10.6
 
 
         
10.16
Letter of Agreement with Brinson Patrick Securities dated October
27, 2011.
S-1/A-4
10/16/12
10.7
 
 
         
10.17
Letter of Agreement with Labrador Technology, Inc. dated
November 22, 2011.
S-1/A-4
10/16/12
10.8
 
 
         
10.18
Letter of Agreement with Brinson Patrick Securities dated February
1, 2012.
S-1/A-4
10/16/12
10.9
 
           
10.19
Statement of Work for mfifty dated March 2, 2012.
S-1/A-4
10/16/12
10.10
 
 
         
10.20
Letter of Agreement with Danone Trading B.V. dated April 17, 2012.
S-1/A-5
11/05/12
10.11
 
 
         
10.21
Letter of Agreement and Addendum to Proposal with Danone
Trading B.V. dated April 25, 2012.
S-1/A-4
10/16/12
10.12
 
 
         
10.22
Consulting Agreement with California Physicians’ Service d/b/a
Blue Shield of California dated August 30, 2012.
10-K
3/27/13
10.22
 
 
         
10.23
Statement of Work for MBO Partners, Inc. dated October 29, 2012.
10-K
3/27/13
10.23
 
 
         
10.24
Services Agreement with Tanger Factory Outlet Centers, Inc. dated
August 28, 2012.
10-Q
5/15/13
10.24
 
 
         
10.25
Statement of Work with Tanger Factory Outlet Centers, Inc. dated
August 28, 2012.
10-Q
5/15/13
10.25
 
 
         
10.26
Services Agreement with Centurion Medical Products dated
October 4, 2012.
10-Q
5/15/13
10.26
 
 
         
10.27
Statement of Work with Centurion Medical Products dated October
4, 2012.
10-Q
5/15/13
10.27
 
 
         
10.28
Services Agreement with Quadrant Homes dated November 30,
2012.
10-Q
5/15/13
10.28
 
 
         
10.29
Statement of Work with Quadrant Homes dated November 30,
2012.
10-Q
5/15/13
10.29
 
 
         
10.30
Services Agreement with Arizona State Credit Union dated March
29, 2013.
10-Q
8/08/13
10.30
 
 
         
10.31
Statement of Work with Arizona State Credit Union dated March
29, 2013.
10-Q
8/08/13
10.31
 
 
         



10.32
Statement of Work with Quadrant Homes dated April 2, 2013.
10-Q
8/08/13
10.32
 
 
         
10.33
Statement of Work with Quadrant Homes dated April 2, 2013.
10-Q
8/08/13
10.33
 
 
         
10.34
Statement of Work with Quadrant Homes dated April 8, 2013.
10-Q
8/08/13
10.34
 
 
         
10.35
Statement of Work with Tanger Factory Outlet Centers, Inc. dated
April 9, 2013.
10-Q
8/08/13
10.35
 
 
         
10.36
Statement of Work with Tanger Factory Outlet Centers, Inc. dated
April 9, 2013.
10-Q
8/08/13
10.36
 
 
         
10.37
Statement of Work with Microsoft dated September 3, 2013.
     
X
 
         
10.38
Share Option Plan with Lynn Davison dated September 3, 2013.
     
X
 
         
14.1
Code of Ethics.
10-K
3/27/13
14.1
 
 
         
31.1
Certification of Principal Executive and Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
X
 
         
32.1
Certification of Chief Executive and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
X
 
         
101.INS
XBRL Instance Document.
     
X
 
         
101.SCH
XBRL Taxonomy Extension – Schema.
     
X
 
         
101.CAL
XBRL Taxonomy Extension – Calculations.
     
X
 
         
101.DEF
XBRL Taxonomy Extension – Definitions.
     
X
 
         
101.LAB
XBRL Taxonomy Extension – Labels.
     
X
 
         
101.PRE
XBRL Taxonomy Extension – Presentation.
     
X













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 on this 14 th day of November, 2013.

 
TOUCHPOINT METRICS, INC.
 
(the “ Registrant ”)
 
   
 
BY:
MICHAEL HINSHAW
   
Michael Hinshaw
   
Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Treasurer and a member of the Board of Directors




















EXHIBIT INDEX

   
Incorporated by reference
Filed
Exhibit
Document Description
Form
Date
Number
herewith
3.1
Articles of Incorporation (12/14/2001).
S-1
4/25/12
3.1
 
 
         
3.2
Amended Articles of Incorporation (4/08/2006).
S-1
4/25/12
3.2
 
 
         
3.3
Amended Articles of Incorporation (10/17/2011).
S-1
4/25/12
3.3
 
 
         
3.4
Amended and Restated Bylaws.
S-1
4/25/12
3.4
 
 
         
4.1
Specimen Stock Certificate.
S-1
4/25/12
4.1
 
 
         
10.1
Lease Agreement for San Anselmo office.
S-1
4/25/12
10.1
 
 
         
10.2
Lease Agreement for North Carolina office.
S-1
4/25/12
10.2
 
 
         
10.3
Lease Agreement for San Francisco office.
S-1
4/25/12
10.3
 
 
         
10.4
Deed covering Lake County Real Property.
S-1
4/25/12
10.4
 
 
         
10.5
Stock Option Plan.
S-1
4/25/12
10.5
 
 
         
10.6
Promissory Note – McLellan Investment Corporation.
S-1/A-2
7/24/12
10.6
 
 
         
10.7
Promissory Note – Brad Holland.
S-1/A-2
7/24/12
10.7
 
 
         
10.8
Employment Agreement – Lynn Davison.
S-1/A-3
9/12/12
10.8
 
 
         
10.9
Services Agreement with mfifty dated March 2, 2012.
S-1/A-3
9/12/12
10.9
 
 
         
10.10
Letter of Agreement with TAG Oil, Ltd. dated February 1, 2010.
S-1/A-4
10/16/12
10.1
 
 
         
10.11
Letter of Agreement TAG Oil, Ltd. with dated September 1, 2010.
S-1/A-4
10/16/12
10.2
 
 
         
10.12
Letter of Agreement with Infinitee dated May 26, 2011.
S-1/A-4
10/16/12
10.3
 
 
         
10.13
Letter of Agreement with Dolce Vita Homes LP dated May 31,
2011.
S-1/A-4
10/16/12
10.4
 
 
         
10.14
Letter of Agreement with Labrador Technology, Inc. dated June 3,
2011.
S-1/A-4
10/16/12
10.5
 
 
         
10.15
Letter of Agreement with Infinitee dated July 15, 2011.
S-1/A-4
10/16/12
10.6
 
 
         
10.16
Letter of Agreement with Brinson Patrick Securities dated October
27, 2011.
S-1/A-4
10/16/12
10.7
 
 
         
10.17
Letter of Agreement with Labrador Technology, Inc. dated
November 22, 2011.
S-1/A-4
10/16/12
10.8
 
 
         



 

10.18
Letter of Agreement with Brinson Patrick Securities dated
February 1, 2012.
S-1/A-4
10/16/12
10.9
 
 
         
10.19
Statement of Work for mfifty dated March 2, 2012.
S-1/A-4
10/16/12
10.10
 
 
         
10.20
Letter of Agreement with Danone Trading B.V. dated April 17,
2012.
S-1/A-5
11/05/12
10.11
 
 
         
10.21
Letter of Agreement and Addendum to Proposal with Danone
Trading B.V. dated April 25, 2012.
S-1/A-4
10/16/12
10.12
 
 
         
10.22
Consulting Agreement with California Physicians’ Service d/b/a
Blue Shield of California dated August 30, 2012.
10-K
3/27/13
10.22
 
 
         
10.23
Statement of Work for MBO Partners, Inc. dated October 29, 2012.
10-K
3/27/13
10.23
 
 
         
10.24
Services Agreement with Tanger Factory Outlet Centers, Inc. dated
August 28, 2012.
10-Q
5/15/13
10.24
 
 
         
10.25
Statement of Work with Tanger Factory Outlet Centers, Inc. dated
August 28, 2012.
10-Q
5/15/13
10.25
 
 
         
10.26
Services Agreement with Centurion Medical Products dated
October 4, 2012.
10-Q
5/15/13
10.26
 
 
         
10.27
Statement of Work with Centurion Medical Products dated
October 4, 2012.
10-Q
5/15/13
10.27
 
 
         
10.28
Services Agreement with Quadrant Homes dated November 30,
2012.
10-Q
5/15/13
10.28
 
 
         
10.29
Statement of Work with Quadrant Homes dated November 30,
2012.
10-Q
5/15/13
10.29
 
 
         
10.30
Services Agreement with Arizona State Credit Union dated March
29, 2013.
10-Q
8/08/13
10.30
 
 
         
10.31
Statement of Work with Arizona State Credit Union dated March
29, 2013.
10-Q
8/08/13
10.31
 
 
         
10.32
Statement of Work with Quadrant Homes dated April 2, 2013.
10-Q
8/08/13
10.32
 
 
         
10.33
Statement of Work with Quadrant Homes dated April 2, 2013.
10-Q
8/08/13
10.33
 
 
         
10.34
Statement of Work with Quadrant Homes dated April 8, 2013.
10-Q
8/08/13
10.34
 
 
         
10.35
Statement of Work with Tanger Factory Outlet Centers, Inc. dated
April 9, 2013.
10-Q
8/08/13
10.35
 
 
         
           



10.36
Statement of Work with Tanger Factory Outlet Centers, Inc. dated
April 9, 2013.
10-Q
8/08/13
10.36
 
 
         
10.37
Statement of Work with Microsoft dated September 3, 2013.
     
X
 
         
10.38
Share Option Plan with Lynn Davison dated September 3, 2013.
     
X
 
         
14.1
Code of Ethics.
10-K
3/27/13
14.1
 
 
         
31.1
Certification of Principal Executive and Principal Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
X
 
         
32.1
Certification of Chief Executive and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
X
 
         
101.INS
XBRL Instance Document.
     
X
 
         
101.SCH
XBRL Taxonomy Extension – Schema.
     
X
 
         
101.CAL
XBRL Taxonomy Extension – Calculations.
     
X
 
         
101.DEF
XBRL Taxonomy Extension – Definitions.
     
X
 
         
101.LAB
XBRL Taxonomy Extension – Labels.
     
X
 
         
101.PRE
XBRL Taxonomy Extension – Presentation.
     
X










 
-26-
 


Exhibit 10.37

DealPoint ID #
 


 
Statement of Work
 
(“SOW”)
 
Addresses and contacts for notices
 

“Microsoft”
“Supplier” MBO Partners
“Supplier Personnel”
Company Name: Microsoft
Company Name: MBO Partners, Inc.
Company Name: Touchpoint
Metrics, Inc. DBA MCorp
Consulting
Primary Contact:
Primary Contact: Rachana Suri
 
Supplier Personnel Name(s):
Michael Hinshaw
Lynn Davison
Address:
Address: 13454 Sunrise Valley
Dr #300 Herndon, VA 20194
Address: 201 Spear Street,
Suite 1100, San Francisco,
CA 94105
Phone number:
Phone number: (703) 793-6000
Phone number: 415-526-2290
Fax number:
Fax number:
Fax number: 415-526-2650
Email (if applicable):
Email (if applicable):
Email (if applicable):
admin@mcorpconsulting.com
Secondary Contact:
Secondary Contact:
Secondary Contact: Lisa
Hamilton (Accounting)
 
Microsoft Supplier Number:
2230285
 
 

SOW Effective Date:
9/3/2013
SOW Expiration Date:
1/31/2014
DealPoint # for master agreement:
MMVA DP820913
 




IC SOW Confidential
Page 1 of 6
October 2011

 
 
 


 
Agreed and accepted
 

Microsoft
Supplier
Microsoft  Signature:
KURT A. SAMUELSON
 
Supplier  Signature:
RACHANA SURI
Microsoft  Name:
Kurt A. Samuelson
 
Supplier  Name:
Rachana Suri
Microsoft  Title:
Kurt A. Samuelson
 
Supplier  Title:
Business Manager
Microsoft  Date:
September 3, 2013  |  09:15 PT
 
Supplier  Date:
September 3, 2013  |  09:24 PT


This SOW, executed in accordance with the terms of that certain Microsoft Master Vendor Agreement (MMVA) (the “Agreement”) dated October 10, 2012 between Microsoft   and Supplier, is entered into by the parties and effective as of the SOW Effective Date above.
 

1.
Description of S ervices

Pursuant to and in conformance with any standards and/or specifications which may be provided by Microsoft to Supplier from time to time, Supplier Personnel shall deliver to and/or perform for Microsoft the following goods, services and/or other items or materials as a work made for hire (collectively, the “Services”).
 
MCorp will assist the Microsoft Information Technology organization (MSIT) and the Connected Customer Experience team (CCE) to leverage the outside-in “customer” perspective to support development of an integrated, end-to-end approach to IT Portfolio Management that enables business strategy through measurement of value delivered.
 
Specifically, MCorp will assist MSIT and CCE to better understand the IT Portfolio Management journey and help identify improvement opportunities by “walking” a series of well-defined and prioritized personas through relevant, end-to-end, scenario-based journeys across the IT Portfolio Management lifecycle.  MSIT will leverage the results to support internal and external customers and partners.
 
MCorp will continue building on and building out CCE capabilities and artifacts by working side-by-side with MSIT as a team to accomplish the engagement objectives.
 
The key activities for each phase of work are as follows:
 
Project Kickoff
 
§
Schedule development
 
§
Role definition
 



IC SOW                                                                                                                                                                                           Confidential
Page 2 of 6
October 2011

 
 
 


 
Phase 1
 
§
One-on-one stakeholder interviews conducted with 4 to 7 IT working group members
 
§
Research Plan finalized and agreed upon
 
§
Knowledge transfer activities, including process refinement and artifacts updates
 
Phase 2
 
§
One-on-one “customer” audience interviews completed with 12 to 18 participants
 
§
Persona prioritization and selection (3 to 5 selected for inclusion and focus in the remainder of the engagement)
 
§
Touchpoint and journey mapping workshop completed
 
§
Online focus group research completed (3 to 5 focus groups; ~15 participants in each)
 
§
Data analysis and research summary findings completed
 
§
Knowledge transfer activities including process refinement and artifacts updates
 
Phase 3
 
§
Target audience personas completed (3 to 5 total)
 
§
Current state journey maps completed for each targeted personas
 
§
Working strategy session completed
 
§
Strategy finalized to focus optimization and transform initiatives
 
§
Business case developed
 
§
Knowledge transfer activities including process refinement and artifacts updates
 
Phase 4
 
§
Working design session completed
 
§
Ideal state journey maps completed for each targeted personas
 
§
Working prioritization session completed
 
§
Creation of implementation roadmap
 
§
Stakeholder presentation completed
 
§
Knowledge transfer activities including process refinement and artifacts updates

All Services shall be treated as Microsoft Confidential Information unless otherwise designated by Microsoft.

2.
Deliverables/Delivery Schedule

Supplier Personnel shall complete and deliver all Services to Microsoft on or before January 31, 2014.   The milestone delivery schedule for the Services, if applicable, shall be as follows:
 



IC SOW Confidential
Page 3 of 6
October 2011

 
 
 




Milestone
#
Brief Description of Services to be completed by Supplier Personnel and delivered to Microsoft
Due on or
Before
1
Project kick-off, including schedule development and
role definition
9/6/2013
2
Phase 1 deliverables including the completion of the
Research Plan and knowledge transfer through our
process refinement and artifacts updates.
9/20/2013
3
Phase 2 deliverables including the completion of the
qualitative research consisting of a touchpoint and
journey mapping workshop, three (3) to five (5)
online focus groups, and knowledge transfer through
our process refinement and artifacts updates.
10/25/2013
4
Phase 3 deliverables including the completion of
target personas, business case, and knowledge
transfer through our process refinement and artifacts
updates.
12/6/2013
5
Phase 4 deliverables including the completion of the
ideal state journey maps, implementation roadmap,
stakeholder presentation, and knowledge transfer our
process refinement and artifacts updates.
1/10/2013


3.
Payment

3.1
Services Fees

As complete and final payment for Services which has been completed and delivered by Supplier Personnel to Microsoft and which has been accepted by Microsoft, Microsoft shall pay Supplier a total fee not to exceed Three Hundred Twelve Thousand U.S. Dollars ( $ 312,000.00 USD) in accordance with the following milestone payment schedule:

Milestone  #
Not to Exceed
Payment Amount
Delivery/Payment
Date
1
$78,175.00
9/6/2013
2
$58,631.25
9/20/2013
3
$58,631.25
10/25/2013
4
$58,631.25
12/6/2013
5
$58,631.25
1/10/2014
Sub-Total
$312,700.00
 
 
 



IC SOW Confidential
Page 4 of 6
October 2011

 
 
 



Milestone  #
Not to Exceed
Payment Amount
Delivery/Payment
Date
Expenses (if any –
see Section 3.2, below)
$15,000.00
As incurred
Total
$327,700.00
 


3.2
Expenses :   (choose one of the below)

As reflected in Section 3.1, above, Microsoft shall reimburse Supplier up to Fifteen Thousand US Dollars ( $15,000.00 USD) for pre-approved, reasonable and actual travel and travel-related expenses incurred by Supplier Personnel in connection with the performance of the Services.  All travel expenses hereunder are subject to Microsoft’s review and the Microsoft Travel Policy and Supplier or Supplier Personnel must submit appropriate documentation evidencing expenses to be reimbursed.

Expenses above include any reasonable and necessary out-of-pocket expenses such as workshop materials, courier transcription fees and focus group platform fees.  All expenses will be billed as incurred, with no additional mark up or margin added by the Supplier.


4.
Relationship of the Parties
 
(a)  
No employment. The Agreement or this SOW does not create an employment relationship between Microsoft and Supplier or Supplier Personnel. Supplier’s employees, independent contractors, personnel and/or subcontractors (collectively referred to as “Supplier Personnel”) are not Microsoft employees.
 
(b)  
Supplier is responsible for and will pay all wages, fringe benefits, payroll taxes, insurance, work schedules, and work conditions with respect to the Supplier Personnel, and for all other costs incurred by it in connection with its business, including but not limited to travel, rent, and the cost of supplies and materials, except as may have been approved by Microsoft in accordance with section this SOW.   Upon Microsoft’s request, Supplier will provide Microsoft with satisfactory proof of employment status of the assigned Resources.
 
(c)  
Supplier will be responsible for and pay all costs of conducting its business, including, but not limited to, the expense and responsibility for any applicable insurance or city, county, state or federal licenses, permits, taxes or assessments of any kind. Supplier will be responsible for payment of any taxes imposed on Supplier including, but not limited to, income taxes, Social Security and Medicare taxes, and worker’s compensation premiums.   Supplier will indemnify Microsoft and hold it harmless from paying such business costs or taxes.
 
(d)  
Supplier will defend, indemnify and hold harmless Microsoft and any of its parent, subsidiary or related companies, officers, managers, directors, employees and agents, for any claims, damages, judgments, settlement, costs or expenses incurred by Microsoft as a result of any action instituted by Supplier Personnel against Microsoft, including but not limited to any claims for wages, fringe benefits, or other compensation under federal or state law, any claims related to Supplier’s employment of or contract with Supplier Personnel, and any claims challenging the Supplier’s right to dismiss or sever contractual ties with its Supplier Personnel.  Similarly, Supplier will defend, indemnify and hold Microsoft harmless for any other third-party claims,
 

 



IC SOW Confidential
Page 5 of 6
October 2011

 
 
 


 

 

 
judgments, settlements, costs, fines or penalties related to the employment status of the Supplier Personnel.

 
[Remainder of this page is intentionally left blank.]




 
 
 
 
 
 
 
 
 
 
 
 
 

 




IC SOW Confidential
Page 6 of 6
October 2011

 
 
 


Exhibit 10.38

SCHEDULE A

Touchpoint Metrics, Inc.
SHARE OPTION PLAN
As adopted by the Board, January 25, 2008

OPTION COMMITMENT

Notice is hereby given that, effective this 3 rd day of September , 2013, (the "Effective Date") Touchpoint Metrics, Inc. (the "Company") has granted to Lynn Davison (“Optionee”), an Option to acquire 300,000 Common shares ("Optioned Shares") up to 5:00 p.m. Pacific time on the 3 rd day of September, 2023 (the "Expiry Date") at an Exercise Price of US $0.40 per share.

Optioned Shares may be acquired as follows:

1.  
20% of the total number of Optioned Shares granted will vest 12 months after Effective Date,

2.  
a further 20% of the total number of Optioned Shares granted will vest eighteen months after the Effective Date,

3.  
20% of the total number of Optioned Shares granted will vest two years after Effective Date,

4.  
20% of the total number of Optioned Shares granted will vest thirty months after the Effective Date,

5.  
the remaining 20% of the total number of Optioned Shares granted will vest three years after the Effective Date.

The grant of the Option evidenced hereby is made subject to the terms and conditions of the Company's Share Option Plan (the “Plan”), the terms and conditions of which are hereby incorporated in this Option Commitment.

To exercise your Option, deliver to the Company at its then principal business office, a written notice specifying the number of Optioned Shares you wish to acquire, together with cash or a certified cheque payable to the Company for the aggregate Exercise Price. A certificate for the Optioned Shares so acquired will be issued by the transfer agent as soon as practicable.

Touchpoint Metrics, Inc.



MICHAEL HINSHAW
President

 
 
 
-2-


 
I hereby acknowledge receipt of a copy of the Plan and agree to be bound by the terms of the Plan.

OPTIONEE

Name:
LYNN DAVISON
 
Print Name:
(signature)
Lynn Davison
 
Address:
 
291 Fawn Dr.
 
 
San Anselmo, CA   94960

 

 

 

 

 

 

 

 

 
 
 


Exhibit 31.1

SARBANES-OXLEY SECTION 302(a) CERTIFICATION

I, Michael Hinshaw , certify that:

1.
I have reviewed this Form 10-Q for the period ended September 30, 2013 of Touchpoint Metrics, Inc. ;
   
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
   
 
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
 
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
 
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
   
 
a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
 
b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:
November 14, 2013
MICHAEL HINSHAW
   
Michael Hinshaw
   
Principal Executive Officer and Principal Financial Officer


 
 
 


Exhibit 32.1





CERTIFICATION PURSUANT TO
18 U.S.C. Section 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Touchpoint Metrics, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013 , as filed with the Securities and Exchange Commission on the date hereof (the “report”), I, Michael Hinshaw , Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
 
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated this 14 th day of November, 2013.


 
MICHAEL HINSHAW
 
Michael Hinshaw
 
Chief Executive Officer and Chief Financial Officer