Attached files
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| EX-23.1 - CONSENT OF HILLARY CPA GROUP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. - MCX Technologies Corp | exh23-1.htm |
Registration No. 333-180914
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-1/A-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
TOUCHPOINT METRICS, INC.
(Name of small business issuer in its charter)
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California
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7372
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(State or Other Jurisdiction of Organization)
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(Primary Standard Industrial Classification Code)
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_________________
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TOUCHPOINT METRICS, INC.
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National Registered Agents, Inc.
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201 Spear Street, Suite 1100
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2875 Michelle Drive, Suite 100
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San Francisco, CA 94105
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Irvine, CA 92606
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415-526-2655
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800-562-6429
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(Address and telephone number of registrant’s executive office)
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(Name, address and telephone number of agent for service)
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_________________
Copies to:
The Law Office of Conrad C. Lysiak, P.S.
601 West First Avenue, Suite 903
Spokane, Washington 99201
(509) 624-1475
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
If any of the securities being registered on the Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X]
If this Form is filed to register additional common stock for an offering under Rule 462(b) of the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed under Rule 462(c) of the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed under Rule 462(d) of the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large Accelerated Filer
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[ ]
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Accelerated Filer
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[ ]
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Non-accelerated Filer
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[ ]
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Smaller Reporting Company
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[X]
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Securities to be
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Amount To Be
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Offering Price
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Aggregate
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Registration
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|||
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Registered
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Registered
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Per Share
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Offering Price
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Fee [1]
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Common Stock by Selling
Shareholders
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7,632,302
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$
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0.25
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$
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1,908,075.50
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$
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218.67
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Total
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7,632,302
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$
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0.25
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$
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1,908,075.50
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$
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218.67
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[1] Estimated solely for purposes of calculating the registration fee under Rule 457.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON DATES AS THE COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY DETERMINE.
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Prospectus
TOUCHPOINT METRICS, INC.
7,632,302 Shares of Common Stock
We are registering for sale by selling shareholders 7,632,302 shares of common stock. We will not receive any proceeds from the shares sold by the selling shareholders.
The sales price to the public is fixed at $0.25 per share until such time as the shares of our common stock become traded on the Bulletin Board operated by the Financial Industry Regulatory Authority or another exchange. If our common stock becomes quoted on the Bulletin Board or another exchange, then the sales price to the public will vary according to the selling decisions of each selling shareholder and the market for our stock at the time of resale.
Our shares of common stock are not traded anywhere.
Investing in our common stock involves risks. See “Risk Factors” starting at page 6.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. It is illegal to tell you otherwise.
The date of this prospectus is ____________________.
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Page No.
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5
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6
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8
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9
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9
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9
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11
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20
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24
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27
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28
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33
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36
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37
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37
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38
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38
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38
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SUMMARY OF OUR OFFERING
Our business
We were incorporated under the laws of the state of California as The Innes Group, Inc. on December 14, 2001. On October 18, 2011, we changed our name to Touchpoint Metrics, Inc. We are engaged in the business of developing and delivering technology-enabled products and services that improve customer experience management capabilities for corporations.
The offering
Following is a brief summary of this offering:
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Securities being offered by selling shareholders
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7,632,302 shares of common stock
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Offering price per share
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$0.25
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Net proceeds to us
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None
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Number of shares outstanding before the offering
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13,132,302
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Number of shares outstanding after the offering if all of the
shares are sold
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13,132,302
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Selected financial data
The following financial information summarizes the more complete historical financial information at the end of this Prospectus:
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As of
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As of
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As of
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3-31-2012
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12-31-2011
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12-31-2010
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(Unaudited)
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(Audited)
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(Audited)
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Balance Sheet
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Cash and Cash Equivalents
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$
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456,007.60
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$
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52,108.79
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$
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167,871.50
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Total Assets
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$
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846,628.55
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$
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420,401.52
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$
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581,293.49
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Total Liabilities
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$
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269,440.95
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$
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228,504.73
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$
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27,180.25
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Stockholders’ Equity
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$
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577,187.60
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$
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191,896.79
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$
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554,113.24
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Three Months
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Ended
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Year Ended
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Year Ended
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3-31-2012
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12-31-2011
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12-31-2010
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(Unaudited)
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(Audited)
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(Audited)
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Income Statement
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Gross Profit
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$
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85,133.44
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$
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369,499.64
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$
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712,890.05
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Total Expenses
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$
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293,010.96
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$
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783,289.61
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$
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701,313.90
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Net Income (Loss)
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$
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(207,877.52)
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$
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(413,272.60)
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$
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15,282.73
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RISK FACTORS
Please consider the following risk factors before deciding to invest in our common stock. All material risk factors have been addressed. Risks associated with Touchpoint Metrics, Inc.:
1. We have losses that we expect to continue into the future. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we will cease operations and you will lose your investment.
We were incorporated in December 2001. Our net loss since December 2001 has been $(754,254.20). Our ability to achieve and maintain profitability and positive cash flow is dependent upon:
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*
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completion of this public offering,
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*
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our ability to attract customers who will buy our services from us, and:
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*
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our ability to generate revenues through the sale of our services.
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Based upon current plans, we expect to incur operating losses in future periods because we will be incurring expenses and not generating revenues sufficient to generate profits. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues will cause you to lose your investment.
2. If we do not attract customers, we will not make a profit which ultimately will result in a cessation of operations.
Our ability to maintain operations is predicated upon being retained to provide technology-enabled products and services that improve customer experience management capabilities for corporations. Currently, we have approximately nine (9) customers. If we are unable to attract and maintain an adequate customer base to generate revenues, we will have to suspend or cease operations.
3. We do not own any patents covering our product.
We do not own any patents. If we infringe on any patents, we will be liable for damages and may be enjoined from conducting our proposed business. Further, because we have no patents covering our product, someone could use the information and compete with us and we will have no recourse against him.
4. Because our officers and directors do not have prior experience in financial accounting and the preparation of reports under the Securities Exchange Act of 1934, as amended, we may have to hire individuals which could result in an expense we are unable to pay.
Because our officers and directors do not have prior experience in financial accounting and the preparation of reports under the Securities Exchange Act of 1934, as amended, we may have to hire additional experienced personnel to assist us with the preparation, thereof. If we need the additional experienced personnel and we do not hire them, we could fail in our plan of operations and have to suspend operations or cease operations entirely and you could lose your investment. Further, the salaries of these individuals could result in an expense we are unable to pay.
6. We are completely dependent on our president, Michael Hinshaw, to guide our operations. If we lose his services we may have to cease operations.
Our continuing operations will depend entirely on the ability and resources of Mr. Hinshaw, our president. If we lose the services of Mr. Hinshaw, we may have to cease operations. Presently, Mr. Hinshaw is committed to providing his full business time and related resources to us.
7. Because we have only two officers and two directors who are responsible for our managerial and organizational structure, in the future, there may not be effective disclosure and accounting controls to comply with applicable laws and regulations which could result in fines, penalties and assessments against us.
We have only two officers and two directors. They are responsible for our managerial and organizational structure, which include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. As such, they are responsible for the administration of the controls. Should they not properly administer the controls, we may be subject to sanctions and fines by the Securities Exchange Committee which ultimately could cause us to lose money.
8. Because we may issue additional shares of common stock, your investment could be subject to substantial dilution.
We anticipate that any additional funding will be in the form of equity financing from the sale of our common stock. In the future, if we do sell more common stock, your investment could be subject to dilution. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us.
9. Because there is no public trading market for our common stock, you may not be able to resell your stock.
There is currently no public trading market for our common stock. Therefore there is no central place, such as stock exchange or electronic trading system, to resell your shares. If you do want to resell your shares, you will have to locate a buyer and negotiate your own sale.
10. There are legal restrictions on the resale of the common shares offered, including penny stock regulations under the U.S. Federal Securities Laws. These restrictions may adversely affect your ability to resell your stock.
We anticipate that our common stock will continue to be subject to the penny stock rules under the Securities Exchange Act of 1934, as amended. These rules regulate broker/dealer practices for transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00. The penny stock rules require broker/dealers to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations and the broker/dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the transaction. The transaction costs associated with penny stocks are high, reducing the number of broker-dealers who may be willing to engage in the trading of our shares. These additional penny stock disclosure requirements are burdensome and may reduce all of the trading activity in the market for our common stock. As long as the common stock is subject to the penny stock rules, our shareholders may find it more difficult to sell their shares.
11. Our future sales of our common shares could cause our stock price to decline.
There is no contractual restriction on our ability to issue additional shares. We cannot predict the effect, if any, that market sales of our common shares or the availability of shares for sale will have on the market price prevailing from time to time. Sales by us of our common shares in the public market, or the perception that our sales may occur, could cause the trading price of our stock to decrease or to be lower than it might be in the absence of those sales or perceptions.
12. The market price of our common stock may be volatile which could adversely affect the value of your investment in our common stock.
The trading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors. Some of the factors that may cause the market price of our common stock to fluctuate include:
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fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
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*
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changes in estimates of our financial results or recommendations by securities analysts;
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*
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failure of any of our products to achieve or maintain market acceptance;
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*
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changes in market valuations of similar companies;
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*
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significant products, contracts, acquisitions or strategic alliances of our competitors;
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success of competing products or services;
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*
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changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
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regulatory developments;
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*
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litigation involving our company, our general industry or both;
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*
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additions or departures of key personnel;
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*
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investors’ general perception of us; and
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*
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changes in general economic, industry and market conditions.
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We will not receive any proceeds from the sale of the shares of common stock in this offering. All proceeds from the sale of the shares of common stock will be received by the selling shareholders.
The selling stockholders will sell their shares at $0.25 per share until a market for the shares develops on the Bulletin Board operated by the Financial Industry Regulatory Authority. There is no assurance that such a market will ever develop. Further, the shares of common stock could be sold by selling shareholders at privately negotiated prices. Consequently, we cannot determine what the actual value of our common stock will be either now or at the time of sale. We will not receive proceeds from the sale of shares from the selling stockholders.
Since all of the shares of common stock being registered are already issued and outstanding, no dilution will result from this offering.
There are 71 selling shareholders. They may be deemed underwriters. They may sell some or all of their common stock in one or more transactions, including block transactions:
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*
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On such public markets or exchanges as the common stock may from time to time be trading;
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In privately negotiated transactions;
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Through the writing of options on the common stock;
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*
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In short sales; or
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In any combination of these methods of distribution.
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The sales price to the public will vary according to the selling decisions of each selling shareholder and the market for our stock at the time of resale. In these circumstances, the sales price to the public may be:
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*
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The market price of our common stock prevailing at the time of sale;
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*
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A price related to such prevailing market price of our common stock; or
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*
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Such other price as the selling shareholders determine from time to time.
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The shares may also be sold in compliance with the Securities and Exchange Commission’s Rule 144 of the Securities Act of 1933, as amended, or the Securities Act of 1933, as amended. The selling shareholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as agent or acquire the common stock as a principal. Any broker or dealer, participating in such transactions as agent, may receive a commission from the selling shareholders, or if they act as agent for the purchaser of such common stock, from such purchaser. The selling shareholders will likely pay the usual and customary brokerage fees for such services. Brokers or dealers may agree with the selling shareholders to sell a specified number of shares at a stipulated price per share and, to the extent such
broker or dealer is unable to do so acting as agent for the selling shareholders, to purchase, as principal, any unsold shares at the price required to fulfill the respective broker’s or dealer’s commitment to the selling shareholders. Brokers or dealers who acquire shares as principals may thereafter resell such shares from time to time in transactions in a market or on an exchange, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices, and in connection with such re-sales may pay or receive commissions to or from the purchasers of such shares. These transactions may involve cross and block transactions that may involve sales to and through other brokers or dealers.
We can provide no assurance that all or any of the common stock offered will be sold by the selling shareholders. We are bearing all costs relating to the registration of the common stock, estimated to be $40,000. The selling shareholders, however, will pay commissions or other fees payable to brokers or dealers in connection with any sale of the common stock. The selling shareholders must comply with the requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, in the offer and sale of the common stock. In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable law and may among other things:
1. Not engage in any stabilization activities in connection with our common stock;
2. Furnish each broker or dealer through which common stock may be offered, such copies of this prospectus, as amended from time to time, as may be required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Securities Exchange Act of 1934, as amended
There is no assurance that any of the selling shareholders will sell any or all of the shares offered by them. Under the securities laws of certain states, the shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in that state or an exemption from registration or qualification is available and is met.
We anticipate that we will initially be a “penny stock.” The Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
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that a broker or dealer approve a person’s account for transactions in penny stocks; and
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the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
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obtain financial information and investment experience and objectives of the person; and
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*
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make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be reasonably capable of evaluating the risks of transactions in penny stocks.
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The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
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sets forth the basis on which the broker or dealer made the suitability determination; and
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*
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that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Disclosure also must be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
CONDITION AND RESULTS OF OPERATIONS
This section of the prospectus 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 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 prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Overview
We are a customer experience management solutions company, focused on helping large, medium and small enterprises plan, measure and improve the experiences they deliver to their customers. We currently offer professional and software-enabled services, and are engaged in the business of developing and subsequently selling on-demand software solutions designed to optimize customer experiences for businesses of all sizes. These professional and software-enabled services and our on-demand software together fall into the broader category of Customer Experience Management (CEM).
Since our founding, we have focused on helping enterprises improve customer experience, primarily as a professional services company offering professional consulting, creative and production, and research services. These services have been marketed primarily to large and medium enterprises in the financial services industry.
In mid-2010, we made the decision to shift the strategic focus of our business from a primary focus on professional services with software holding a secondary, supporting role to a primary focus on on-demand software solutions and software-enabled services designed to optimize customer experiences for businesses of all sizes. With this refocusing, professional services are migrating to a secondary role supporting our software deployment.
Consequently, the majority of the firm’s resources in the year 2011 were spent codifying and systematizing the analytical and monitoring functionality of Touchpoint Mapping®, a trademark name which describes our approach to measuring and improving customer experience “at the touchpoint level.” Touchpoint Mapping is a registered trademark, and was accepted for registration by the United States Trademark and Patent office in June, 2005.
As a result of this shift, there was a significant increase in expenses in 2011 as employee and other corporate resources were reallocated to expand the range of CEM solutions enabled by the company’s Touchpoint Mapping approach to include development of Touchpoint Mapping as a suite of on-demand software solutions. This increase in, and reallocation of, resources resulted in a significant increase in development, planning, licensing and other related expenses, and a significant decrease in professional and consulting services revenue.
In October, 2011 the name of the company was changed from The Innes Group, Inc. to Touchpoint Metrics, Inc. to reflect the firm’s strategic shift, and to set the stage for formal market entry and initial product launch of Touchpoint Mapping on-demand, which is anticipated to occur in the Q3/Q4 2012.
The majority of product development expenses in 2011 were related to software, systems and service design. The majority of product development expenses during the first quarter of 2012 have been related to market and product validation, product refinement, and user interface and user experience design and validation, and modification. Resources during the first quarter of 2012 continue to be allocated to product development, with significant additional resources being allocated to sales and marketing over 2011, in preparation for market entry and product launch.
Sources of Revenue
Our revenue is comprised primarily of fees from professional consulting services, creative and production services, research services, and products. To varying degrees, each of these sources of revenue is software-enabled. 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, consulting and research services will remain a significant revenue source in the near future.
The majority of our revenue in each of our last two years was derived from consulting services, creative and production services, research and products & other revenue, not elsewhere classified. Consulting services include planning, education, training and best practices consulting. Creative and production services are primarily related to the articulation and implementation of customer-centric strategies. Research services include the development and execution of customized research and analytical solutions, based on a client's specific business application. 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.
Once Touchpoint Mapping has launched as an on-demand software solution, we expect that consulting, creative and production, research, and products services will be sold in two ways: either with initial software subscription, or on a fee-for-service basis, depending on the needs of our clients’ organizations.
Depending on the size and complexity of the client project, our typical consulting, creative and production and research services contracts are either fixed price/fixed scope or, less frequently, billed on a time and materials basis. For these services, we typically invoice clients for a set amount (generally one-third or fifty percent of total fees) at engagement inception, with the balance of the payments distributed over the duration of the contract as project milestones are met. Again depending on the size and complexity of the client project, the average time it takes for us to complete an assignment of these kinds’ ranges from 45 to 120 days. Payment of each invoice is generally due within 30 days. Amounts that have been invoiced are recorded in accounts receivable and deferred revenue or revenue, depending on whether revenue recognition criteria have been met.
In the future, 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 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, materials and travel expenses related to providing professional services to our clients.
As Touchpoint Mapping® on-demand is launched, costs of goods will include all product-related hosting and monitoring costs, licenses for products embedded in the application, related sales commissions, service support, account management and credit card fees .
As our client base grows, 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. While we have not yet recognized commissionable sales, we plan to expense sales commissions through cost of goods sold. 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 additional sales and marketing personnel and increase the level of marketing activities.
Research and development expenses are reflected in contract labor, salaries and wages and other related overhead expense categories. Research and development expenses consist primarily of salary and related expenses for product development personnel and costs related to the development of our new products. These include software licensing and programming fees payable to third parties, quality assurance and testing. To date, we have not capitalized any of our software development costs. As a result, research and development costs have been expensed as incurred. We intend to continue to expand and enhance our product offerings. To accomplish this, we plan to hire additional personnel and continue to contract with third parties. We expect research and development expenses to increase in absolute dollars as we expand our technology and product offerings.
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 and the transitioning of our business to meet the requirements of a public company.
Results of Operations
Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011
Revenue
Our revenues for the three months ended March 31, 2012 were $122,840.70 as compared to revenues of $127,615.75 for the three months ended March 31, 2011. Revenues decreased by $4,775.05, or 4%. Consulting services revenue were $118,400.16 as compared to $113,557.75 in the comparative quarter, an increase of $4,822.41, or 4%. Products & Other revenue decreased by $9,597.46, or 68%, to $4,440.54. These changes are due primarily to a shift away from implementation-oriented projects towards strategy services and product development.
Cost of Goods Sold and Operating Expenses
Cost of Goods Sold. Cost of goods sold during the three months ended March 31, 2012 and 2011 was $37,707.26 and $73,866.08, respectively, representing a decrease of $36,158.82, or 49%. The cost of sales as a percentage of revenues decreased by 27% from 2011. This percentage of revenue is lower than historical results as we have narrowed our service offerings and focused our efforts on our more profitable professional services and consulting customers.
Operating Expenses. Operating expenses as a percentage of revenue was 239% and 124% for the quarters ended March 31, 2012 and 2011, respectively. The increase in operating expenses as a percentage of revenue was primarily related to investments in computers and software, contract services, professional fees and in salaries and wages.
During the quarter ended March 31, 2012, computers and software expenses increased by $45,875.08 to $51,300.90 over the comparative quarter in 2011 as a result of investments in the third party software and technology required in the development of our SaaS product Touchpoint Mapping®.
Contract services expenses increased by $49,161.23, or 374%, during the three months ended March 31, 2012 to $62,310.73 from $13,149.50 during the three months ended March 31, 2011. The increase primarily relates to significant expansion in research and development and business development activities, in accordance with our strategic plan.
Professional fees increased by $28,422.47, or 2,301%, during the three months ended March 31, 2012 to $29,657.47 from $1,235.00 during the three months ended March 31, 2011. This is a direct result of the legal, accounting and advisory services related to this registration.
Salaries and wages increased by $31,602.82, or 38%, during the three months ended March 31, 2012 to $115,031.26 from $83,428.44 during the three months ended March 31, 2011. The increase also primarily relates to significant expansion in research and development and business development activities, in accordance with our strategic plan.
Travel expenses decreased by $9,697.80, or 83%, during the three months ended March 31, 2012 to $2,003.14 from $11,700.94 during the three months ended March 31, 2011. This decrease primarily relates to our strategic move away from implementation-based consulting services, which often require travel to client sites, towards strategy services and product development.
Year ended December 31, 2011 Compared to the Year ended December 31, 2010
Revenue
For the years ended December 31, 2011 and 2010, total revenues were $611,373.83 and $1,082,389.40, respectively resulting in a $471,015.57 decrease in total revenues. While a significant decrease in revenues from 2010, these results were expected and are a direct result of our reprioritization of resources, moving the majority of our resources towards product development efforts. These efforts have been focused on “productizing” our service offerings in a manner that will allow us to sell on-demand, technology-enabled products and services as described in the strategy section of this prospectus. Consulting services saw an increase of $165,343.58 due primarily to a shift away from implementation-oriented projects towards strategy, while creative & production services and research revenues decreased by $417,473.64 and $215,763.50, respectively, both due to the shift away from implementation-oriented projects as well as our macro shift towards product development.
Cost of Goods Sold and Operating Expenses
Cost of Goods Sold. Cost of goods sold decreased by $127,625.16 to $241,874.19 for the year ended December 31, 2011. The expected decrease in revenues has had a direct impact on our cost of goods for the period as measured in absolute cost. At the same time, cost of goods sold as a percentage of revenue was 40% and 34% for the years ended December 31, 2011 and 2010, respectively. This increase in cost of goods as a percentage of sales is consistent with an increased reliance on external resources, required as a result of employee and other corporate resources focused primarily on product development activities.
Operating Expenses. Operating expenses as a percentage of revenue was 128% and 64.8% for the years ended December 31, 2011 and 2010, respectively. The increase in operating expenses as a percentage of revenue was primarily related to the investments in salaries and wages necessary to support product development. Looking forward, we expect operating expenses to decrease as a percentage of revenue as we launch Touchpoint Mapping on-demand products, and shift towards a greater focus on software as a revenue source.
In 2011, our operating expenses increased by $81,975.71 to $783,289.61. As described below, the increase in operating expenses for the year ended December 31, 2011 compared to the year ended December 31, 2010 was primarily due to increases in professional fees and salaries and wages. Decreases in contract services, marketing and promotion and rent served to partially offset the increases in operating expenses for the year ended December 31, 2011.
Professional fees increased by $22,002.83 to $45,474.77 in the year ended December 31, 2011 as a result of legal, accounting and advisory services related to this registration, the company’s salaries and wages increased by $211,313.95 to $439,601.16 in 2011 principally due to an increase in product development personnel.
In 2011, as we continued to redirect our focus to the development and commercialization of on-demand software solutions and software-enabled services, we saw resulting decreases in contract services, marketing and promotion and rent expense. For the year ended December 31, 2011, contract services decreased by $58,527.76 from 2010 to $89,040.74 due to a decreased reliance on contract labor, with a related increase in salaries and wages as we developed the software, systems and service design of our on-demand software. Marketing and promotion costs decreased by $24,205.51 to $32,324.39 in 2011 due to
our focus on product development rather than marketing and sales of existing services, and rent decreased to $27,218.96 in 2011 from $76,653.84 in 2010 when the company consolidated operations into less expensive office locations.
Liquidity and Capital Resources
As of March 31, 2012, we had $456,007.60 in cash and cash equivalents, which consisted entirely of cash accounts.
Although we can provide no assurances, we believe that with our available cash and cash equivalents balance, as well as a significant reliance on revenues generated from ongoing operations, we have sufficient cash to satisfy our needs for the year ending December 31, 2012.
Since inception we have issued 13,132,302 restricted shares of common stock to 73 persons and corporations. 6,000,000 shares of common stock were issued to Michael Hinshaw, an officer and member of the board of directors, pursuant to Section 4(2) of the Securities Act of 1933, as amended. Mr. Hinshaw is a sophisticated investor and had access to the same information that can be found in Part I of a Form S-1 registration statement. 7,132,302 shares of common stock were issued to 72 persons or corporations pursuant to Reg. S of the Securities Act of 1933, as amended. Those shares were issued to non-US persons and the transactions took place outside the United States of America.
We own one tract of real property in Lake County, California, of approximately five acres. The tract is unencumbered. The land is undeveloped and unoccupied.
Anticipated Uses of Cash
We are prioritizing our resources in 2012 to strengthen our infrastructure, market and sell our products and services, expand product development activities and maintain capital reserves. We expect this prioritization of resources to allow us to complete market-ready production development of our initial industry vertical product offerings, engage in and finalize both beta testing and formal soft-launch of our products into the designated verticals and begin generating cash flow from our SaaS-based Touchpoint Mapping® on-demand products.
To support these objectives, our areas of investment will include:
Strengthen infrastructure. Infrastructure related expenses include current staff and the addition of staff in the areas of project management, administration and research management; the computer systems and project management software and systems (both desktop and server based, as well as cloud-based applications) which will help support our growth; the legal framework required to protect our trademarks and intellectual property, and support our licensing and customer on-boarding efforts; the partnership development efforts which support our distribution and technology strategies; and general overhead expenses such as office space and related costs. Approximately $137,200 of expenditures in these items is planned for the year ended December 31, 2012.
Market and sell products and services. Specific areas of investment in this area include the addition of senior sales and marketing support staff; inbound marketing activities (including PPC, SEO, and content development); website development; sales related technologies (such as SFA and lead nurturing software, web analytics and search marketing) and outbound marketing activities such as email and direct marketing, sponsorships and webinars. Approximately $240,100 in expenditures has been planned for these expenses for the year ended December 31, 2012.
Expand product development activities. Product development activities are primarily focused on technology and systems development, and include programming and development; licensing fees; cloud-based servers and related systems in the areas of security, rights and permission management, and data management (customer data security and management is a critical component of our business); business analyst subscriptions and review services; technology documentation, as well as documentation of processes and procedures; and customer discovery/beta testing and research efforts. Approximately $171,500 of expenditures in these items is planned for the year ended December 31, 2012.
Capital reserves. Approximately $137,200 of has been planned for these expenses for the year ended December 31, 2012.
We currently plan to fund these expenditures with cash flows generated from operations during this period.
We do not intend to pay dividends in the foreseeable future.
Cash Flow
Three Months Ended March 31, 2012 and 2011
Operating Activities.
Net cash used in operating activities for the three months ended March 31, 2012 and 2011, amounted to $168,432.15 and $38,554.49, respectively. During the three months ended March 31, 2012, the net cash used in operating activities was primarily attributable to the $207,877.52 in net loss, partially offset by $40,888.42 needed to fund changes in operating assets and liabilities. During the three months ended March 31, 2011, the net cash used in operating activities was primarily attributable to the $104,535.93 net loss, offset by $72,219.24 generated from changes in operating assets and liabilities.
Investing Activities.
Net cash used in investing activities for the three months ended March 31, 2012 and 2011 amounted to $22,337.37 and $456.05, respectively. The net cash used in investing activities for the three months ended March 31, 2012 related primarily to prepaid expenses. Acquisitions of office equipment for the three months ended March 31, 2011 amounted to $456.05.
Financing Activities.
Net cash provided by financing activities for the three months ended March 31, 2012 and 2011 amounted to $594,668.33 and $0, respectively. For the three months ended March 31, 2012, the net cash provided by financing activities resulted primarily from net proceeds from the issuance of common stock and options of $594,668.33.
Years Ended December 31, 2011 and 2010
Operating Activities.
Cash used in operating activities consists primarily of our net income (loss) adjusted for certain items such as accounts receivable, accounts payable, notes payable and credit card expenses.
For the year ended December 31, 2011, our net cash used in operating activities of $322,433.95 consisted of a net loss of $413,272.60, offset by decreases in accounts receivable of $41,014.17, and increases in accounts payable and credit card expenses of $34,247.91 and $22,893.37, respectively. These increases were due to changes in client payment schedules and increased costs associated with development of our products.
For the year ended December 31, 2010, our net cash used in operating activities of $21,409.91 consisted of net income of $15,282.73, offset by decreases in accounts payable of $36,855.33 and notes payable of $14,500.00. These decreases resulted from a strategic reduction in short-term liabilities including debt and capital leases.
Investing Activities.
Cash provided by investing activities principally consisted of non-cash items such as $11,179.00 and $12,790.00 in depreciation expense on property and equipment for the years ended December 31, 2011 and 2010, respectively. These expenses are consistent with our depreciation policies and historical results.
Financing Activities.
For the year ended December 31, 2011, net cash provided by financing activities of $202,556.15 substantially consisted of entering two notes payable totaling $151,500.00. In addition, we received cash proceeds from the issuance of common stock of $40,000.00.
For the year ended December 31, 2010, our net cash used in financing activities of $8,713.00 was entirely attributed to capital equipment leases .
BUSINESS
General
We were incorporated in the State of California on December 14, 2001. We are a customer experience management solutions company, focused on helping large, medium and small enterprises plan, measure and improve the experiences that they deliver to their customers. We currently offer professional and software-enabled services, and are developing on-demand software solutions designed to measure, optimize and improve customer experiences for businesses of all sizes.
We maintain our primary business address at 201 Spear Street, Suite 1100, San Francisco, CA 94105. Our telephone number is (415) 526-2655. Our registered agent for service of process is National Registered Agents, Inc.
Industry Background
It is generally recognized by executive management in large, medium and small enterprises that business value is derived from its customers. Consequently, companies have been trying to improve customer relationships for years, investing heavily in technologies and services such as Customer Relationship Management (CRM), Marketing Management Consulting and Marketing Research industry sectors.
In our opinion, these three industry sectors exist for only one reason: to help corporations better understand and serve their customers by driving insights into customer actions, opinions and perceptions, and devising strategies to accomplish these things. Companies continue to invest in these three areas, resulting in an approximate combined year over year growth rate for these industries of about 10%.
Yet investments in these areas are costly, time consuming and resource intensive, each requiring complex, industry- and company-specific customization. And, in spite of heavy investments by companies, they do not appear to dramatically improve key metrics such as customer satisfaction. For example, while CRM spending has increased to an estimated $15B in global spend (software and services) in 2011, there is little or no correlation between these CRM investments and increased customer satisfaction (as measured by the American Customer Satisfaction index, or ACSI).
Enter Customer Experience Management (CEM). Virtually unheard of as recently as 2005, this emerging sector is now recognized by many enterprise executives as the best way to solve these problems. CEM is a series of disciplines, methodologies and processes used to understand, measure and comprehensively manage a customer's cross-channel interactions and transactions with a company.
While the CEM ecosystem is broad and complex, our solutions are focused on the needs of large, medium and small enterprises specifically interested in voice-of-the-customer insights, and a straightforward way to gather, measure, monitor and improve customer experience over time.
We believe that a series of three macro trends sets the stage for market acceptance of our solutions. These trends include:
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Digitally-empowered consumers are changing the traditional company-customer dynamic: Until recently, corporations have been able to ‘control’ customer relationships in large part because they controlled customer data and access to information. With the now wide-spread adoption of smart phones and broadband wireless access, customers are able to quickly assess competitive alternatives. As a result, many businesses run the risk of becoming “perceptually commoditized” unless they can offer customers a differentiated customer experience.
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Market interest in Customer Experience Management: In the face of this first trend, a large majority of corporate executives have said that customer experience strategies are an important part of their organization's agenda, and that it is critical to their future success. The reasons for this are generally recognized to be the ability of a firm to better compete in an otherwise commoditized business by offering superior customer experiences.
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Widespread acceptance of cloud computing. Cloud computing – including hosted data, on-demand software and services in the “cloud” – has gained widespread acceptance with corporate IT departments as well as consumers. It is estimated that a significant portion of the Digital Universe will be centrally hosted, managed, or stored in public or private repositories that today we call ‘cloud services’ by 2020. As a result, the historical cost structure associated with designing, maintaining and upgrading software has changed dramatically, making it easier to and less expensive by historical standards to scale growth and control product development.
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In our opinion – as well as that of leading independent business analysts – improving customer experience drives significant value for corporations, increasing loyalty, driving brand engagement and helping customers stay longer and buy more. As a result, we believe that in the coming years companies are likely to invest heavily to improve customer experience, shifting existing budgets from the areas of marketing management consulting, marketing research and customer relationship management to the emerging market of Customer Experience Management.
Our Strategy
We plan to use our expertise as a customer experience strategy leader to create a leading customer experience management technology company. Our ability to accomplish these goals will stem from the commercialization of Touchpoint Mapping®, our analytical and research methodologies delivered in the form of on-demand, Internet cloud-based (SaaS) software and software-enabled professional and consulting services, the business intelligence which we derive as a result, and the licensing of our proprietary systems as we continue to develop products and services that help companies better serve their customers by improving their ability to manage customer experience, thereby reducing or eliminating bad experiences for their customers.
There are three principle strategies that we plan to use to help meet our goals of scaling growth at lower incremental costs, while creating barriers to entry for future competitors.
Research-based approach to “outside in” customer insights:
Customer Relationship Management (CRM) -- which generally doesn’t take into account a customer’s view of the company, and usually doesn’t capture how these interactions make customers feel -- relies on an internally-generated “inside out” view of the customer. Touchpoint Mapping provides a Voice of the Customer (VoC) based, “outside-in” view of the customer. It is a fact-based approach that can help companies impact experience by measuring the customers’ perspective, as well as how well their wants and needs are being met.
Best-in-breed technology and integration:
Our product solution is designed to be highly scalable and cloud-based, and uses a combination of proprietary and commercially available software. With the continued growth and widespread acceptance of cloud computing, our firm can leverage multiple, separate purpose-built technologies through strategic commercial relationships on a subscription or other similar fee basis, allowing us to limit technology risk (including development costs), while focusing product development on those areas of proprietary technology and services creation that drive the greatest enterprise value for the firm.
Licensee and partner distribution channels
In addition to direct sales, we plan to establish a global partner and reseller distribution channel. We anticipate that these will primarily be small and medium-size companies such as general business management consulting firms, CRM consultants, ad agencies and social media marketing firms, industry-focused technology and consulting firms and others looking for new ways to drive revenue and provide insights to existing customers.
Our Products and Services
We currently offer professional and software-enabled services, and are engaged in the business of developing and subsequently selling on-demand software solutions designed to optimize customer experiences for businesses of all sizes. These professional and software-enabled services and our on-demand software together fall into the broader category of Customer Experience Management (CEM).
Our primary on-demand software products will include scalable, cloud-based software and software-enabled services which will help large, medium and small enterprises gather and display customer experience insights and business intelligence in near real-time.
Our services and software will help our client companies better understand both positive and negative customer perceptions of customer experience and the specific interactions that drive these perceptions. As a result, the data which is gathered by and displayed in our Touchpoint Mapping® products is designed to help our clients increase their understanding of their customers, providing them the detailed insights they need to take action to improve customer experiences, driving increased customer value in these primary areas:
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Increase retention, by keeping customers longer;
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Get existing customers to spend more, more often;
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Increase acquisition of new customers through positive word-of-mouth, and;
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Reduce the cost of serving customers by improving or eliminating ineffective interactions.
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Our business strategies, product development and sales and marketing efforts are focused around the commercialization of five primary revenue streams. These include a focus on the small and medium enterprises with Touchpoint Mapping® on-demand, which will be customized and pre-populated for targeted industry niches – e.g., banking, home building, hospitals and hospitality. Secondly, we plan to focus on needs of medium-sized enterprises across multiple industries with “semi-custom” Touchpoint Mapping, which will populate our basic, pre-configured on-demand software with a combination of industry- and client-specific data. Third, we plan to focus on the needs of large enterprises, with fully-customized Touchpoint Mapping on-demand products and software-enabled services, leveraging the data gathering and analytical frameworks of all Touchpoint Mapping products and services, but would also include the potential to be modified dramatically based on the data gathering and reporting requirements of different organizations. Our fourth revenue stream is expected to generate revenue from large, medium and small enterprises, and will include consulting, education, research, creative and production services sold either with an initial software license, or on a fee-for-service basis, fully dependent on the needs of our clients’ organizations. The fifth area includes aggregation and analysis of industry data, to be used for the development of related information products. We plan to license all products and services for distribution worldwide.
Competition
Multiple potential competitors exist in the overlapping areas of marketing research, CRM and marketing management consulting. These include both large and small management consulting firms and more often smaller Customer Experience Management (CEM) consulting firms. In addition, many CRM software companies are beginning to include CEM-specific insights as adjunct capabilities to their existing platforms, and as a result these companies have the ability to compete directly with us as well. Given the growth of CEM, there are likely to be many other competitors we have not identified.
Insurance
We maintain health insurance, workman’s compensation and general liability insurance.
Employees; Identification of Certain Significant Employees
We currently have six full-time employees and nine independent contractors. We intend to hire more employees and independent contractors on an as-needed basis.
Offices
We have four business addresses. Our primary business address is located at 201 Spear Street, Suite 1100, San Francisco, CA 94105.
Our additional addresses include a business office in San Anselmo, California located at 251 Sir Francis Drake Boulevard, 94960. We lease the aforementioned from the Annette Kaufman Survivor Trust, 2 Magnolia Avenue, San Anselmo, CA 94960 pursuant to a 36 month lease entered into on August 15, 2010. Our monthly rental is $1,788 until July 18, 2012 and $1,840 thereafter.
Our office in Charlotte, North Carolina is located at 15720 John J. Delaney Dr., Suite 300, 28277. We lease the San Francisco and Charlotte spaces from Davinci Virtual LLC, 2150 South 1300 East, Suite 200, Salt Lake City UT 84106 pursuant to a commercial lease on a month to month basis. Our monthly rental is $190.00 for our San Francisco location and $80.00 per month for our Charlotte, North Carolina location. Our office in Vancouver, British Columbia is located at 2901-1050 Burrard Street, V6Z 2S3 (Canada), and is made available to us for no charge on a month-to-month basis under a verbal contract, by IREMCO. IREMCO is a controlling shareholder of Touchpoint Metrics.
Government Regulation
We are not currently subject to direct federal, state or local regulation other than regulations applicable to businesses .
Officers and Directors
Our directors will serve until their successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until their successor is duly elected and qualified, or until he is removed from office. The board of directors has no nominating, auditing or compensation committees.
The names, addresses, ages and positions of our officers and directors are set forth below:
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Name and Address
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Age
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Position(s)
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Michael Hinshaw
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50
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President, Principal Executive Officer, Treasurer,
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201 Spear Street, Suite 1100
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Principal Financial Officer, Principal Accounting
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San Francisco, CA 94105
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Officer and a member of the Board of Directors
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Lynn Davison
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48
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Vice-President, Secretary
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201 Spear Street, Suite 1100
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San Francisco, CA 94105
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Ashley Garnot
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26
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Director
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201 Spear Street, Suite 1100
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San Francisco, CA 94105
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The people named above are expected to hold their offices/positions until the next annual meeting of our stockholders.
Background of Officers and Directors
Michael Hinshaw - President, Principal Executive Officer, Treasurer, Principal Financial Officer, Principal Accounting Officer and a director.
Since March 31, 2006, Mr. Hinshaw has been our President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and a director. Mr. Hinshaw has served as Treasurer and Principal Accounting Officer since December 7, 2011.
Lynn Davison - Vice-President, Secretary
Since February 7, 2011, Ms. Davison has been our Vice-President. From April 2004 to February 2011, Ms. Davison worked as an independent management consultant to a range of start-up, mid-sized and Fortune 500 clients providing strategic business consulting services to improve business performance and overall growth.
Ashley Garnot - Director
Since December 7, 2011, Ashley Garnot has been a member of the board of directors. Since October 21, 2011, Ms. Garnot has been a member of the board of directors of Coronado Resources Ltd., a Canadian corporation listed for trading on the TSX Venture Exchange under the symbol CRD. Coronado Resources Ltd. is located in Vancouver, British Columbia.
Audit Committee Financial Expert
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of the size of our operations, at the present time we believe the services of a financial expert are not warranted.
Involvement in Certain Legal Proceedings
During the past ten years, Mr. Hinshaw, Ms. Davison and Ms. Garnot have not been the subject of the following events:
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1.
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A petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he/she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he/she was an executive officer at or within two years before the time of such filing;
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Convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him/her from, or otherwise limiting, the following activities;
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i)
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Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; or
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ii)
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Engaging in any type of business practice; or
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iii)
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Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws.
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4.
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The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
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Found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
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Found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
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7.
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The subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
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i)
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Any Federal or State securities or commodities law or regulation; or
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ii)
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Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
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iii)
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Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
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Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934, as amended, (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Conflicts of Interest
There are no conflicts of interest with respect to our officers, directors and key employees.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid by us to our officers for the last two years.
Officer Compensation Table
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Change in
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Pension
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Value &
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Non-Equity
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Nonqualified
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Incentive
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Deferred
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All
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Stock
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Option
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Plan
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Compensation
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Other
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Name and Principal
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Totals
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Position
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Year
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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Michael Hinshaw
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2011
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300,000
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0
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0
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0
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0
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0
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1,500
|
301,500
|
|
President
|
2010
|
300,000
|
0
|
0
|
0
|
0
|
0
|
1,500
|
301,500
|
|
Lynn Davison
|
2011
|
121,000
|
0
|
0
|
0
|
0
|
0
|
0
|
121,000
|
|
Vice President
|
2010
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
The following table sets forth information with respect to compensation paid by us to our directors during the last completed fiscal year. Our fiscal year end is December 31.
Director Compensation Table
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
Change in
|
|||||||
|
Pension
|
|||||||
|
Fees
|
Value and
|
||||||
|
Earned
|
Non-Equity
|
Nonqualified
|
|||||
|
or
|
Incentive
|
Deferred
|
All
|
||||
|
Paid in
|
Stock
|
Option
|
Plan
|
Compensation
|
Other
|
||
|
Cash
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
|
Name
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
Michael Hinshaw
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Ashley Garnot
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
All compensation received by our officers and directors has been disclosed.
There are no retirement, pension, or profit sharing plans for the benefit of our officers and directors other than our stock option plan. The stock option plan reserves 2,500,000 shares of common stock that may be issued at the discretion of the board of directors.
Indemnification
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his or her position, if he or she acted in good faith and in a manner he or she reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he or she is to be indemnified, we must indemnify
him or her against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of California.
Regarding indemnification for liabilities arising under the Securities Act of 1933, as amended, which may be permitted to directors or officers under California law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against policy, as expressed in the Act and is, therefore, unenforceable.
The following table sets forth, as of the date of this offering, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The table also reflects what their ownership will be assuming completion of the sale of all shares in this public offering. The stockholders listed below have direct ownership of their shares and possess sole voting and dispositive power with respect to the shares.
|
Name and
Address of Beneficial Owner
|
Total number
of shares
owned prior
to offering
|
Percentage of
shares owned
prior to offering
|
Number of
shares being
offered
|
Percentage of
shares owned
after the offering
assuming all of
the shares are
sold in the offering
|
|
Michael Hinshaw [1]
|
6,000,000
|
45.69%
|
3,000,000
|
22.84%
|
|
201 Spear Street, Suite 1100
|
||||
|
San Francisco, CA 94105
|
||||
|
|
||||
|
Lynn Davison [1]
|
0
|
0.00%
|
0
|
0.00%
|
|
201 Spear Street, Suite 1100
|
||||
|
San Francisco, CA 94105
|
||||
|
Ashley Garnot [1]
|
850,000 [2]
|
6.40%
|
350,000
|
3.81%
|
|
201 Spear Street, Suite 1100
|
||||
|
San Francisco, CA 94105
|
||||
|
All officers and directors as a group
|
6,850,000
|
52.09%
|
3,350,000
|
26.65%
|
|
(3 individuals)
|
||||
|
International Resource Management Corp.
|
1,962,302
|
14.94%
|
462,302
|
11.42%
|
|
2901-1050 Burrard Street
|
||||
|
Vancouver, British Columbia V6Z 2S3
|
|
[1]
|
The people named above may be deemed to be a “parent” or “promoter” of our company. Mr. Hinshaw, Ms. Davison and Ms. Garnot are our only promoters.
|
|
[2]
|
Comprised of 500,000 shares of common stock held in the name of ALG Investments Ltd., which is owned and controlled by Ms. Garnot; 250,000 shares owned by Ms. Garnot and her husband, Wade Garnot; and, 100,000 shares held in Ms. Garnot’s maiden name, Ashley Guidi.
|
Future Sales by Existing Stockholders
A total of 13,132,302 shares of common stock were issued to 73 persons, all of which are restricted securities, as defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act of 1933, as amended. Under Rule 144, the shares can be only sold, subject to volume restrictions and restrictions on the manner of sale, commencing one year after their acquisition, provided we are not classified as a “shell company” pursuant to Reg. 405 of the Securities Act of 1933, as amended. If we are classified as a “shell company” our shares may not be resold until such time as we file a Form S-1 registration statement with the Securities and Exchange Commission (“SEC”) registering the shares for resale and the registration statement is declared effective or we file a Form 8-K and disclose the information required by Item 5.06 thereof and one (1) year has passed. We believe we are not a shell company, nor have we ever been a shell company.
We have agreed to register the shares sold to you with the Securities and Exchange Commission. We intend to file the registration statement not later than 30 days from the date we complete this public offering.
There is no trading market for our common stock. There are no outstanding options or warrants to purchase, or securities convertible into, our common stock. There are 73 holders of record for our common stock. The record holders are comprised of our two directors (including the common stock held in the name of Michael Hinshaw, ALG Investments, Ltd., Ashley Guidi, and Ashley and Wade Garnot) and 69 other investors. A portion of Mr. Hinshaw’s shares will be registered along with shares owned by 70 other holders of record.
Securities Authorized for Issuance Under Equity Compensation Plans
|
Number of securities
|
|||
|
Number of securities to
|
Weighted-average
|
remaining available for
|
|
|
be issued upon exercise
|
exercise price of
|
Future issuance under
|
|
|
of outstanding options,
|
outstanding options,
|
equity compensation plans
|
|
|
warrants and rights
|
warrants and rights
|
(excluding securities
|
|
|
Plan category
|
(a)
|
(b)
|
in column (a)) (c)
|
|
Equity compensation plans
|
|||
|
approved by security holders
|
320,000
|
$0.34375
|
2,180,000
|
|
Equity compensation plans
|
|||
|
not approved by securities
|
|||
|
holders
|
None
|
None
|
None
|
|
|
|||
|
Total
|
320,000
|
$0.34375
|
2,180,000
|
Selling Shareholders
The following table sets forth the name of each selling shareholder, the total number of shares owned prior to the offering, the percentage of shares owned prior to the offering, the number of shares offered, and the percentage of shares owned after the offering, assuming the selling shareholder sells all of his shares and we sell the maximum number of shares.
|
Name
|
Total
number of
shares owned
prior to
offering
|
Percentage of
shares owned
prior to offering
|
Number of
shares being
offered
|
Percentage of
shares owned
after the
offering
assuming all of
the shares are
sold in the
offering
|
|
Anderson, Elise
|
8,000
|
0.06%
|
8,000
|
0.00%
|
|
Aplas, Mark
|
10,000
|
0.08%
|
10,000
|
0.00%
|
|
Balaghi, Mohammade
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Balter, Daniel
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Bertuzzi, Georgina
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Bertuzzi, Ronald
|
520,000
|
3.96%
|
520,000
|
0.00%
|
|
Bird, Kevin
|
30,000
|
0.23%
|
30,000
|
0.00%
|
|
Boman, Marvin
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Brant Investments Limited [1]
|
400,000
|
3.05%
|
400,000
|
0.00%
|
|
Braverman, Eitan
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Brown, Dan
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Brown, Gary
|
40,000
|
0.30%
|
40,000
|
0.00%
|
|
Brown, Paula
|
40,000
|
0.30%
|
40,000
|
0.00%
|
|
Carina Investments [2]
|
400,000
|
3.05%
|
400,000
|
0.00%
|
|
Ciancone, Mario
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Ciancone, Mark
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Clark, Robert
|
12,000
|
0.09%
|
12,000
|
0.00%
|
|
Clements, Anitra
|
10,000
|
0.08%
|
10,000
|
0.00%
|
|
Clerkson, Casey
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Dabbs, Tracy
|
30,000
|
0.23%
|
30,000
|
0.00%
|
|
Docker, Jo-Anne
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Dzedets, Alexander
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Dzedets, Boris
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Dzedets, Zinaida
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Fazli, Cameron
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Fazli, Hayley
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Fazli, Saeid
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Florence, Leya
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Fooks, Gary
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Garnot Ashley/Garnot, Wade
|
250,000
|
1.90%
|
250,000
|
0.00%
|
|
Ghini, Gerald
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Golnik, Semyon
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Guidi, Ashley
|
100,000
|
0.76%
|
100,000
|
0.00%
|
|
Guidi, Luciano
|
80,000
|
0.61%
|
80,000
|
0.00%
|
|
Hinshaw, Michael
|
6,000,000
|
45.69%
|
3,000,000
|
22.84%
|
|
Holland, Brad
|
430,000
|
3.27%
|
430,000
|
0.00%
|
|
International Resource Management Corp. [3]
|
1,962,302
|
14.94%
|
462,302
|
11.42%
|
|
Johnson, Christine
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Kay, Kenneth
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Kay, Seth B.
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Kvint, Susanna
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Lafuente, Peter
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Larabie, Eugene
|
10,000
|
0.08%
|
10,000
|
0.00%
|
|
Leshem, Ilana
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Leshem, Maureen
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Lightbody, Mike
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Lundin, Lukas H.
|
400,000
|
3.05%
|
400,000
|
0.00%
|
|
Mayorov, Alexander
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Mikhailova, Larissa
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Naresh, Elijah
|
16,000
|
0.12%
|
16,000
|
0.00%
|
|
Nekrich, Salya
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Owen, Chris
|
30,000
|
0.23%
|
30,000
|
0.00%
|
|
Panorama Ridge Investment Corporation [4]
|
80,000
|
0.61%
|
80,000
|
0.00%
|
|
Perone, Giuseppe
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Platinum Capital Corp. [5]
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Pollack, Dave
|
10,000
|
0.08%
|
10,000
|
0.00%
|
|
Pomykalski, Jack
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Radi, Margaret
|
40,000
|
0.30%
|
40,000
|
0.00%
|
|
Raimundo, Jose
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Rantucci, Robert
|
240,000
|
1.83%
|
240,000
|
0.00%
|
|
Ross, Ian
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Rusch, Kevin
|
4,000
|
0.03%
|
4,000
|
0.00%
|
|
Sali, Barrie
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Sali, Max
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Schimdt, David
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Schimdt, Irene
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Shear, Craig
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Stilwell, Kathy
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Swedburg, Jennifer
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
Wall Street Financial Corp. [6]
|
20,000
|
0.15%
|
20,000
|
0.00%
|
|
W.D. Latimer & Co. LTD. [7]
|
100,000
|
0.76%
|
100,000
|
0.00%
|
|
TOTAL
|
12,132,302
|
92.39%
|
7,632,302
|
34.27%
|
|
[1]
|
Cecilia M. Kershaw exercises voting and dispositive control over the shares of common stock owned by Brant Investments Limited.
|
|
[2]
|
Ken Vidalin exercises voting and dispositive control over the shares of common stock owned by Carina Investments.
|
|
[3]
|
Alex P. Guidi exercises voting and dispositive control over the shares of common stock owned by International Resource Management Corp.
|
|
[4]
|
Jack Loretto exercises voting and dispositive control over the shares of common stock owned by Panorama Ridge Investment Corporation.
|
|
[5]
|
Jason Shull exercises voting and dispositive control over the shares of common stock owned by Platinum Capital Corp.
|
|
[6]
|
Shawn Balaghi exercises voting and dispositive control over the shares of common stock owned by Wall Street Financial.
|
|
[7]
|
Robert Pollack exercises voting and dispositive control over the shares of common stock owned by W.D. Latimer & Co. LTD.
|
Other than investing money with us, the foregoing selling security holders have had no material relationship with us during the last three years.
All natural persons named as selling security holders exercise voting and/or dispositive powers with respect to the securities to be offered for resale by our selling security holders.
No selling shareholder is an affiliate of a registered broker dealer.
The following is a summary of the issuances of all shares:
On April 14, 2006, we issued 3,000,000 restricted shares of common stock to Michael Hinshaw, our president, in consideration of services rendered valued at $1,500.00. The shares of common stock were issued to Michael Hinshaw, our president pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Mr. Hinshaw is a sophisticated investor and had access to the same information that can be found in Part I of a Form S-1 registration statement.
On April 14, 2006, we issued 1,000,000 restricted shares of common stock to two (2) individuals and three (3) companies in consideration of $250,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On April 27, 2007, we issued 1,050,000 restricted shares of common stock to two (2) individual and three (3) companies in consideration of $525,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On July 16, 2007, we issued 262,302 restricted shares of common stock to one (1) company in consideration of rights and ownership in Petro Portfolio, Ltd., an online media property valued at $131,151.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On December 6, 2011 we issued 3,000,000 restricted shares of common stock to Michael Hinshaw, our president, in consideration of $30,000.00. The shares of common stock were issued to Michael Hinshaw, our president pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Mr. Hinshaw is a sophisticated investor and had access to the same information that can be found in Part I of a Form S-1 registration statement.
On December 6, 2011, we issued 1,000,000 restricted shares of common stock to two (2) companies in consideration of $10,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On January 4, 2012, we issued 2,300,000 restricted shares of common stock to fifty-eight (58) individuals and three (3) companies in consideration of $575,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On January 24, 2012, we issued 1,500,000 restricted shares of common stock to one (1) company in consideration of $15,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On April 20, 2012, we issued 20,000 restricted shares of common stock to one (1) individual in consideration of $5,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons .
No Public Market for Common Stock.
There is presently no public market for our common stock. We intend to request that a market marker submit an application to FINRA to quote our common stock on the OTC Bulletin Board upon the effectiveness of the registration statement of which this prospectus forms a part. We can provide no assurance that our shares will be traded on the bulletin board, or if traded, that a public market will materialize.
The Securities Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The last price of our common stock was in connection with our placement under the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, wherein we sold our common shares at $0.25 per share. Thus, our common stock would qualify as penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;(b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities’ laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;(d) contains a toll-free telephone number for inquiries on disciplinary actions;(e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and;(f) contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with; (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction;(c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, stockholders may have difficulty selling those securities.
Holders of Our Common Stock
Currently, we have 73 holders of record of our common stock.
Rule 144 Shares
All of the presently outstanding shares of our common stock are “restricted securities” as defined under Rule 144 promulgated under the Securities Act, as amended, and may only be sold pursuant to an effective registration statement or an exemption from registration, if available. The SEC has adopted final rules amending Rule 144 which have become effective on February 15, 2008. Pursuant to the new Rule 144, one year must elapse from the time a “shell company”, as defined in Rule 405 of the Securities Act of 1933, as amended, and Rule 12b-2 of the Securities Exchange Act of 1934, as amended, ceases to be a “shell company” and files Form 10 information with the SEC, before a restricted shareholder can resell their holdings in reliance on Rule 144. Form 10 information is equivalent to information that a company would be required to file if it were registering a class of securities on Form 10 under the Securities Exchange Act 1934, as amended. A Form 10 includes information such as a description of the company’s business, risk factors associated with the business, financial information, description of the company’s properties, the securities ownership of the company’s management and 5% shareholders, a description of management and the board of directors, compensation for officers and directors, transactions in which the company entered into with officers and directors, legal proceedings, the market in which the company trades its stock, sales of unregistered securities, among other information. Under the amended Rule 144, restricted or unrestricted securities, that were initially issued by a reporting or non-reporting shell company or a company that was at anytime previously a reporting or non-reporting shell company, can only be resold in reliance on Rule 144 if the following conditions are met: (1) the issuer of the securities that was formerly a reporting or non-reporting shell company has ceased to be a shell company; (2) the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended; (3) the issuer of the securities has filed all reports and material required to be filed under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, as applicable, during the preceding twelve months (or shorter period that the Issuer was required to file such reports and materials), other than Form 8-K reports; and (4) at least one year has elapsed from the time the issuer filed the current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
At the present time, we are not classified as a “shell company” under Rule 405 of the Securities Act Rule 12b-2 of the Securities Exchange Act of 1934, as amended. As such, all restricted securities presently held by the affiliates of our company may be resold in reliance on Rule 144 one year from the date of issuance.
Stock Option Grants
Information concerning individual grants of stock options, whether or not in tandem with stock appreciation rights (“SARs”), and freestanding SARs made during fiscal 2011 to each of the named executive officers is reflected in the table below.
Option/SAR Grants in Fiscal 2011 – Individual Grants
|
Number of
|
Percent of Total
|
|||
|
Securities Underlying
|
Options/SARs
|
Exercise
|
||
|
Options/SARs Granted
|
Granted to Employees
|
or Base
|
Expiration
|
|
|
Name
|
(#)
|
in Fiscal Year
|
Price
|
Date
|
|
Lynn Davison
|
300,000
|
100%
|
$0.35
|
February 7, 2021
|
Aggregated Option/SAR Exercises and Fiscal 2011 Year-End Option/SAR Value Table
The following table sets forth certain information with respect to each exercise of stock options and SARs during fiscal 2011 by each of the named executive officers, and the fiscal 2011 year-end value of unexercised options and SARs. The dollar values are calculated by determining the difference between the exercise or base price of the options and the fair market value of the underlying stock at the time of exercise and at fiscal year-end if unexercised, respectively. The unexercised options, some of which may be exercisable, have not been exercised and it is possible they might never be exercised. Actual gains realized, if any, on stock option exercises and common stock holdings are dependent on the future performance and value of the common stock and overall stock market conditions. There can be no assurance that the projected gains and values shown in this Table will be realized.
Aggregated Option/SAR Exercises in Fiscal 2011 and Option/SAR Values at December 31, 2011
|
Number of Securities
|
Value of Unexercised
|
|||||
|
Shares
|
Underlying Unexercised
|
In-the-Money
|
||||
|
Acquired on
|
Value
|
Options/SARs
|
Options/SARs
|
|||
|
Name
|
Exercise (#)
|
Realized
|
at FY-End (#)
|
at FY-End ($)
|
||
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||
|
Lynn Davison
|
0
|
0
|
0
|
300,000
|
$0
|
$0
|
In addition, in 2012, we granted Kris Clark an option to acquire up to 20,000 shares of common stock at an exercise price of $0.25 per share with one-third of the shares vesting December 15 of each year commencing 2012.
Registration Rights
We have not granted registration rights to the selling shareholders or to any other persons.
We are paying the expenses of the offering because we seek to: (i) become a reporting company with the Commission under the Securities Exchange Act of 1934, as amended; and (ii) enable our common stock to be traded on the OTC Bulletin Board. We must be a reporting company under the 1934 Act in order that our common stock is eligible for trading on the OTC Bulletin Board. We will become a reporting company under Section 15 of the 1934 Act upon the effectiveness of this Registration Statement. We believe that the registration of the resale of shares on behalf of existing shareholders may facilitate the development of a public market in our common stock if our common stock is approved for trading on a recognized market for the trading of securities in the United States. In addition, we plan to file a Form 8-A registration statement with the Commission to cause us to become a reporting company with the Commission under Section 12 of the 1934 Act.
We consider that the development of a public market for our common stock will make an investment in our common stock more attractive to future investors. In the near future, in order for us to continue with our business plan program, we will need to raise additional capital. We believe that obtaining reporting company status under the 1934 Act and trading on the OTCBB should increase our ability to raise these additional funds from investors.
Common Stock
Our authorized capital stock consists of 30,000,000 shares of common stock, no par value per share. The holders of our common stock:
|
*
|
have equal ratable rights to dividends from funds legally available if and when declared by our board of directors;
|
|
*
|
are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs;
|
|
*
|
do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
|
|
*
|
are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.
|
All shares of common stock now outstanding are fully paid for and non-assessable and all shares of common stock which are the subject of this public offering, when issued, will be fully paid for and non-assessable. We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the State of California for a more complete description of the rights and liabilities of holders of our securities. All material terms of our common stock have been addressed in this section.
Non-Cumulative Voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares not be able to elect any of our directors.
Cash Dividends
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Stock Transfer Agent
Our stock transfer agent for our securities will be Computershare N.A., 250 Royall Street, Canton, Massachusetts 02021 and its telephone number is (781) 575-2000.
General
There are no other securities authorized in our articles of incorporation.
CERTAIN TRANSACTIONS
On April 14, 2006, we issued 3,000,000 restricted shares of common stock to Michael Hinshaw, our president, in consideration of services valued at $1,500.00. On December 6, 2011, we issued 3,000,000 restricted shares of common stock to Mr. Hinshaw, in consideration of $30,000.00. The shares were issued pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Mr. Hinshaw was furnished with all of the information that is contained in a registration statement and is a sophisticated investor. No commission was paid to anyone in connection with the sale of shares to Mr. Hinshaw.
On July 16, 2007, we issued 262,302 restricted shares of common stock to IREMCO in consideration of rights and ownership in Petro Portfolio, Ltd., an online media property valued at $131,151.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On July 30, 2007, the company effected a transfer of 100,000 restricted shares of common stock from an existing shareholder to Ashley Guidi, now known as Ashley Garnot, in consideration of $50,000.00 to the existing shareholder. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On December 6, 2011, we issued 500,000 restricted shares of common stock to ALG Investments Ltd., a corporation owned and controlled by Ashley Garnot, in consideration of $5,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On January 4, 2012, we issued 250,000 restricted shares of common stock to Ashley Garnot and her husband Wade, in consideration of $62,500.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
Our office in Vancouver, British Columbia is located at 2901-1050 Burrard Street, V6Z 2S3 (Canada), and is made available to us for no charge on a month-to-month basis under a verbal contract with IREMCO. IREMCO is a controlling shareholder of Touchpoint Metrics .
LITIGATION
We are not a party to any pending litigation and none is contemplated or threatened.
Our financial statements for the years ended December 31, 2011, 2010 and 2009 included in this prospectus have been audited by Hillary CPA Group, Independent Registered Public Accounting Firm, 9465 Counselors Row, Suite 200, Indianapolis, Indiana 46240, telephone (317) 222-1416, as set forth in its report included in this prospectus. Its report is given upon its authority as experts in accounting and auditing. Hillary CPA Group is registered with the Public Company Accounting Oversight Board.
The Law Office of Conrad C. Lysiak, P.S., 601 West First Avenue, Suite 903, Spokane, Washington 99201, telephone (509) 624-1475 has passed on the legality of the shares being sold in this public offering.
Our fiscal year end is December 31. We will provide audited financial statements to our stockholders on an annual basis; the statements will be audited by a firm registered with the Public Company Accounting Oversight Board.
Unaudited financial statement for the period ending March 31, 2012 and audited financial statements for the years December 31, 2011 and December 31, 2010 follow :
|
FINANCIAL STATEMENTS (Unaudited)
|
||
|
F-1
|
||
|
F-2
|
||
|
F-3
|
||
|
F-4
|
||
|
F-5
|
||
|
F-13
|
||
|
FINANCIAL STATEMENTS (Audited)
|
||
|
F-14
|
||
|
F-15
|
||
|
F-16
|
||
|
F-17
|
||
|
F-18
|
||
Touchpoint Metrics, Inc.
|
2012
|
2011
|
|||
|
ASSETS
|
||||
|
Current Assets
|
||||
|
Checking
|
$
|
455,929.12
|
$
|
128,789.63
|
|
Savings
|
$
|
78.48
|
$
|
71.33
|
|
Accounts Receivable
|
$
|
58,942.59
|
$
|
56,692.50
|
|
Work-In-Process
|
$
|
2,266.34
|
||
|
Total Current Assets
|
$
|
517,216.53
|
$
|
185,553.46
|
|
Fixed Assets
|
||||
|
Computers & Hardware
|
$
|
43,028.91
|
$
|
40,553.05
|
|
Software
|
$
|
38,645.98
|
$
|
38,645.98
|
|
Equipment
|
$
|
2,359.34
|
$
|
2,359.34
|
|
Furniture
|
$
|
31,730.60
|
$
|
31,730.60
|
|
Leasehold Improvements
|
$
|
95,608.48
|
$
|
95,608.48
|
|
Land
|
$
|
85,000.00
|
$
|
85,000.00
|
|
Land Improvements
|
$
|
4,000.00
|
$
|
4,000.00
|
|
Accumulated Depreciation
|
$
|
(139,919.00)
|
$
|
(128,740.00)
|
|
Organization Costs
|
$
|
1,377.19
|
$
|
1,377.19
|
|
Accumulated Amortization
|
$
|
(1,377.19)
|
$
|
(1,377.19)
|
|
Total Fixed Assets
|
$
|
160,454.31
|
$
|
169,157.45
|
|
Other Assets
|
||||
|
Prepaid Expenses
|
$
|
34,332.71
|
$
|
11,018.14
|
|
Investment in Petro Portfolio
|
$
|
131,151.00
|
$
|
131,151.00
|
|
Deposits
|
$
|
3,474.00
|
$
|
3,783.00
|
|
Total Other Assets
|
$
|
168,957.71
|
$
|
145,952.14
|
|
TOTAL ASSETS
|
$
|
846,628.55
|
$
|
500,663.05
|
|
LIABILITIES AND EQUITY
|
||||
|
Liabilities
|
||||
|
Current Liabilities
|
||||
|
Accounts Payable
|
$
|
80,719.12
|
$
|
29,745.08
|
|
Credit Cards Payable
|
$
|
30,421.83
|
$
|
10,045.66
|
|
Security Deposits
|
$
|
2,300.00
|
$
|
2,300.00
|
|
Current Portion - Capital Lease
|
$
|
5,995.00
|
||
|
Notes Payable - Short-term
|
$
|
3,000.00
|
$
|
3,000.00
|
|
Total Current Liabilities
|
$
|
116,440.95
|
$
|
51,085.74
|
|
Long-Term Liabilities
|
||||
|
Notes Payable - Long-term
|
$
|
153,000.00
|
||
|
Total Long-Term Liabilities
|
$
|
153,000.00
|
$
|
0.00
|
|
Total Liabilities
|
$
|
269,440.95
|
$
|
51,085.74
|
|
Equity
|
||||
|
Retained Earnings
|
$
|
(766,810.36)
|
$
|
(352,037.76)
|
|
Common Stock
|
$
|
1,537,651.00
|
$
|
906,151.00
|
|
Stock Options
|
$
|
14,224.48
|
||
|
Net Income
|
$
|
(207,877.52)
|
$
|
(104,535.93)
|
|
Total Equity
|
$
|
577,187.60
|
$
|
449,577.31
|
|
TOTAL LIABILITIES AND EQUITY
|
$
|
846,628.55
|
$
|
500,663.05
|
F-1
Touchpoint Metrics, Inc.
|
2012
|
2011
|
|||
|
Revenue
|
||||
|
Consulting Services
|
$
|
118,400.16
|
$
|
113,577.75
|
|
Products & Other
|
$
|
4,440.54
|
$
|
14,038.00
|
|
Total Revenue
|
$
|
122,840.70
|
$
|
127,615.75
|
|
Cost of Goods Sold
|
||||
|
Labor
|
$
|
15,999.25
|
$
|
12,528.75
|
|
Services
|
$
|
3,500.00
|
$
|
27,017.25
|
|
Products & Other
|
$
|
18,208.01
|
$
|
34,320.08
|
|
Total Cost of Goods Sold
|
$
|
37,707.26
|
$
|
73,866.08
|
|
Gross Profit
|
$
|
85,133.44
|
$
|
53,749.67
|
|
Expenses
|
||||
|
Administrative Costs
|
$
|
7,318.34
|
$
|
5,631.22
|
|
Automobile Expense
|
$
|
2,239.74
|
$
|
8,588.29
|
|
Computers and Software
|
$
|
51,300.90
|
$
|
5,425.82
|
|
Contract Services
|
$
|
62,310.73
|
$
|
13,149.50
|
|
Insurance
|
$
|
4,337.77
|
$
|
7,826.25
|
|
Marketing and Promotion
|
$
|
8,201.24
|
$
|
9,602.46
|
|
Professional Fees
|
$
|
29,657.47
|
$
|
1,235.00
|
|
Rent
|
$
|
7,077.00
|
$
|
7,859.64
|
|
Repairs and Maintenance
|
$
|
100.00
|
$
|
485.31
|
|
Research and Development
|
$
|
231.25
|
||
|
Salaries and Wages
|
$
|
115,031.26
|
$
|
83,428.44
|
|
Taxes
|
$
|
800.00
|
$
|
800.00
|
|
Telephone
|
$
|
1,749.66
|
$
|
2,269.47
|
|
Travel Expenses
|
$
|
2,003.14
|
$
|
11,700.94
|
|
Utilities
|
$
|
652.46
|
$
|
288.01
|
|
Total Expenses
|
$
|
293,010.96
|
$
|
158,290.35
|
|
Net Operating Income
|
$
|
(207,877.52)
|
$
|
(104,540.68)
|
|
Other Income/Expense
|
||||
|
Other Income
|
$
|
4.75
|
||
|
Other Expense
|
||||
|
Total Other Income/Expense
|
$
|
0.00
|
$
|
4.75
|
|
Net Income
|
$
|
(207,877.52)
|
$
|
(104,535.93)
|
|
Net Income per Common Share
|
||||
|
Weighted common shares outstanding
|
13,112,302
|
5,312,302
|
||
|
Basic net income per common share
|
$
|
(0.016)
|
$
|
(0.020)
|
|
Dilutive securities
|
60,000
|
0
|
||
|
Diluted net income per common share
|
$
|
(0.016)
|
$
|
(0.020)
|
F-2
Touchpoint Metrics, Inc.
|
2012
|
2011
|
||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
||||
|
Common Stock, beginning of period
|
9,312,302
|
$
|
946,151
|
5,312,302
|
$
|
906,151
|
|
|
Common Stock Issued
|
3,800,000
|
$
|
591,500
|
||||
|
Stock-based compensation expense
|
$
|
14,224
|
|||||
|
Balance, end of period
|
13,112,302
|
$
|
1,551,875
|
5,312,302
|
$
|
906,151
|
|
|
Retained Earnings Balance, beginning of period
|
$
|
(456,574)
|
$
|
(352,038)
|
|||
|
Net income
|
$
|
(207,878)
|
$
|
(104,536)
|
|||
|
Retained Earnings Balance, end of period
|
$
|
(664,451)
|
$
|
(456,574)
|
|||
|
Total Common Shareholders’ Equity
|
$
|
887,424
|
$
|
449,577
|
|||
F-3
Touchpoint Metrics, Inc.
|
2012
|
2011
|
|||
|
OPERATING ACTIVITIES
|
||||
|
Net Income
|
$
|
(207,877.52)
|
$
|
(104,535.93)
|
|
Adjustments to reconcile Net Income to Net Cash provided by operations:
|
||||
|
Accounts Receivable
|
$
|
2,275.49
|
$
|
45,539.75
|
|
Work-In-Process
|
$
|
(2,266.34)
|
||
|
Accounts Payable
|
$
|
33,359.96
|
$
|
16,633.83
|
|
Credit Card Expenses
|
$
|
7,528.46
|
$
|
10,045.66
|
|
Current Portion - Capital Lease
|
$
|
(2,718.00)
|
||
|
Payroll Liabilities
|
$
|
(1,452.20)
|
$
|
(3,519.80)
|
|
Net cash provided by operating activities
|
$
|
(168,432.15)
|
$
|
(38,554.49)
|
|
INVESTING ACTIVITIES
|
||||
|
Equipment Purchases
|
$
|
(456.05)
|
||
|
Prepaid Expenses
|
$
|
(22,337.37)
|
||
|
Net cash provided by investing activities
|
$
|
(22,337.37)
|
$
|
(456.05)
|
|
FINANCING ACTIVITIES
|
||||
|
Notes Payable - Long-term
|
$
|
1,500.00
|
||
|
Stock Options
|
$
|
3,168.33
|
||
|
Common Stock
|
$
|
591,500.00
|
||
|
Retained Earnings
|
$
|
(1,500.00)
|
||
|
Net cash provided by financing activities
|
$
|
594,668.33
|
$
|
0.00
|
|
Net cash increase for period
|
$
|
403,898.81
|
$
|
(39,010.54)
|
|
Cash at beginning of period
|
$
|
52,108.79
|
$
|
167,871.50
|
|
Cash at end of period
|
$
|
456,007.60
|
$
|
128,860.96
|
F-4
Touchpoint Metrics, Inc.
March 31, 2012 and 2011
|
1.
|
NATURE OF ORGANIZATION
|
Touchpoint Metrics, Inc. 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.
Touchpoint Metrics, Inc. is a brand and customer experience research consultancy that maps and improves the touch points between organizations and their customers. Their focus assists companies improve business performance by measuring and transforming the ways they interact with customers.
Touchpoint Metrics, Inc. services a wide variety of industries and customer size.
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
The financial statements of Touchpoint Metrics, Inc. are presented on the accrual basis. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader.
The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America, This requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.
CASH, CASH EQUIVALENTS, AND CREDIT RISK
Cash and cash equivalents are comprised of highly liquid investments with original maturity dates of less than three months that are not reported as investments. While Touchpoint Metrics, Inc. may maintain cash and cash equivalents in bank deposit accounts, which at times exceed Federal Deposit Insurance Corporation insured limits, they have not experienced any losses in such accounts.
Portions of the bank deposit accounts are held in Canadian banks on a Canadian and US Dollar basis. The balances in these accounts at times exceed Canada Deposit Insurance Corporation insured limits. They have not experienced any losses in these accounts.
Management believes it is not exposed to any significant credit risk on cash and cash equivalents.
INVESTMENTS
Touchpoint Metrics, Inc. reports marketable investments at published market or fair value with gains and losses reported in the income statements.
For investments without a readily available market, valuation is recorded at historical cost and tested for impairment as of each reporting period.
F-5
DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
Effective January 1, 2008, Touchpoint Metrics, Inc. adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a fair value hierarchy, which requires Touchpoint Metrics, Inc. to maximize the use of observable inputs and minimize the use of observable inputs and minimize the use of unobservable inputs, when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 Quoted prices in active markets for identical assets or liabilities.
|
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy.
Cash and Cash Equivalents
The carrying amounts approximate Level 1 fair value.
Petro Portfolio Investment
The Petro Portfolio investment is stated at Level 3 historical cost.
Property, Improvements, and Depreciation
Property and equipment are stated at cost or estimated historical cost through appraisal. Betterments, renewals, and extraordinary repairs over $1,000 that extend the life of the assets are capitalized; other repairs and maintenance are expensed.
The cost and accumulated depreciation applicable to assets retired are removed from the accounts, and the gain or loss on disposition is recognized as other income or expense. Depreciation and amortization is computed on various methods as follows:
F-6
|
Depreciable Asset Class
|
Method
|
Depreciable Life
|
|
Software Design & Development
|
Straight Line
|
3-Years
|
|
Organization Costs
|
Straight Line
|
3-Years
|
|
Real Property Improvements
|
150 DB HY
|
15-Years
|
|
Computer Equipment
|
200 DB HY
|
5-Years
|
|
Furniture and Fixtures
|
200 DB HY
|
7-Years
|
|
Leasehold Improvements
|
Straight Line
|
15-Years
|
|
Machinery and Equipment
|
200 DB HY
|
7-Years
|
REVENUES AND EXPENSES
Revenues are traditionally derived from consultation and research engagements. Other revenue is earned from production and product sales that are incidental to the consultation and research efforts. Consultation and research engagements normally span a period of 45 to 120 days in duration.
The company enters into engagements with one of two contracted payment arrangements. The contracts call for a deposit to be made at the time of contract signing and payment as project milestones are achieved or no deposit and payment as project milestones are achieved.
Engagements where a deposit is received, the company reports the deposit amount as unearned revenue on the balance sheet. Revenue is recognized and reported as project milestones are achieved. The revenue for production and product sales are recognized as incurred.
The company has added SaaS (Software as a Service) technology to its offerings. SaaS is a subscription based offering that includes nonrefundable setup fees, subscription fees, professional services, and consulting fees related to implementation, customization, configuration, training and other value added services.
The SaaS subscriptions are sold with three payment options. The subscription can be paid annually, quarterly, or monthly and are all payable prior to services being provided.
As payments are received for any of the subscription options, the revenue is reported as unearned revenue on the balance sheet and recognized at the end of each monthly period as service is provided.
Subscription agreements provide service-level commitments of 99.5% uptime per period, excluding scheduled maintenance and any unavailability caused by defined circumstances beyond reasonable control. Failure to meet this availability commitment requires a credit to qualifying customers equal to the value of the time unavailable, up to a maximum of one month of subscription fees. Reserves equal to the maximum potential credits are recorded on the balance sheet and are treated as a reduction in revenue.
The non-refundable setup fees are recognized upon completion of the setup process. All other ancillary services follow the same revenue recognition process as the consultation and research services.
Revenue is recorded net of applicable sales, use, and excise taxes.
F-7
Expenses are reported in accordance with accrual basis accounting.
Direct labor and materials for consulting or research projects are reported as Work-In-Process on the balance sheet until the associated revenue is recognized. The indirect costs are considered immaterial and are reported as selling, general, and administrative expenses.
Certain software costs for the development and delivery of the SaaS services are capitalized when the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalized costs include only direct external costs of materials and services as well as compensation and benefits for employees directly associated with the software project.
|
3.
|
PROPERTY AND IMPROVEMENTS
|
Property and improvements consist of:
|
March 31, 2012
|
March 31, 2011
|
|||
|
Computers & Hardware
|
$
|
43,028.91
|
$
|
40,553.05
|
|
Software Design & Development
|
$
|
38,645.98
|
$
|
38,645.98
|
|
Equipment
|
$
|
2,359.34
|
$
|
2,359.34
|
|
Furniture & Fixtures
|
$
|
31,730.60
|
$
|
31,730.60
|
|
Leasehold Improvements
|
$
|
95,608.48
|
$
|
95,608.48
|
|
Intangible Assets
|
$
|
1,377.19
|
$
|
1,377.19
|
|
Real Estate Improvements
|
$
|
4,000.00
|
$
|
4,000.00
|
|
Real Estate (Land)
|
$
|
85,000.00
|
$
|
85,000.00
|
|
Total Property and Improvements
|
$
|
301,750.50
|
$
|
299,274.64
|
|
Less: Accumulated Depreciation
|
$
|
(141,296.19)
|
$
|
(130,117.19)
|
|
Net Property and Improvements
|
$
|
160,454.31
|
$
|
169,157.45
|
|
4.
|
INVENTORY
|
Touchpoint Metrics, Inc. does not carry any inventory. All products are purchased and resold on an as needed basis.
|
5.
|
STOCK-BASED COMPENSATION
|
The Touchpoint Metrics, Inc. stock-based compensation program is designed to attract and retain high quality employees while aligning employees’ interests with the interests of the shareholders.
The program was established in 2008. Plan Shares cannot exceed 30% of any outstanding issue or 1,515,000 shares, whichever is the lower amount.
The company entered into two option commitments during 2011. The first grant date was on February 7, 2011 with an option for 300,000 shares at an exercise price of $0.35. The options carry a vesting schedule with 20% vesting on February 7, 2012 and an additional 20% vesting every six months thereafter. The optioned shares will fully vest after 36 months on February 7, 2014. The options will remain open for 10 years, expiring on February 7, 2021.
F-8
The second grant date is on December 15, 2011 with an option for 20,000 shares at an exercise price of $0.25. The options carry a vesting schedule with one-third of the total optioned shares becoming vested every 12 months. The optioned shares will fully vest after 36 months on December 15, 2014. The options will remain open for 5 years, expiring on December 15, 2016.
Method of Accounting and Assumptions
Stock options are valued under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. 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. The company does not backdate, re-price or grant stock-based compensation awards retroactively.
The Black-Sholes Value for each option granted is $0.120 and is amortized to expense over the vesting period of three years.
The weighted-average Black-Scholes fair value assumptions are as follows:
|
Option Grant #1
|
Option Grant #2
|
|
|
Expected life
|
10 Years
|
5 Years
|
|
Risk free interest rate
|
3.68%
|
3.68%
|
|
Expected volatility
|
40.00%
|
40.00%
|
|
Current Stock Price
|
$0.25
|
$0.25
|
|
Exercise Price
|
$0.35
|
$0.25
|
|
Black-Sholes Value
|
$0.120
|
$0.101
|
The expected life is the period over which our employees are expected to hold their options. The risk free interest rate is based on the U.S. Treasury T-Bond rate at the grant date. Volatility reflects movements in the stock price over the most recent historical period equivalent to the expected life.
The option grant #1 shares will incur a compensation expense of $36,000 to be realized over 36 months beginning with the option grant date of February 7, 2011. Option grant #2 shares will incur a compensation expense of $2,020 over 36 months beginning with the December 15, 2011 grant date.
At March 31, 2012, there was $23,795.52 of total unrecognized compensation cost related to non-vested share-based compensation grants.
60,000 stock options were exercisable at March 31, 2012.
|
6.
|
ACCOUNTS RECEIVABLE
|
The Accounts Receivable balances and aging are significantly better than many service related companies. There are no Accounts Receivable balances that exceed 30 days.
|
Aging Periods
|
|||||
|
< 30 Days
|
30 to 60 Days
|
60 to 90 Days
|
Over 90 Days
|
Total A/R
|
|
|
As of 03-31-11
|
$56,692.50
|
$56,692.50
|
|||
|
As of 03-31-12
|
$54,528.09
|
$4,414.50
|
$58,942.59
|
||
F-9
SIGNIFICANT CLIENTS
Touchpoint Metrics, Inc. 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 periods ended March 31, 2012 and 2011 and, the percentage of sales and the concentration is as follows:
|
03/31/11
|
03/31/12
|
|
|
Three largest clients
|
92.02%
|
65.96%
|
|
Next three largest clients
|
7.98%
|
28.61%
|
|
All other clients
|
0.00%
|
5.43%
|
|
100.00%
|
100.00%
|
Touchpoint Metrics, Inc. has strong relationships with their clients and believes that they are credit worthy. 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.
|
7.
|
OTHER ASSETS
|
Other assets are comprised of security deposits, prepaid expenses, and a significant investment in Petro Portfolio.
Petro Portfolio is an online media asset with a website and registered domain name (petroportfolio.com), newsletter, and a database of approximately 80,000 registered subscribers.
The asset was purchased on July 16, 2007 in a stock trade with a related party. The asset had a valuation of $131,151 on the trade date. 262,032 restricted common shares valued at $0.50 per share were issued to complete the purchase.
The website and newsletter remained highly active until mid-2008. Economic events during this period caused a decline in subscriber membership and a decision was reached to restrict continued expense and effort until economic conditions improve and subscriber interest is revitalized.
Management believes that a modest increase in resources allocated to the website and newsletter when economic conditions improve, the company will recognize income streams in excess of $100,000 annually.
There does not appear to be any impairment to the asset as compared to similar types of informational websites and newsletters. The cost to produce an equivalent website, newsletter format, and subscriber database would exceed the current historical book value.
|
8.
|
ACCOUNTS PAYABLE
|
Touchpoint Metrics, Inc. operates primarily on a pay as you go basis using minimal credit available through trade accounts.
F-10
|
Aging Periods
|
|||||
|
< 30 Days
|
30 to 60 Days
|
60 to 90 Days
|
Over 90 Days
|
Total A/P
|
|
|
As of 03-31-11
|
$17,909.38
|
$11,835.70
|
$29,745.08
|
||
|
As of 03-31-12
|
$80,719.12
|
$80,719.12
|
|||
There is no significant concentration of the vendors used by the company.
|
9.
|
CURRENT LIABILITIES
|
The current liabilities carried by the company are normal liabilities for continuing operations comprised primarily of payroll tax payable and credit card debt.
Payroll taxes are paid monthly as required by the IRS and the State of California.
Credit card debt is comprised of three corporate credit cards issued by American Express and First National Bank. Balances are generally paid each month.
The American Express credit card has a credit limit of $16,000 and incurs an interest rate of 15.24% Each of the First National Bank credit cards have a credit limit of $10,000 and incur and interest rate of 15.99% and 16.00%.
Each credit card requires a minimum monthly payment amount that will fluctuate depending on any balances carried into a billing period.
|
10.
|
LONG-TERM DEBT
|
The company entered into two long-term debt instruments during 2011.
A $100,000 CDN note was executed with Brad Holland, an 8.09% shareholder on September 16, 2011. The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest. The maturity date of the note is September 16, 2014. The principal and accrued interest payable at maturity will be $112,000.
A $50,000 USD note was executed with McLellan Investment Corporation, an unrelated party, on September 7, 2011. The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest. The maturity date of the note is September 7, 2014. The principal and accrued interest payable at maturity will be $56,000.
|
11.
|
INCOME TAXES
|
Touchpoint Metrics, Inc. has not made a provision for income taxes. The company posted a significant loss for the first quarter 2012 and currently has a significant deferred tax asset primarily comprised of prior year losses.
F-11
|
12.
|
NET INCOME PER COMMON SHARE
|
Basic net income per common share is net income available to common shareholders divided by the weighted average of common shares outstanding during the period. Diluted net income per common share is calculated using the weighted average of common shares outstanding adjusted to include the effect that would occur if in-the-money employee stock options were exercised.
Options to purchase 600,000 shares were not included in the calculation of diluted earnings per common share because these options were out-of-the-money. Out-of-the-money options have an exercise price of $0.35.
The computations for basic and diluted net income per common share are as follows:
|
March 31, 2012
|
March 31, 2011
|
||||
|
Income
|
Shares
|
Income
|
Shares
|
||
|
Net income
|
(207,878.00)
|
(104,540.68)
|
|||
|
Dividends
|
0.00
|
0.00
|
|||
|
Net income available for common shareholders
|
(207,878.00)
|
13,112,302.00
|
(104,540.68)
|
5,343,585.00
|
|
|
Basic net income per common share
|
(0.02)
|
(0.02)
|
|||
|
Net income available for common shareholders
|
(207,878.00)
|
(104,540.68)
|
|||
|
Dilutive securities:
|
|||||
|
Stock options
|
60,000.00
|
0.00
|
|||
|
Diluted
|
(207,878.00)
|
13,172,302.00
|
(104,540.68)
|
5,343,585.00
|
|
|
Diluted net income per common share
|
(0.02)
|
(0.02)
|
|||
|
13.
|
STOCK
|
Touchpoint Metrics, Inc. was capitalized through the sale of 5,312,302 shares of stock totaling $906,151. There are 30,000,000 shares authorized. 2,360,000 additional restricted shares were issued for an additional $590,000 during the first quarter 2012 resulting in 13,112,302 shares issued and outstanding as of March 31, 2012.
During the review process preparing documentation for the S-1 submission process it was discovered that $1,500 as payment for a stock transaction that took place in 2006 was not reported in the company financial information. An entry to correct the oversight was made as of March 31, 2012 by increasing the common stock value and decreasing retained earnings accordingly.
|
14.
|
LEGAL
|
Touchpoint Metrics, Inc. has no known legal issues pending.
|
15.
|
INTERNAL CONTROLS
|
Touchpoint Metrics, Inc. has well documented processes and procedures. The internal controls are comparable to a firm of like size and configuration. The company uses outside third party services to effect a good segregation of duties and controls.
F-12
To the Board of Directors and Shareholders
Touchpoint Metrics, Inc.
San Francisco, California
We have audited the accompanying balance sheets of Touchpoint Metrics, Inc. (a California corporation) as of December 31, 2011 and 2010, and the related statements of operations, stockholders' equity, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred o above present fairly, in all material respects, the financial position of the Company as of December 331, 2011 and 2010. The results of its operations and its cash flows are in conformity with U.S. generally accepted accounting principles.
/s/ DAVID L. HILLARY, JR., CPA, CITP
David L. Hillary, Jr., CPA, CITP
Indianapolis, Indiana
February 15, 2012
F-13
Touchpoint Metrics, Inc.
|
2011
|
2010
|
|||
|
ASSETS
|
||||
|
Current Assets
|
||||
|
Checking
|
$
|
33,189.77
|
$
|
1,819.88
|
|
Savings
|
$
|
18,919.02
|
$
|
166,051.62
|
|
Accounts Receivable
|
$
|
61,218.08
|
$
|
102,232.25
|
|
Total Current Assets
|
$
|
113,326.87
|
$
|
270,103.75
|
|
Fixed Assets
|
||||
|
Computers & Hardware
|
$
|
43,028.91
|
$
|
40,553.05
|
|
Software
|
$
|
38,645.98
|
$
|
38,645.98
|
|
Equipment
|
$
|
2,359.34
|
$
|
2,359.34
|
|
Furniture
|
$
|
31,730.60
|
$
|
31,274.55
|
|
Leasehold Improvements
|
$
|
95,608.48
|
$
|
95,608.48
|
|
Land
|
$
|
85,000.00
|
$
|
85,000.00
|
|
Land Improvements
|
$
|
4,000.00
|
$
|
4,000.00
|
|
Accumulated Depreciation
|
$
|
(139,919.00)
|
$
|
(128,740.00)
|
|
Organization Costs
|
$
|
1,377.19
|
$
|
1,377.19
|
|
Accumulated Amortization
|
$
|
(1,377.19)
|
$
|
(1,377.19)
|
|
Total Fixed Assets
|
$
|
160,454.31
|
$
|
168,701.40
|
|
Other Assets
|
||||
|
Prepaid Expenses
|
$
|
11,995.34
|
$
|
7,554.34
|
|
Investment in Petro Portfolio
|
$
|
131,151.00
|
$
|
131,151.00
|
|
Deposits
|
$
|
3,474.00
|
$
|
3,783.00
|
|
Total Other Assets
|
$
|
146,620.34
|
$
|
142,488.34
|
|
TOTAL ASSETS
|
$
|
420,401.52
|
$
|
581,293.49
|
|
LIABILITIES AND EQUITY
|
||||
|
Liabilities
|
||||
|
Current Liabilities
|
||||
|
Accounts Payable
|
$
|
47,359.16
|
$
|
13,111.25
|
|
Credit Cards Payable
|
$
|
22,893.37
|
||
|
Current Portion - Capital Lease
|
$
|
8,713.00
|
||
|
Security Deposits
|
$
|
2,300.00
|
$
|
2,300.00
|
|
Notes Payable - Short-term
|
$
|
3,000.00
|
$
|
3,000.00
|
|
Payroll Liabilities
|
$
|
1,452.20
|
$
|
56.00
|
|
Total Current Liabilities
|
$
|
77,004.73
|
$
|
27,180.25
|
|
Long-Term Liabilities
|
||||
|
Notes Payable - Long-term
|
$
|
151,500.00
|
$
|
0.00
|
|
Total Long-Term Liabilities
|
$
|
151,500.00
|
$
|
0.00
|
|
Total Liabilities
|
$
|
228,504.73
|
$
|
27,180.25
|
|
Equity
|
||||
|
Retained Earnings
|
$
|
(352,037.76)
|
$
|
(367,320.49)
|
|
Stock Options
|
$
|
11,056.15
|
$
|
|
|
Common Stock
|
$
|
946,151.00
|
$
|
906,151.00
|
|
Net Income
|
$
|
(413,272.60)
|
$
|
15,282.73
|
|
Total Equity
|
$
|
191,896.79
|
$
|
554,113.24
|
|
TOTAL LIABILITIES AND EQUITY
|
$
|
420,401.52
|
$
|
581,293.49
|
F-14
Touchpoint Metrics, Inc.
|
2011
|
2010
|
|||
|
Revenue
|
||||
|
Consulting Services
|
$
|
290,220.58
|
$
|
124,877.00
|
|
Creative & Production Services
|
$
|
46,980.00
|
$
|
464,453.64
|
|
Research
|
$
|
226,303.00
|
$
|
442,066.50
|
|
Products & Other
|
$
|
47,870.25
|
$
|
50,992.26
|
|
Total Revenue
|
$
|
611,373.83
|
$
|
1,082,389.40
|
|
Cost of Goods Sold
|
||||
|
Labor
|
$
|
88,374.95
|
$
|
111,180.94
|
|
Services
|
$
|
90,348.93
|
$
|
215,187.44
|
|
Products & Other
|
$
|
63,150.31
|
$
|
43,130.97
|
|
Total Cost of Goods Sold
|
$
|
241,874.19
|
$
|
369,499.35
|
|
Gross Profit
|
$
|
369,499.64
|
$
|
712,890.05
|
|
Expenses
|
||||
|
Administrative Costs
|
$
|
31,544.76
|
$
|
28,335.68
|
|
Automobile Expense
|
$
|
22,422.82
|
$
|
33,281.50
|
|
Computers and Software
|
$
|
21,987.38
|
$
|
16,708.61
|
|
Contract Services
|
$
|
89,040.74
|
$
|
147,568.50
|
|
Insurance
|
$
|
33,763.92
|
$
|
26,087.97
|
|
Marketing and Promotion
|
$
|
32,324.39
|
$
|
56,529.90
|
|
Professional Fees
|
$
|
45,474.77
|
$
|
23,471.94
|
|
Rent
|
$
|
27,218.96
|
$
|
76,653.84
|
|
Repairs and Maintenance
|
$
|
621.37
|
$
|
16,271.02
|
|
Salaries and Wages
|
$
|
439,601.16
|
$
|
228,287.21
|
|
Taxes
|
$
|
4,362.94
|
$
|
3,602.64
|
|
Travel Expenses
|
$
|
25,892.05
|
$
|
34,563.87
|
|
Utilities
|
$
|
9,034.35
|
$
|
9,951.22
|
|
Total Expenses
|
$
|
783,289.61
|
$
|
701,313.90
|
|
Net Operating Income
|
$
|
(413,789.97)
|
$
|
11,576.15
|
|
Other Income/Expense
|
||||
|
Other Income
|
$
|
517.37
|
$
|
3,706.58
|
|
Total Other Income/Expense
|
$
|
517.37
|
$
|
3,706.58
|
|
Net Income
|
$
|
(413,272.60)
|
$
|
15,282.73
|
|
Net Income per Common Share
|
||||
|
Weighted common shares outstanding
|
$
|
5,343,585
|
$
|
5,312,302
|
|
Basic net income per common share
|
$
|
(0.077)
|
$
|
0.003
|
|
Dilutive securities
|
$
|
0
|
$
|
0
|
|
Diluted net income per common share
|
$
|
(0.077)
|
$
|
0.003
|
F-15
Touchpoint Metrics, Inc
|
2011
|
2010
|
||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
||||
|
Common Stock, beginning of year
|
5,312,302
|
$
|
906,151
|
5,312,302
|
$
|
906,151
|
|
|
Common Stock Issued
|
4,000,000
|
$
|
40,000
|
||||
|
Stock-based compensation expense
|
$
|
20,000
|
|||||
|
Balance, end of year
|
9,312,302
|
$
|
966,151
|
5,312,302
|
$
|
906,151
|
|
|
Retained Earnings Balance, beginning of year
|
$
|
(352,038)
|
$
|
(367,320)
|
|||
|
Net income
|
$
|
(413,273)
|
$
|
15,283
|
|||
|
Retained Earnings Balance, end of year
|
$
|
(765,310)
|
$
|
(352,038)
|
|||
|
Total Common Shareholders’ Equity
|
$
|
200,841
|
$
|
554,113
|
|||
F-16
Touchpoint Metrics, Inc
|
2011
|
2010
|
|||
|
OPERATING ACTIVITIES
|
||||
|
Net Income
|
$
|
(413,272.60)
|
$
|
15,282.73
|
|
Adjustments to reconcile Net Income to Net Cash provided by operations:
|
||||
|
Accounts Receivable
|
$
|
41,014.17
|
$
|
28,853.19
|
|
Accounts Payable
|
$
|
34,247.91
|
$
|
(36,855.33)
|
|
Notes Payable - Short-term
|
$
|
(14,500.00)
|
||
|
Credit Card Expenses
|
$
|
22,893.37
|
||
|
Capital Lease - Short-term
|
$
|
(8,713.00)
|
$
|
(2,063.00)
|
|
Payroll Liabilities
|
$
|
1,396.20
|
$
|
(12,127.50)
|
|
Net cash provided by operating activities
|
$
|
(322,433.95)
|
$
|
(21,409.91)
|
|
INVESTING ACTIVITIES
|
||||
|
Capital Purchases
|
$
|
(2,931.91)
|
$
|
(1,406.10)
|
|
Accumulated Depreciation
|
$
|
11,179.00
|
$
|
12,790.00
|
|
Deposits
|
$
|
309.00
|
$
|
(3,474.00)
|
|
Prepaid Expenses
|
$
|
(4,441.00)
|
||
|
Net cash provided by investing activities
|
$
|
4,115.09
|
$
|
7,909.90
|
|
FINANCING ACTIVITIES
|
||||
|
Notes Payable - Long-term
|
$
|
151,500.00
|
||
|
Capital Lease - Long-term
|
$
|
(8,713.00)
|
||
|
Stock Options
|
$
|
11,056.15
|
||
|
Common Stock
|
$
|
40,000.00
|
||
|
Net cash provided by financing activities
|
$
|
202,556.15
|
$
|
(8,713.00)
|
|
Net cash increase for period
|
$
|
(115,762.71)
|
$
|
(22,213.01)
|
|
Cash at beginning of period
|
$
|
167,871.50
|
$
|
190,084.51
|
|
Cash at end of period
|
$
|
52,108.79
|
$
|
167,871.50
|
F-17
Touchpoint Metrics, Inc.
December 31, 2011 and 2010
|
1.
|
NATURE OF ORGANIZATION
|
Touchpoint Metrics, Inc. 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.
Touchpoint Metrics, Inc. is a brand and customer experience research consultancy that maps and improves the touch points between organizations and their customers. Their focus assists companies improve business performance by measuring and transforming the ways they interact with customers.
Touchpoint Metrics, Inc. services a wide variety of industries and customer size.
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
The financial statements of Touchpoint Metrics, Inc. are presented on the accrual basis. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader.
The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America, This requires management to make estimates and assumptions that affect the reported amounts and disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.
CASH, CASH EQUIVALENTS, AND CREDIT RISK
Cash and cash equivalents are comprised of highly liquid investments with original maturity dates of less than three months that are not reported as investments. While Touchpoint Metrics, Inc. may maintain cash and cash equivalents in bank deposit accounts, which at times exceed Federal Deposit Insurance Corporation insured limits, they have not experienced any losses in such accounts.
Portions of the bank deposit accounts are held in Canadian banks on a Canadian and US Dollar basis. The balances in these accounts at times exceed Canada Deposit Insurance Corporation insured limits. They have not experienced any losses in these accounts.
Management believes it is not exposed to any significant credit risk on cash and cash equivalents.
INVESTMENTS
Touchpoint Metrics, Inc. reports marketable investments at published market or fair value with gains and losses reported in the income statements.
For investments without a readily available market, valuation is recorded at historical cost and tested for impairment as of each reporting period.
F-18
DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
Effective January 1, 2008, Touchpoint Metrics, Inc. adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a fair value hierarchy, which requires Touchpoint Metrics, Inc. to maximize the use of observable inputs and minimize the use of observable inputs and minimize the use of unobservable inputs, when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 Quoted prices in active markets for identical assets or liabilities.
|
|
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis and recognized in the accompanying financial statements, as well as the general classification of such instruments pursuant to the valuation hierarchy.
Cash and Cash Equivalents
The carrying amounts approximate Level 1 fair value.
Petro Portfolio Investment
The Petro Portfolio investment is stated at Level 3 historical cost.
Property, Improvements, and Depreciation
Property and equipment are stated at cost or estimated historical cost through appraisal. Betterments, renewals, and extraordinary repairs over $1,000 that extend the life of the assets are capitalized; other repairs and maintenance are expensed.
The cost and accumulated depreciation applicable to assets retired are removed from the accounts, and the gain or loss on disposition is recognized as other income or expense. Depreciation and amortization is computed on various methods as follows:
F-20
|
Depreciable Asset Class
|
Method
|
Depreciable Life
|
|
Software Design & Development
|
Straight Line
|
3-Years
|
|
Organization Costs
|
Straight Line
|
3-Years
|
|
Real Property Improvements
|
150 DB HY
|
15-Years
|
|
Computer Equipment
|
200 DB HY
|
5-Years
|
|
Furniture and Fixtures
|
200 DB HY
|
7-Years
|
|
Leasehold Improvements
|
Straight Line
|
15-Years
|
|
Machinery and Equipment
|
200 DB HY
|
7-Years
|
REVENUES AND EXPENSES
Revenues are traditionally derived from consultation and research engagements. Other revenue is earned from production and product sales that are incidental to the consultation and research efforts. Consultation and research engagements normally span a period of 45 to 120 days in duration.
The company enters into engagements with one of two contracted payment arrangements. The contracts call for a deposit to be made at the time of contract signing and payment as project milestones are achieved or no deposit and payment as project milestones are achieved.
Engagements where a deposit is received, the company reports the deposit amount as unearned revenue on the balance sheet. Revenue is recognized and reported as project milestones are achieved. The revenue for production and product sales are recognized as incurred by client.
The company has added SaaS (Software as a Service) technology to its offerings. SaaS is a subscription based offering that includes nonrefundable setup fees, subscription fees, professional services, and consulting fees related to implementation, customization, configuration, training and other value added services.
The SaaS subscriptions are sold with three payment options. The subscription can be paid annually, quarterly, or monthly and are all payable prior to services being provided.
As payments are received for any of the subscription options, the revenue is reported as unearned revenue on the balance sheet and recognized at the end of each monthly period as service is provided.
Subscription agreements provide service-level commitments of 99.5% uptime per period, excluding scheduled maintenance and any unavailability caused by defined circumstances beyond reasonable control. Failure to meet this availability commitment requires a credit to qualifying customers equal to the value of the time unavailable, up to a maximum of one month of subscription fees. Reserves equal to the maximum potential credits are recorded on the balance sheet and are treated as a reduction in revenue.
The non-refundable setup fees are recognized upon completion of the setup process. All other ancillary services follow the same revenue recognition process as the consultation and research services.
Revenue is recorded net of applicable sales, use, and excise taxes.
Expenses are reported in accordance with accrual basis accounting.
F-21
Direct labor and materials for consulting or research projects are reported as Work-In-Process on the balance sheet until the associated revenue is recognized. The indirect costs are considered immaterial and are reported as selling, general, and administrative expenses.
Certain software costs for the development and delivery of the SaaS services are capitalized when the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalized costs include only direct external costs of materials and services as well as compensation and benefits for employees directly associated with the software project.
|
3.
|
PROPERTY AND IMPROVEMENTS
|
Property and improvements consist of:
|
December 31,
|
||||
|
2010
|
2011
|
|||
|
Computers & Hardware
|
$
|
40,553.05
|
$
|
43,028.91
|
|
Software Design & Development
|
$
|
38,645.98
|
$
|
38,645.98
|
|
Equipment
|
$
|
2,359.34
|
$
|
2,359.34
|
|
Furniture & Fixtures
|
$
|
31,274.55
|
$
|
31,730.60
|
|
Leasehold Improvements
|
$
|
95,608.48
|
$
|
95,608.48
|
|
Intangible Assets
|
$
|
1,377.19
|
$
|
1,377.19
|
|
Real Estate Improvements
|
$
|
4,000.00
|
$
|
4,000.00
|
|
Real Estate (Land)
|
$
|
85,000.00
|
$
|
85,000.00
|
|
Total Property and Improvements
|
$
|
298,818.59
|
$
|
301,750.50
|
|
Less: Accumulated Depreciation
|
$
|
(130,117.19)
|
$
|
(141,296.19)
|
|
Net Property and Improvements
|
$
|
168,701.40
|
$
|
160,454.31
|
|
4.
|
INVENTORY
|
Touchpoint Metrics, Inc. does not carry any inventory. All products are purchased and resold on an as needed basis.
|
5.
|
STOCK-BASED COMPENSATION
|
The Touchpoint Metrics, Inc. stock-based compensation program is designed to attract and retain high quality employees while aligning employees’ interests with the interests of the shareholders.
The program was established in 2008. Plan Shares cannot exceed 30% of any outstanding issue or 1,515,000 shares, whichever is the lower amount.
The company entered into two option commitments during 2011. The first grant date was on February 7, 2011 with an option for 300,000 shares at an exercise price of $0.35. The options carry a vesting schedule with 20% becoming vested on February 7, 2012 and an additional 20% vesting every six months thereafter. The optioned shares will fully vest after 36 months on February 7, 2014. The options will remain open for 10 years, expiring on February 7, 2021.
F-22
The second grant date is on December 15, 2011 with an option for 20,000 shares at an exercise price of $0.25. The options carry a vesting schedule with one-third of the total optioned shares becoming vested every 12 months. The optioned shares will fully vest after 36 months on December 15, 2014. The options will remain open for 5 years, expiring on December 15, 2016.
Method of Accounting and Assumptions
Stock options are valued under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. 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. The company does not backdate, re-price or grant stock-based compensation awards retroactively.
The Black-Sholes Value for each option granted is $0.120 and is amortized to expense over the vesting period of three years.
The weighted-average Black-Scholes fair value assumptions are as follows:
|
Option Grant #1
|
Option Grant #2
|
|
|
Expected life
|
10 Years
|
5 Years
|
|
Risk free interest rate
|
3.68%
|
3.68%
|
|
Expected volatility
|
40.00%
|
40.00%
|
|
Current Stock Price
|
$0.25
|
$0.25
|
|
Exercise Price
|
$0.35
|
$0.25
|
|
Black-Sholes Value
|
$0.120
|
$0.101
|
The expected life is the period over which our employees are expected to hold their options. The risk free interest rate is based on the U.S. Treasury T-Bond rate at the grant date. Volatility reflects movements in the stock price over the most recent historical period equivalent to the expected life.
The option grant #1 shares will incur a compensation expense of $36,000 to be realized over 36 months beginning with the option grant date of February 7, 2011. Option grant #2 shares will incur a compensation expense of $2,020 over 36 months beginning with the December 15, 2011 grant date.
At December 31, 2011, there was $26,963.85 of total unrecognized compensation cost related to non-vested share-based compensation grants.
No stock options were exercisable at December 31, 2011.
|
6.
|
ACCOUNTS RECEIVABLE
|
The Accounts Receivable balances and aging are significantly better than many service related companies. There are no Accounts Receivable balances that exceed 30 days.
|
Aging Periods
|
|||||
|
< 30 Days
|
30 to 60 Days
|
60 to 90 Days
|
Over 90 Days
|
Total A/R
|
|
|
2010
|
$102,232.25
|
$102,232.25
|
|||
|
2011
|
$13,379.83
|
$47,838.25
|
$61,218.08
|
||
F-23
SIGNIFICANT CLIENTS
Touchpoint Metrics, Inc. 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 years ended 2010 and 2011, the percentage of sales and the concentration is as follows:
|
2010
|
2011
|
|
|
Three largest clients
|
74.85%
|
66.30%
|
|
Next three largest clients
|
22.93%
|
25.00%
|
|
All other clients
|
2.22%
|
8.70%
|
|
100.00%
|
100.00%
|
Touchpoint Metrics, Inc. has strong relationships with their clients and believes that they are credit worthy. 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.
|
7.
|
OTHER ASSETS
|
Other assets are comprised of security deposits, prepaid expenses, and a significant investment in Petro Portfolio.
Petro Portfolio is an online media asset with a website and registered domain name (petroportfolio.com), newsletter, and a database of approximately 80,000 registered subscribers.
The asset was purchased on July 16, 2007 in a stock trade with a related party. The asset had a valuation of $131,151 on the trade date. 262,032 restricted common shares valued at $0.50 per share were issued to complete the purchase.
The website and newsletter remained highly active until mid-2008. Economic events during this period caused a decline in subscriber membership and a decision was reached to restrict continued expense and effort until economic conditions improve and subscriber interest is revitalized.
Management believes that a modest increase in resources allocated to the website and newsletter when economic conditions improve, the company will recognize income streams in excess of $100,000 annually.
There does not appear to be any impairment to the asset as compared to similar types of informational websites and newsletters. The cost to produce an equivalent website, newsletter format, and subscriber database would exceed the current historical book value.
|
8.
|
ACCOUNTS PAYABLE
|
Touchpoint Metrics, Inc. operates primarily on a pay as you go basis using minimal credit available through trade accounts.
F-24
|
Aging Periods
|
|||||
|
< 30 Days
|
30 to 60 Days
|
60 to 90 Days
|
Over 90 Days
|
Total A/P
|
|
|
2010
|
$13,111.25
|
$13,111.25
|
|||
|
2011
|
$36,578.23
|
$5,892.93
|
$1,300.00
|
$3,588.00
|
$47,359.16
|
The over 90 Days accounts are primarily due to incomplete delivery of the final product or service. As a percentage of total expenses, the outstanding balances are insignificant and immaterial to the operations.
There is no significant concentration of the vendors used by the company.
|
9.
|
CURRENT LIABILITIES
|
The current liabilities carried by the company are normal liabilities for continuing operations comprised primarily of payroll tax payable and credit card debt.
Payroll taxes are paid monthly as required by the IRS and the State of California.
Credit card debt is comprised of three corporate credit cards issued by American Express and First National Bank. Balances are generally paid each month.
The American Express credit card has a credit limit of $16,000 and incurs an interest rate of 15.24% Each of the First National Bank credit cards have a credit limit of $10,000 and incur and interest rate of 15.99% and 16.00%.
Each credit card requires a minimum monthly payment amount that will fluctuate depending on any balances carried into a billing period.
|
10.
|
LONG-TERM DEBT
|
The company entered into two long-term debt instruments during 2011.
A $100,000 CDN note was executed with Brad Holland, an 8.09% shareholder on September 16, 2011. The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest. The maturity date of the note is September 16, 2014. The principal and accrued interest payable at maturity will be $112,000.
A $50,000 USD note was executed with McLellan Investment Corporation, an unrelated party, on September 7, 2011. The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest. The maturity date of the note is September 7, 2014. The principal and accrued interest payable at maturity will be $56,000.
|
11.
|
INCOME TAXES
|
Touchpoint Metrics, Inc. has not made a provision for income taxes. The company posted a significant loss for 2011 and currently has a significant deferred tax asset primarily comprised of prior year losses.
F-25
|
Income before income taxes
|
$
|
(413,273)
|
|
Provision for income taxes
|
||
|
Current: U.S. Federal
|
$
|
0
|
|
State
|
$
|
0
|
|
$
|
0
|
|
|
Deferred: U.S. Federal
|
$
|
144,646
|
|
State
|
$
|
36,533
|
|
$
|
181,179
|
|
|
$
|
181,179
|
|
|
Tax rate reconciliation
|
||
|
U.S. Federal statutory tax rate
|
35.00%
|
|
|
State income tax, net of U.S. Federal tax benefit
|
8.84%
|
|
|
Annual Tax Rate
|
43.84%
|
|
|
Deferred tax assets
|
||
|
Prepaid Expenses
|
$
|
11,995
|
|
Net carryforwards
|
$
|
339,311
|
|
Stock-based compensation
|
$
|
52,000
|
|
Net Deferred Tax Assets
|
$
|
403,306
|
|
12.
|
NET INCOME PER COMMON SHARE
|
Basic net income per common share is net income available to common shareholders divided by the weighted average of common shares outstanding during the period. Diluted net income per common share is calculated using the weighted average of common shares outstanding adjusted to include the effect that would occur if in-the-money employee stock options were exercised.
Options to purchase 600,000 shares were not included in the calculation of diluted earnings per common share because these options were out-of-the-money. Out-of-the-money options have an exercise price of $0.35.
The computations for basic and diluted net income per common share are as follows:
|
2011
|
2010
|
||||||
|
Income
|
Shares
|
Income
|
Shares
|
||||
|
Net income
|
$
|
(413,273)
|
$
|
15,283
|
|||
|
Dividends
|
$
|
0
|
$
|
0
|
|||
|
Net income available for common shareholders
|
$
|
(413,273)
|
5,343,585
|
$
|
15,283
|
5,312,302
|
|
|
Basic net income per common share
|
$
|
(0.077)
|
$
|
0.003
|
|||
|
Net income available for common shareholders
|
$
|
(413,273)
|
$
|
15,283
|
|||
|
Dilutive securities:
|
|||||||
|
Stock options
|
0
|
0
|
|||||
|
Diluted
|
$
|
(413,273)
|
5,343,585
|
$
|
15,283
|
5,312,302
|
|
|
Diluted net income per common share
|
$
|
(0.077)
|
$
|
0.003
|
|||
F-26
|
13.
|
STOCK
|
Touchpoint Metrics, Inc. was capitalized through the sale of 5,312,302 shares of stock totaling $906,151. There are 30,000,000 shares authorized. 4,000,000 additional restricted shares were issued for an additional $40,000 during 2011 resulting in 9,312,302 shares issued and outstanding as of December 31, 2011.
|
14.
|
LEGAL
|
Touchpoint Metrics, Inc. has no known legal issues pending.
|
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 10.
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 a foreign location and will be eliminated if IREMCO has a need for the space.
Neither of the related party transactions presents any evidence of preferential treatment for either shareholder or the company.
|
16.
|
INTERNAL CONTROLS
|
Touchpoint Metrics, Inc. has well documented processes and procedures. The internal controls are comparable to a firm of like size and configuration. The company uses outside third party services to effect a good segregation of duties and controls.
|
17.
|
SUBSEQUENT EVENTS
|
On January 4, 2012, Touchpoint Metrics, Inc. issued an additional 3,820,000 restricted shares for an additional $595,000 under a private placement memorandum. The total shares issued and outstanding on that date were 13,132,302.
During January and February 2012, Touchpoint Metrics, Inc. is undergoing final planning to file Form S-1 with the Securities and Exchange Commission to register the shares.
|
18.
|
GOING CONCERN
|
The accompanying financial statements and notes have been prepared assuming that Touchpoint Metrics, Inc. will continue as a going concern.
F-27
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering, all of which are to be paid by the registrant, are as follows:
|
SEC Registration Fee
|
$
|
218.67
|
|
Printing Expenses
|
1,781.33
|
|
|
Accounting Fees and Expenses
|
10,000.00
|
|
|
Legal Fees and Expenses
|
25,000.00
|
|
|
Blue Sky Fees/Expenses
|
0.00
|
|
|
Transfer Agent Fees
|
3,000.00
|
|
|
TOTAL
|
$
|
40,000.00
|
|
ITEM 14.
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
|
The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of the Registrant is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows:
|
1.
|
Sixth Article of the Articles of Incorporation of the company, filed as Exhibit 3.1 to the Registration Statement.
|
|
2.
|
Article VI of the Amended and Restated Bylaws of the company, filed as Exhibit 3.3 to the Registration Statement.
|
|
3.
|
California Corporations Code 317.
|
The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making the company responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.
|
ITEM 15.
|
RECENT SALES OF UNREGISTERED SECURITIES.
|
Since inception, the Registrant has sold the following securities that were not registered under the Securities Act of 1933, as amended, as follows:
On April 14, 2006, we issued 3,000,000 restricted shares of common stock to Michael Hinshaw, our president, in consideration of services rendered valued at $1,500.00. The shares of common stock were issued to Michael Hinshaw, our president pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Mr. Hinshaw is a sophisticated investor and had access to the same information that can be found in Part I of a Form S-1 registration statement.
On April 14, 2006, we issued 1,000,000 restricted shares of common stock to two (2) individuals and three (3) companies in consideration of $250,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons .
On April 27, 2007, we issued 1,050,000 restricted shares of common stock to two (2) individual and three (3) companies in consideration of $525,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On July 16, 2007, we issued 262,302 restricted shares of common stock to one (1) company in consideration of rights and ownership in Petro Portfolio, Ltd., an online media property valued at $131,151.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On December 6, 2011 we issued 3,000,000 restricted shares of common stock to Michael Hinshaw, our president, in consideration of $30,000.00. The shares of common stock were issued to Michael Hinshaw, our president pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Mr. Hinshaw is a sophisticated investor and had access to the same information that can be found in Part I of a Form S-1 registration statement.
On December 6, 2011, we issued 1,000,000 restricted shares of common stock to two (2) companies in consideration of $10,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On January 4, 2012, we issued 2,300,000 restricted shares of common stock to fifty-eight (58) individuals and three (3) companies in consideration of $575,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On January 24, 2012, we issued 1,500,000 restricted shares of common stock to one (1) company in consideration of $15,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons.
On April 20, 2012, we issued 20,000 restricted shares of common stock to one (1) individual in consideration of $5,000.00. The shares of common stock were issued pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933, as amended, in that the transactions took place outside the United States of America with non-US persons .
ITEM 16. EXHIBITS.
The following exhibits are filed as part of this Registration Statement, pursuant to Item 601 of Regulation S-K.
|
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
|
|
|
5.1
|
Opinion of The Law Office of Conrad C. Lysiak, P.S. regarding the legality of the securities being registered.
|
S-1
|
4/25/12
|
5.1
|
|
|
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
|
|
|
23.1
|
Consent of Hillary CPA Group, Independent Registered Public Accounting Firm.
|
X
|
|||
|
23.2
|
Consent of The Law Office of Conrad C. Lysiak, P.S.
|
S-1
|
4/25/12
|
23.2
|
|
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
|
|
(1)
|
To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to:
|
(a) include any prospectus required by Section 10(a)(3) of the Securities Act;
|
|
(b)
|
reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be
|
reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and
|
|
(c)
|
include any additional or changed material information with respect to the plan of distribution.
|
|
|
(2)
|
That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
(3)
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
|
|
(4)
|
To provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
|
|
|
(5)
|
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective.
|
|
|
(6)
|
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
(7)
|
For the purpose of determining liability under the Securities Act to any purchaser:
|
Each prospectus filed pursuant to Rule 424(b) under the Securities Act as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
|
(8)
|
For the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of securities:
|
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
(a)
|
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 of this chapter;
|
|
|
(b)
|
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
|
|
(c)
|
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
|
|
(d)
|
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
|
B.
|
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
|
|
C.
|
To provide to the underwriter at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
|
|
D.
|
The undersigned Registrant hereby undertakes that:
|
|
|
(1)
|
For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
|
|
|
(2)
|
For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing of this amended Form S-1 Registration Statement and has duly caused this amended Form S-1 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in San Francisco, California on this 29th day of May, 2012.
|
|
TOUCHPOINT METRICS, INC.
|
|
|
(the “Registrant”)
|
||
|
BY:
|
MICHAEL HINSHAW
|
|
|
Michael Hinshaw
|
||
|
President, Principal Executive Officer, Treasurer, Principal Financial Office, Principal Accounting Officer and a member of the Board of Directors
|
||
Pursuant to the requirements of the Securities Act of 1933, as amended, this amended Form S-1 Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
|
Signature
|
Title
|
Date
|
|
MICHAEL HINSHAW
|
President, Principal Executive Officer,
|
May 29, 2012
|
|
Michael Hinshaw
|
Treasurer, Principal Financial Officer, Principal Accounting Officer and a member of the Board of Directors
|
|
|
ASHLEY GARNOT
|
Director
|
May 29, 2012
|
|
Ashley Garnot
|
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
|
|
|
5.1
|
Opinion of The Law Office of Conrad C. Lysiak, P.S. regarding the legality of the securities being registered.
|
S-1
|
4/25/12
|
5.1
|
|
|
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
|
|
|
23.1
|
Consent of Hillary CPA Group, Independent Registered Public Accounting Firm.
|
X
|
|||
|
23.2
|
Consent of The Law Office of Conrad C. Lysiak, P.S.
|
S-1
|
4/25/12
|
23.2
|
|
- 71 -