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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Commission File Number:   000-54918

MCORPCX, INC.

(formerly, Touchpoint Metrics, Inc.)

(Exact name of registrant as specified in its charter)

California

(State or other jurisdiction of incorporation or organization)

26-0030631

(I.R.S. Employer Identification No.)

201 Spear Street, Suite 1100

San Francisco, CA   94105

(Address of principal executive offices, including zip code)

(415) 526-2655

(Registrant's telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.  

YES ☑     NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES ☑     NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

 

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicated the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

16,766,158 as of November 13, 2015.

 

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MCORPCX, Inc.

Form 10-Q Quarterly Report

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

The accompanying notes are an integral part of these statements.

The accompanying notes are an integral part of these statements.

The accompanying notes are an integral part of these statements.

MCORPCX, INC.

NOTES TO THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

Note 1: Organization and Basis of Presentation

MCORPCX, Inc., formerly Touchpoint Metrics, Inc. (the "Company"), is a for profit corporation established under the corporation laws in the State of California, United States of America on December 14, 2001. The corporation operated as The Innes Group, Inc., dba MCorp Consulting until filing a Certificate of Amendment to the Articles of Incorporation renaming the company Touchpoint Metrics, Inc., effective October 18, 2011.  During Q1 2015, the Company filed a d/b/a (doing business as) with the State of California Secretary of State to begin doing business as MCORPCX. On June 11, 2015, at the Company's Annual General Meeting, shareholders passed a resolution to change the name of the Company to MCORPCX, Inc.

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

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

The Financial Statements and related disclosures as of September 30, 2015 and for the three and nine months ended September 30, 2015, are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). The December 31, 2014, Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S.").  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These financial statements should be read in conjunction with the financial statements included in our Annual Report for the year ended December 31, 2014, filed on Form 10-K with the SEC on March 31, 2015.  The results of operations for the three and nine months ended September 30, 2015, are not necessarily indicative of the results to be expected for the full year. Unless the context otherwise requires, all references to "MCORPCX," "we," "us," "our" or the "company" are to MCORPCX, Inc. and our subsidiaries.

Note 2: Summary of Significant Accounting Policies

Website Development Costs

Development of a new Company website began in September 2014; related costs incurred during the design and production stages of website development were capitalized prior to its go-live date, which occurred in March 2015.  Now that the website is live, all capitalized costs will be amortized using straight-line basis over two years, the estimated economic life of the completed website.

Note 3: Recent Accounting Pronouncements

In May 2014, the FASB and the International Accounting Standards Board ("IASB") jointly issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance. The objective of ASU 2014-09 is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As amended by the FASB in July 2015, ASU 2014-09 will be effective for annual periods beginning after December 15, 2017, and interim periods therein. An entity can elect to adopt ASU 2014-09 using one of two methods, either full retrospective adoption to each prior reporting period, or recognizing the cumulative effect of adoption at the date of initial application.  The Company is in the process of evaluating the new standard and does not know the effect, if any ASU 2014-09 will have on the Financial Statements or which adoption method will be used.

Note 4: Property and Equipment

Property and equipment consists of:

Depreciation expense incurred during the three and nine months ended September 30, 2015 was $589 and $1,847, respectively.  Depreciation expense incurred during the three and nine months ended September 30, 2014 was $454 and $1,312, respectively.

Note 5: Stock-Based Compensation

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

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

At September 30, 2015, 480,000 stock options were exercisable and $149,010 of total compensation cost related to vested share-based compensation grants had been recognized.  Unrecognized compensation expense from stock options was $166,251 at September 30, 2015, which is expected to be recognized over a weighted-average vesting period 1.352 years beginning October 1, 2015.

The following table summarizes our stock option activity for the nine months ended September 30, 2015:

MCORPCX, INC.

NOTES TO THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2015

As of September 30, 2015, the Company had 1,272,000 of outstanding stock options, representing stock option that previously vested and those which are expected to vest, with a weighted-average exercise price of $0.58.

The following assumptions were used to calculate weighted average fair values of the options granted in the nine months ended September 30, 2015 and 2014:

To the extent the actual forfeiture rate is different than what has been anticipated, share-based compensation expense related to these options will be different from expectations.

Note 6: Concentrations

The Company sells products and services under various terms to a broad range of companies across multiple industries ranging from start-ups to Fortune 500 companies, with sales concentrated among a few large clients. For the nine months ended September 30, 2015 and 2014, the percentage of sales and the concentrations are as follows:

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

Note 7: Capitalized Software Development Costs

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

Amortization of software development costs commenced when the product was available for general release to customers. The capitalized costs are amortized on a straight line basis over the three year expected useful life of the software. Capitalized software development costs, net of amortization, were $36,551 and $91,378 as of September 30, 2015 and December 31, 2014, respectively. Amortization expense incurred during the nine months ended September 30, 2015 and 2014 was $54,827 in both periods and is included in cost of goods sold.

Note 8: Intangible Assets

Intangibles as of September 30, 2015 consisted of the following:

Development of a new Company website began in September 2014; related costs incurred during the design and production stages of website development were capitalized prior to its go-live date, which occurred in March 2015.  Now that the website is live, all capitalized costs will be amortized using straight-line basis over two years, the estimated economic life of the completed website.

Amortization of identifiable intangible assets was $18,321 and $625 for the nine months ended September 30, 2015 and 2014, respectively.

The Company's intangible assets are reviewed for impairment when facts or circumstances suggest that the carrying value of the asset group containing these assets may not be recoverable.  There were no impairment charges during the nine months ending September 30, 2015 and 2014.

Note 9: Commitments and Contingencies

Leases

The Company leases two facilities in northern California under operating leases that expire in 2016.  Rent expense under operating leases was $8,895 and $26,505 for the three and nine months ended September 30, 2015, respectively.  Rent expense under operating leases was $6,183 and $18,447 for the three and nine months ended September 30, 2014, respectively.

As of September 30, 2015, estimated future payments under operating leases (including rent escalation clauses) for each of the next five years is as follows:

Purchase Obligations

The Company has entered into non-cancelable service contracts related to SaaS licenses which expire in the years ended December 31, 2016 and 2015. As of September 30, 2015 future payments under these contractual obligations were as follows:

Legal Matters

The Company has no known legal issues pending.

Note 10: Debt

On September 16, 2011, a $100,000 CAD note was executed with Brad Holland, a 1.95% shareholder. The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest on its amended maturity date of September 16, 2016.  Subsequent to this payment, the Company recorded unrealized gains of $10,386 and $10,391 during the nine months ended September 30, 2015 and 2014, respectively, related to the revaluation of this note's principal from CAD to USD.  Interest accrued on this note as of September 30, 2015 was $3,397.

On September 7, 2011, a $50,000 USD note was executed with McLellan Investment Corporation, an unrelated party. The note is structured to incur a balloon payment of the principal and 4% APR non-compounding accrued interest on its amended maturity date of September 7, 2016. Interest accrued on this note as of September 30, 2015 was $2,083.

Note 11 – Shareholders Equity

On May 27, 2015, the Company issued 685,000 shares of common stock at a price of US$0.75 per share for total gross proceeds of $513,750.  The proceeds from the issuance will be used for general corporate purposes.

Note 12: Interest Expense

Interest expense consists of interest on the Company's debt, short-term promissory note, and credit card balances.  Interest expense was $3,972 and $11,167 for the three and nine months ended September 30, 2015, respectively.  Interest expense was $2,794 and $9,187 for the three and nine months ended September 30, 2014, respectively.

Note 13: Income Taxes

No provision for income taxes at this time is being made due to the offset of cumulative net operating losses.  A full valuation allowance has been established for deferred tax assets based on a "more likely than not" threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carry forward periods provided in the tax law. While the Company's statutory tax rate can range from 15% - 39% depending on taxable income level, the effective tax rate is 0% due to the effects of the valuation allowance described above. The Company does not have any material uncertainties with respect to its provisions for income taxes.

Note 14: Net Income per Share

Net income per share was computed by dividing the net income by the weighted average number of common shares outstanding during the period.  The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding.  The effects of certain stock options and warrants are excluded from the determination of the weighted average common shares outstanding for diluted income per share in each of the periods presented as the effects were anti-dilutive or the exercise price for the outstanding options exceeded the average market price for the Company's common stock.  Accordingly, net income per share basic and diluted is equal in all periods presented.

The computations for basic and diluted net income (loss) per share are as follows:

Note 15: Going Concern

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

For the nine months ended September 30, 2015, the Company had a net loss of $649,893.  In addition, the Company had a net income of $3,123 for the year ended December 31, 2014. These circumstances result in substantial doubt as to the Company's ability to continue as a going concern.  The Company's ability to continue as a going concern is dependent upon the Company's ability to continue to generate sufficient revenues to operate profitably, or raise additional capital through debt financing and/or through sales of common stock.

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

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement

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

Overview

We are a customer experience (CX) management solutions company providing Touchpoint Mapping^®, an on-demand ("cloud based") suite of customer experience software, as well as professional and related services designed to help organizations improve customer experiences, increase customer loyalty, reduce costs and increase revenue.

We believe that delivering better customer experiences is a powerful, sustainable way for any organization to differentiate from their competition.  We are engaged in the business of developing and delivering technology-enabled products and professional services that help large, medium and small organizations to do this by improving their customer listening and customer experience management capabilities.

Our product, Touchpoint Mapping^® On-Demand, is a research-based software solution designed to be a comprehensive customer experience solution for customer-centric organizations to measure and gather customer data across all their touchpoints, channels and interactions with their customers. It enables an organization's personnel to leverage a common application to see where and how to improve brand and customer loyalty, and their customers' experiences across multiple channels and touchpoints, including web, sales, marketing, contact center, social, mobile, physical locations and others.

Our value-added and professional services helps primarily large and medium organizations plan, design and deliver better customer experiences and organize to do so, in addition to analysis and review of client data gathered through our application. Other services include customer experience training, strategy consulting and business process optimization, and are directed toward increasing our customers' adoption of our products and services, helping maximize their return on investment, and improving our customers' efficiency.

Development of our software is ongoing, as Touchpoint Mapping^® On-Demand is refined and improved based on customer feedback, and as it is customized for specific organizations and industry sectors. The services delivered with Touchpoint Mapping^® On-Demand may include consulting and additional research services, as well as services such as assessment, integration, implementation and additional offline analysis and reporting of data. Customer experience consulting and professional services are offered primarily through our consulting services group.

Though we released Touchpoint Mapping^® On-Demand in 2013, we cannot predict the timing or probability of generating material sales revenue from it.  As of this filing, we have yet to engage the necessary sales and marketing staff or the capabilities required to identify, develop, and close material product sales opportunities, and currently lack sufficient resources to market and sell our products in the manner which we believe is required to achieve our product sales and revenue growth objectives.

Sources of Revenue

Our revenue consisted primarily of professional and software-enabled consulting services, product sales and other revenues in 2015 and 2014. Consulting services include customer experience management consulting in the areas of strategy development, planning, education, training and program design, and includes the articulation of customer-centric strategies and implementation roadmaps in support of these strategies. Product revenue is from productized and software-enabled service sales not elsewhere classified, while other revenue includes reimbursement of related travel costs and out-of-pocket expenses.

While our plan of operations is based on migrating the majority of our service revenue from these categories to recurring SaaS subscription fees, we anticipate that fees for professional and software-enabled consulting services will remain a significant revenue source in the near future. As of September 30, 2015, we have successfully delivered certain features and functionality of our software product, Touchpoint Mapping^® On-Demand, to several clients. However, we have not obtained material stand-alone sales commitments for Touchpoint Mapping^® On-Demand, and do not anticipate being able to do so until we engage the necessary sales and marketing staff to develop and execute product sales opportunities.

Should we successfully obtain material sales commitments for Touchpoint Mapping^® On-Demand, 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 are based on our gross margin objectives, growth strategies and the specific needs of our clients' organizations, measured primarily by the following metrics: breadth of insights sought, number of employees, number of customers and customer segments, frequency of insights gathered, and other variables.

Subscription agreements for our software solutions are 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 include consulting fees related to implementation, customization, configuration, training and other value added services.

Based on data gathered during the implementation stage of on-demand software and software-enabled services engagements, we believe that 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 typically invoice clients upon inception of 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 are 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 are 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:

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 materials and travel expenses related to providing professional services to our clients.  As certain features of Touchpoint Mapping^® On-Demand were made available for general release in 2014, costs of goods also included product-related hosting and monitoring costs, licenses for products embedded in the application, amortization of capitalized software development costs, related sales commissions, service support, account management and subscriptions, as applicable.

Should our client base grow, we intend to continue to invest additional resources in our hosting, technical support and professional services capabilities, 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 of goods sold as a percentage of revenue is higher for professional services revenue than for software product sales revenue, a decrease in professional services as a percentage of total revenue will likely increase gross profit as a percentage of total revenue.

General and Administrative Expenses

General and administrative expenses consist primarily of salary and related expenses for management, client delivery, finance and accounting, and sales personnel. Expenses also include contract services, marketing and promotion, professional fees, software license fee expenses, administrative costs, insurance, rent and a portion of travel expenses and other overhead.

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

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

Results of Operations

Revenues decreased for the three and nine months ended September 30, 2015 as compared to the three and nine months ended September 30, 2014, due to decreased sales of our consulting services.

Cost of goods sold decreased for the three months ended September 30, 2015 as compared to the same period in 2014 based on the following:

·	A decrease of approximately $127,000 in professional fees, including contract labor, marketing & promotion, and research vendors.

·	A decrease of $27,000 in reimbursable expenses such as lodging, meals and entertainment and transportation.

·	Decreases were offset by an increase of approximately $2,000 in other professional fee costs and $12,000 in other miscellaneous increases.

Cost of goods sold decreased slightly for the nine months ended September 30, 2015 as compared to the same period in 2014 based on the following:

·	A decrease of $65,000 in reimbursable expenses such as lodging, meals and entertainment and transportation.

·	A decrease of approximately $15,000 in professional fees, including contract labor, marketing & promotion, and research vendors.

·	Decreases were offset by increases in a few areas including:

·	An increase of $43,000 in reimbursable project expenses.

·	An increase of approximately $18,000 in other professional fee costs.

·	An increase of approximately $8,000 in other miscellaneous increases.

Salaries and wages decreased for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014, due to a reduction in staff salaries and related benefits of approximately $72,000 and a decrease in commissions of $14,000, offset by increases in officer salaries of $66,000 due to new officer hire and stock based compensation expense of $15,000.

Salaries and wages decreased for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, due to a reduction in staff salaries and related benefits of approximately $159,000 and commissions of $7,000, offset by increases in officer salaries of $92,000 and stock based compensation expense of $21,000.

Contract services remained relatively consistent for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014, due to increases in business development of $9,000, corporate and investor relations of $5,000 and marketing of $5,000. These increases were offset by decreases in contract accounting and administration costs of $19,000.

Contract services increased for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, due to increases in business development of $21,000, corporate and investor relations of $59,000, marketing of $15,000 and product development of $7,000.  These increases were offset by decreases in contract accounting and administration costs of $18,000.

Other general and administrative costs increased for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014 due to increased expenses in all of the following categories: administration, professional fees, sales, marketing and promotion, and travel, meals and entertainment.

Other general and administrative costs increased for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 due to increased expenses in all of the following categories: administration, computer and software, professional fees, and sales, marketing and promotion, and travel, meals and entertainment.

Other income (expense) decreased for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014 due to decreases in net unrealized gains of $6,000 associated with the revaluation of a promissory note from CAD to USD.

Other income (expense) decreased for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 due to an increase in realized losses of approximately $1,000 associated with the revaluation of a promissory note from CAD to USD.

Liquidity and Capital Resources

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

For the nine months ended September 30, 2015 and the year ended December 31, 2014, we were able to finance our operations, including capital expenditures for infrastructure, product development and marketing activities through operating activities and cash on hand, in addition to the proceeds received from our private placement of common stock.  The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As reflected in the financial statements included in this report, for the nine months ended September 30, 2015 we had a net loss of $649,893, and a net income of $3,123 for the year ended December 31, 2014.

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

Anticipated Uses of Cash

In 2014, our primary areas of investment were professional staff to support our services business, as well as staff to support SaaS product delivery and client relationship management. We also invested in product development and sales and marketing activities, including sales and staff, marketing and sales automation software and other related services.

In 2015, our primary areas of investment are expected to continue to be professional staff to support our services business, as well as staff to support SaaS product delivery and manage client relationships. We also anticipate investments in product development and sales and marketing activities, including building our sales and marketing staff, marketing and advertising services, and other related activities.  A secondary area of investment may include the hiring of business development staff to support the development of our indirect distribution channels.

We currently plan to fund these planned expenditures with cash flows generated from ongoing operations during this period and/or additional capital raised through debt financing and/or through sales of common stock. We will consider raising capital through debt financing and/or additional sales of common stock if necessary.  We do not intend to pay dividends in the foreseeable future.

Cash Flow – Nine Months Ended September 30, 2015 and 2014

Operating Activities. Net cash (used in) provided by operating activities decreased by $491,248 (or >100%), to ($512,891) for the nine months ended September 30, 2015 compared to ($21,643) for the nine months ended September 30, 2014. The decrease in cash provided by operating activities was attributable primarily to a $702,843 reduction in net income, partially offset by increases to net working capital of $117,165 and increases to other adjustments of $94,430.  The increase in net working capital was primarily due to an increase in accounts receivable of $117,218.

Days Sales Outstanding (DSO) remained relatively consistent with the same period in the prior year.  During the nine months ended September 30, 2015 was approximately 44 days, up slightly from approximately 39 days during the nine months ended September 30, 2014.

Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2015 and 2014 amounted to $43,460 and $1,811, respectively, consisting of $40,863 in capitalized web development costs and $2,597 of investments in equipment.

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2015 and 2014 amounted to $513,570 and $0, respectively.  During the nine months ended September 30, 2015, we received $513,750 as the result of our private placement of common stock.

Off Balance Sheet Arrangements

We did not have any off balance sheet arrangements as of September 30, 2015.

Contractual Obligations

We lease two facilities in northern California from Four Kays, under operating leases both expected to expire in 2016. We do not have any debt capital lease obligations. As of September 30, 2015, the following table summarizes our contractual obligation under the foregoing lease agreements and the effect such obligations are expected to have on our liquidity and cash flow in future periods:

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

(b)	Purchase obligations primarily represent non-cancelable contractual obligations related to SaaS licenses.

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

Our management, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of  September 30, 2015, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) accumulated and communicated to our management, including our principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report has been signed on its behalf by the undersigned, thereunto duly authorized on this 9^th day of November, 2015.

EXHIBIT INDEX