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EX-32.1 - VGTel, Inc. | ex32_1.htm |
EX-31.1 - VGTel, Inc. | ex31_1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10Q
FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 2009 (Mark One)
þ
|
QUARTERLY
REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30,
2009 OR
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from to
New
York
|
4814
|
01-0671426
|
State
or Other Jurisdiction of Incorporation
of
Organization
|
Primary
Standard
Industrial
Code
|
(I.R.S.
Employer Identification No.)
|
(Name of
Small Business Issuer in its Charter)
VGTel,
Inc.
Ron
Kallus, CEO
2 Ingrid
Road
Setauket,
NY 11733-2218
Tel:
631-458-1120
Address,
including zip code, and telephone number, including area code, of registrant's
principal executive office)
Indicate
by check mark whether the registrant (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 past 90
days. Yes x
No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. (Check one):
Accelerated
filer
¨
|
|
Non-accelerated
filer
¨
|
Smaller
reporting company
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
x No ¨
Transitional
Small Business Disclosure Format (check one): Yes ¨ No x
Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No x
As of
July 20, 2009, 6,434,000 shares of common stock were
outstanding.
Transitional
Small Business Disclosure Format (check
one): Yes No x
VGTEL,
INC.
|
(A
DEVELOPMENT STAGE COMPANY)
|
FINANCIAL
STATEMENTS
|
SEPTEMBER
30, 2009
(unaudited)
|
TABLE
OF CONTENTS
PART
I FINANCIAL INFORMATION
|
|||
Item
|
1
|
Financial
Statements
|
2
|
Balance
Sheets
|
2
|
||
Statements
of Operations
|
3
|
||
Statements
of Changes in Stockholder’s Equity (Deficit)
|
4
|
||
|
Statement
of Cash Flows
|
5
|
|
Notes
to Financial Statements
|
6
|
||
Item
|
2
|
Management
Discussion & Analysis
|
15
|
Item
|
3
|
Financial
Controls & Procedures
|
16
|
PART
II OTHER INFORMATION
|
|||
Item
|
1
|
Legal
Proceedings
|
16
|
Item | 1A | Risks | 16 |
Item
|
2
|
Changes
in Securities
|
17
|
Item
|
3
|
Default
Upon Senior Securities
|
17
|
Item
|
4
|
Submission
of Matters to a Vote of Securities Holders
|
17
|
Item
|
5
|
Other
Information
|
17
|
Item
|
6
|
Exhibits
And Reports on Form 8K
|
17
|
Item: 1. Financial
Statements
1
PART
1
FINANCIAL
INFORMATION
ITEM 1:
FINANCIAL STATEMENTS
The
financial statements of VGTel, Inc. (the “Company”, "we", "our", "us"), included
herein were prepared, without audit, pursuant to rules and regulations of the
Securities and Exchange Commission. Because certain information and notes
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America were condensed or
omitted pursuant to such rules and regulations, these financial statements
should be read in conjunction with the financial statements and notes thereto
included in the audited financial statements of the Company as included in the
Company’s Form 10-K for the period ended March 31, 2009.
VGTel,
Inc.
(A
Development Stage Company)
Balance
Sheets
September
30,
|
March
31,
|
|||||||
ASSETS
|
2009
|
2009
|
||||||
(unaudited)
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 955 | $ | 3,063 | ||||
Accounts
receivable (Note 6)
|
1,600 | 900 | ||||||
Total
Current Assets
|
2,555 | 3,963 | ||||||
Intellectual
property, net (Note 4)
|
7,250 | 10,150 | ||||||
Total
Assets
|
$ | 9,805 | $ | 14,113 | ||||
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable (Note 7)
|
$ | 1,430 | $ | 500 | ||||
Due
to shareholders/others (Note 8)
|
16,730 | 12,730 | ||||||
Due
to shareholder/officer (Note 9)
|
31,323 | 31,323 | ||||||
Total
Current Liabilities
|
49,483 | 44,553 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
DEFICIT
|
||||||||
Preferred
stock, $.001 par value,
|
||||||||
authorized
10,000,000 shares; none issued
|
- | - | ||||||
Common
stock, $.0001 par value,
|
||||||||
authorized
200,000,000 shares; issued and
|
||||||||
outstanding
6,433,900 and 6,433,900, respectively
|
643 | 643 | ||||||
Additional
paid in capital
|
339,383 | 310,719 | ||||||
Accumulated
deficit
|
(379,704 | ) | (341,802 | ) | ||||
Total
Stockholders' Deficit
|
(39,678 | ) | (30,440 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 9,805 | $ | 14,113 |
The
accompanying notes are an integral part of these financial
statements.
2
VGTel,
Inc.
(A
Development Stage Company)
Statements
of Operations
(unaudited)
For
the
|
||||||||||
Period
|
||||||||||
July
27, 2004
|
||||||||||
For
the Three
|
For
the Six
|
(inception)
|
||||||||
Months
Ended
|
Months
Ended
|
through
|
||||||||
September
30,
|
September
30,
|
September
30,
|
||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
||||||
REVENUES
|
$
|
4,800
|
$
|
5,651
|
$
|
7,900
|
$
|
9,364
|
$
|
75,343
|
OPERATING
EXPENSES
|
||||||||||
General
and administrative
|
1,627
|
4,365
|
6,698
|
38,504
|
107,757
|
|||||
Research
and development
|
4,110
|
4,500
|
7,540
|
4,500
|
95,100
|
|||||
Officers'
compensation and Rent
|
14,000
|
14,000
|
28,000
|
28,000
|
211,000
|
|||||
Depreciation
and amortization
|
1,450
|
1,450
|
2,900
|
2,900
|
21,985
|
|||||
Professional
Services- Consulting
|
-
|
-
|
-
|
-
|
16,850
|
|||||
Total
operating expenses
|
21,187
|
24,315
|
45,138
|
73,904
|
452,692
|
|||||
Interest
expense
|
336
|
-
|
664
|
-
|
1,676
|
|||||
NET
LOSS FROM CONTINUING OPERATIONS
|
(16,723)
|
(18,664)
|
(37,902)
|
(64,540)
|
(379,025)
|
|||||
DISCONTINUED
OPERATIONS
|
||||||||||
Loss
from discontinued operations
|
-
|
-
|
-
|
-
|
(679)
|
|||||
NET
LOSS
|
$
|
(16,723)
|
$
|
(18,664)
|
$
|
(37,902)
|
$
|
(64,540)
|
$
|
(379,704)
|
INCOME
(LOSS) PER COMMON SHARE-
|
||||||||||
Basic
and Diluted
|
$
|
(0.00)
|
$
|
(0.00)
|
$
|
(0.01)
|
$
|
(0.01)
|
||
Weighted
average number of shares outstanding
|
6,434,000
|
6,434,000
|
6,434,000
|
5,925,049
|
The
accompanying notes are an integral part of these financial
statements.
3
VGTel,
Inc.
(A
Development Stage Company)
Statements
of Changes in Stockholder’s Equity (Deficit)
For the
period July 27, 2004 (Inception) to September 30, 2009 (unaudited)
Common
Stock
|
Paid-in
|
Accumulated
|
||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||
Balances,
July 27, 2004
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Intellectual
property contributed by officers
|
-
|
-
|
66,500
|
-
|
66,500
|
|||||
Issuance
of shares to incorporators and others
|
4,000,000
|
400
|
(400)
|
-
|
-
|
|||||
Units
sold February 2006
|
400,000
|
40
|
9,960
|
-
|
10,000
|
|||||
Officers' compensation
charged
|
-
|
-
|
15,000
|
-
|
15,000
|
|||||
Net
loss
|
-
|
-
|
-
|
(56,426)
|
(56,426)
|
|||||
Balances,
March 31, 2006
|
4,400,000
|
440
|
91,060
|
(56,426)
|
35,074
|
|||||
Issuance
of shares for services rendered May 2006
|
400,000
|
40
|
9,960
|
-
|
10,000
|
|||||
Officers' compensation
& rent charged
|
-
|
-
|
56,000
|
-
|
56,000
|
|||||
Net
loss
|
-
|
-
|
-
|
(99,595)
|
(99,595)
|
|||||
Balances,
March 31, 2007
|
4,800,000
|
480
|
157,020
|
(156,021)
|
1,479
|
|||||
Officers' compensation
& rent charged March 31, 2008
|
-
|
-
|
56,000
|
-
|
56,000
|
|||||
Net
loss
|
-
|
-
|
-
|
(85,521)
|
(85,521)
|
|||||
Balances,
March 31, 2008
|
4,800,000
|
480
|
213,020
|
(241,542)
|
(28,042)
|
|||||
Officers' compensation
& rent charged March 31, 2009
|
-
|
-
|
56,000
|
-
|
56,000
|
|||||
Units
sold May 2008
|
960,000
|
96
|
23,904
|
-
|
24,000
|
|||||
Issuance
of shares for services rendered May 2008
|
674,000
|
67
|
16,783
|
-
|
16,850
|
|||||
Imputed
interest for due to Ron Kallus
|
-
|
-
|
1,012
|
-
|
1,012
|
|||||
Net
loss
|
-
|
-
|
-
|
(100,260)
|
(100,260)
|
|||||
Balances,
March 31, 2009
|
6,434,000
|
643
|
310,719
|
(341,802)
|
(30,440)
|
|||||
Officers'
compensation & rent charged September 30, 2009
|
-
|
-
|
28,000
|
-
|
28,000
|
|||||
Imputed
interest for due to Ron Kallus
|
-
|
-
|
664
|
-
|
664
|
|||||
Net
loss
|
-
|
-
|
-
|
(37,902)
|
(37,902)
|
|||||
Balances,
September 30, 2009 (unaudited)
|
6,434,000
|
$
|
643
|
$
|
339,383
|
$
|
(379,704)
|
$
|
(39,678)
|
The
accompanying notes are an integral part of these financial
statements.
4
VGTel,
Inc.
(A
Development Stage Company)
Statements
of Cash Flows
(unaudited)
For
the
|
||||||
Period
|
||||||
July
27, 2004
|
||||||
For
the Six
|
(inception)
|
|||||
Months
Ended
|
through
|
|||||
September
30,
|
September
30,
|
|||||
2009
|
2008
|
2009
|
||||
Cash
flows from operating activities
|
||||||
Net
Loss
|
$
|
(37,902)
|
$
|
(64,540)
|
$
|
(379,704)
|
Adjustments
to reconcile net loss to net
|
||||||
cash
used by operating activities:
|
||||||
Officer's
compensation and rent
|
28,000
|
28,000
|
211,000
|
|||
Intellectual
property write down
|
-
|
-
|
66,500
|
|||
Depreciation
and amortization
|
2,900
|
2,900
|
21,750
|
|||
Imputed
interest for due to Ron Kallus
|
664
|
-
|
1,676
|
|||
Issuance
for common stock for services rendered
|
-
|
16,850
|
26,850
|
|||
Changes
in assets and liabilities:
|
||||||
Accounts
receivable
|
(700)
|
(697)
|
(1,600)
|
|||
Accounts
payable
|
930
|
(14,966)
|
1,430
|
|||
Net
cash used by operating activities
|
(6,108)
|
(32,453)
|
(52,098)
|
|||
Cash
flows from investing activities
|
||||||
Purchase
of intellectual properties
|
-
|
-
|
(29,000)
|
|||
Net
cash used by investing activities
|
-
|
-
|
(29,000)
|
|||
Cash
flows from financing activities
|
||||||
Sale
of units
|
-
|
24,000
|
34,000
|
|||
Proceeds
from related shareholders
|
4,000
|
-
|
16,730
|
|||
Repayments
from related shareholders
|
-
|
(19,060)
|
-
|
|||
Officer
loans
|
-
|
24,742
|
31,323
|
|||
Net
cash provided by financing activities
|
4,000
|
29,682
|
82,053
|
|||
Net
increase (decrease ) in cash
|
(2,108)
|
(2,771)
|
955
|
|||
Cash
and cash equivalents, beginning of period
|
3,063
|
5,125
|
-
|
|||
Cash
and cash equivalents, end of period
|
$
|
955
|
$
|
2,354
|
$
|
955
|
Supplemental
disclosures:
|
||||||
Noncash
investing and financing activities:
|
||||||
Issuance
of common stock in exchange for intellectual property
|
$
|
-
|
$
|
-
|
$
|
66,500
|
Officer's
compensation and rent credited to additional paid in
capital
|
$
|
14,000
|
$
|
14,000
|
$
|
211,000
|
Issuance
of common stock for services rendered
|
$
|
-
|
$
|
16,850
|
$
|
26,850
|
The
accompanying notes are an integral part of these financial
statements.
5
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
1 – GENERAL ORGANIZATION AND BUSINESS
VGTel
Inc. (formerly known as Tribeka-Tek Inc.) (The “Company) was organized on
February 5, 2002 in the State of New York. Tribeka-Tek Inc. was engaged in the
business of providing Edgarizing services for publicly traded companies filing
through the Edgar system. On January 18, 2006 the Company purchased from NYN
International LLC its intellectual property assets pertaining to the GMG System,
a telemarketing campaigning product. Tribeka Tek, Inc. was a
minimally operating corporation with nominal assets. Pursuant to the terms of
the Acquisition Agreement, the Company issued to NYN shareholders and designees
2,760,000 newly issued shares of VGTel Inc. (formerly Tribeka Tek, Inc). At the
time of the acquisition, the 2,760,000 shares represented approximately 70% of
the outstanding shares of the Company, which resulted in the stockholders of NYN
obtaining control of the Company.
The
merger has been accounted for as a reverse acquisition using the purchase method
of accounting. NYN International, Inc. has been treated as the acquiring company
for accounting purposes under the Business Combinations Standard Codified
within ASC 805. As a result of the reverse acquisition, the statements of
operations presented herein include the results of NYN International for the
years ended March 31, 2006-2008, and include the results of Tribeka Tek for the
period from date of acquisition (January 18, 2006 ) to March 31, 2006. Although
NYN International was formed in July of 2004 there was no activity prior to
April 2005, thus the results for the fiscal periods reflect results from
inception.
Because
NYN International LLC is treated as the acquirer for accounting purposes, the
equity accounts are adjusted for the share exchange and carried forward. Prior
accumulated deficits of NYN International LLC are adjusted to additional paid in
capital therefore carrying forward the accumulated deficit or earnings of NYN
International LLC. As these are the first periods with activity there was
no beginning accumulated deficit or earnings, and ending retained deficit
reflects the retained deficit for the current period.
The
common stock per share information in the consolidated financial statements and
related notes have been retroactively adjusted to give effect to the reverse
acquisition on January 18, 2006 for all periods presented.
On
January 18, 2006 the Company changed its name to VGTel Inc. As of the periods
stated the Company had generated minimal revenues and is considered a
development stage company. As of February 2006 the Company has
ceased its Edgarizing operations and is concentrating its efforts in the
development of its intellectual properties. As a result of the
acquistion of the GMG System, the company is now operating in the telemarketing
sector of the telecommunications industry.
NOTE
2 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company has no established
source of revenue. This raises substantial doubt about the Company’s
ability to continue as a going concern. Without realization of
additional capital, it would be unlikely for the Company to continue as a going
concern. The financial statements do not include any adjustments that
might result from this uncertainty.
The
Company’s activities to date have been supported by equity
financing. It has sustained loss of $379,704 from inception July
27, 2004 to September 30, 2009. Management plans to
seek funding from its shareholders and other qualified investors to
pursue its business plan. In the alternative, the Company may be
amenable to a sale, merger or other acquisition in the event such
transaction is deemed by management to be in the best interests of the
shareholders.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation:
The
interim financial statements are unaudited but, in the opinion of management,
reflect all adjustments necessary for a fair statement of the Company's
financial position, results of operations and cash flows for the periods
presented. These adjustments consist of normal, recurring items. The results of
operations for any interim period are not necessarily indicative of results for
the full year. The interim financial statements and notes are presented as
permitted by the requirements for Quarterly Reports on Form
10-Q. This Quarterly Report on Form 10-Q should be read in
conjunction with the Company's financial statements and notes included in its
March 31, 2009 Annual Report on form 10-K.
The Company has evaluated subsequent events through the date that
the financial statements were issued, which was November 10, 2009, the date of
the Company's Quarterly Report on Form 10 for the period ended September 30,
2009.
6
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting
Basis
These
financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
Fiscal
Year
The
Company has chosen March 31, as its fiscal year end.
Cash and Cash
Equivalents
For the
purpose of the statements of cash flows, cash equivalents include all highly
liquid investments with maturity of three months or less.
Property and Equipment
Depreciation
and amortization are recognized principally on the straight line method in
amounts adequate to amortize costs over the estimated useful lives of the
respective assets. The estimated useful life of equipment is five
years.
Stock Based
Compensation
Companies
are required to measure the compensation costs of share-based compensation
arrangements based on the grant-date fair value and recognize the costs in the
financial statements over the period during which employees are required to
provide services. Share-based compensation arrangements include stock options,
restricted share plans, performance-based awards, share appreciation rights and
employee share purchase plans. In March 2005 the SEC issued a statement which
expresses views of the staff regarding the interaction between the Standard
for Shared Based Payment and certain SEC rules and regulations and
provides the staff’s views regarding the valuation of share-based payment
arrangements for public companies. The Revised Standard permits
public companies to adopt its requirements using one of two
methods.
According
to the standards, Companies may elect to apply this statement either
prospectively, or on a modified version of retrospective application under which
financial statements for prior periods are adjusted on a basis consistent with
the pro forma disclosures required for those periods. Effective
January 1, 2006, the Company has fully adopted the provisions where
compensation cost is measured on the date of grant at their fair value. Such
compensation amounts, if any, are amortized over the respective vesting periods
of the option grant. The Company applies this statement
prospectively.
Dividends
The
Company has not adopted any policy regarding payment of dividends. No dividends
have been paid during the periods shown.
Income
Taxes
The
Company provides for income taxes under the standard "Accounting for Income
Taxes", codified within ASC 740 and requires the use of an asset and liability
approach in accounting for income taxes.
The
standard requires the reduction of deferred tax assets by a valuation allowance
if, based on the weight of available evidence, it is more likely than not that
some or all of the deferred tax assets will not be realized. No
provision for income taxes is included in the financials statements due to its
immaterial amount.
7
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Net Income (Loss) per Common
Share
Net
income (loss) per common share is computed based on the weighted average number
of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive
securities.
Revenue and Cost
Recognition
The
Company recognizes revenue on arrangements when the price is fixed or
determinable, persuasive evidence of an arrangement exists, the service is
performed and collectibles is reasonably assured. The Company
will recognize revenues from the sale of its tutorial CD’s and for its tutorial
course memberships after the sale has been made, payment has been received and
the CD or access to the learning infrastructure has been delivered to the
buyer.
Intellectual
Properties
The
Company developed the intellectual properties known as Group Messaging
Gateway. As of December 31, 2007 total costs associated with
the development of the GMG System was $95,500. It has been
determined that of this amount $29,000 had been incurred after technological
feasibility has been reached. All costs prior to technological feasibility have
been expensed. All post development costs have been expensed in the
periods incurred. The asset valued at $29,000 is being amortized over a
sixty-month period.
The
costs, which were incurred by the Company in the development of the program,
were segregated between pre technological feasibility costs and post
technological feasibility costs. It is estimated that the useful life of this
asset should approximate five years. Once technological feasibility has
been established, all software production costs are capitalized and reported at
the lower of unamortized cost or net realizable value. When the product is
available for general use amortization begins and all further maintenance costs
are expensed.
Impairment of Long-Lived
Assets
In
accordance with the standard, "Accounting for the Impairment or Disposal of
Long-Lived Assets", codified within ASC 360, the Company periodically
reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. The Company recognizes an impairment loss when the sum of expected
undiscounted future cash flows is less than the carrying amount of the asset.
The amount of impairment is measured as the difference between the asset's
estimated fair value and its book value. The Company did not record any
impairment charges during the years ended March 31, 2009 and 2008.
Fair Value of Financial
Instruments
Financial
instruments are recorded at fair value in accordance with the standard for
"Fair Value Measurements codified within ASC 820", which defines fair values,
establishes a three level valuation hierarchy for disclosures of fair value
measurement and enhances disclosure requirements for fair value
measurements:
-
Level 1--inputs to the valuation methodology are quoted prices (unadjusted) for identical asset or liabilities in active markets.
-
Level 2--inputs to the valuation methodology include closing prices for similar assets and liabilities in active markets, and inputs that are observable for the assets and liabilities, either directly, for substantially the full term of the financial instruments.
-
Level 3--inputs to the valuation methodology are observable and significant to the fair value.
8
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting
Pronouncements
In
December 2007, the FASB issued and, in April 2009, amended a new
business combinations standard codified within ASC 805, which changed the
accounting for business acquisitions. Accounting for business combinations under
this standard requires the acquiring entity in a business combination to
recognize all (and only) the assets acquired and liabilities assumed in the
transaction and establishes the acquisition-date fair value as the measurement
objective for all assets acquired and liabilities assumed in a business
combination. Certain provisions of this standard impact the determination of
acquisition-date fair value of consideration paid in a business combination
(including contingent consideration); exclude transaction costs from acquisition
accounting; and change accounting practices for acquisition-related
restructuring costs, in-process research and development, indemnification
assets, and tax benefits. The Company adopted the standard for business
combinations and adjustments to an acquired entity’s deferred tax asset and
liability balances and it had no immediate impact on the Company’s financial
position or results of operations.
In
April 2009, the FASB issued an accounting standard which provides guidance
on (1) estimating the fair value of an asset or liability when the volume
and level of activity for the asset or liability have significantly declined and
(2) identifying transactions that are not orderly. The standard also
amended certain disclosure provisions for fair value measurements and
disclosures in ASC 820 to require, among other things, disclosures in interim
periods of the inputs and valuation techniques used to measure fair value as
well as disclosure of the hierarchy of the source of underlying fair value
information on a disaggregated basis by specific major category of investment.
This standard was effective prospectively beginning April 1, 2009. The
adoption of this standard did not have a material impact on the Company’s
results of operations or financial condition.
In
April 2009, the FASB issued an accounting standard which modifies the
requirements for recognizing other-than-temporarily impaired debt securities and
changes the existing impairment model for such securities. The standard also
requires additional disclosures for both annual and interim periods with respect
to both debt and equity securities. Under the standard, impairment of debt
securities will be considered other-than-temporary if an entity (1) intends
to sell the security, (2) more likely than not will be required to sell the
security before recovering its cost, or (3) does not expect to recover the
security’s entire amortized cost basis (even if the entity does not intend to
sell). The standard further indicates that, depending on which of the above
factor(s) causes the impairment to be considered other-than-temporary,
(1) the entire shortfall of the security’s fair value versus its amortized
cost basis or (2) only the credit loss portion would be recognized in
earnings while the remaining shortfall (if any) would be recorded in other
comprehensive income. The standard requires entities to initially apply its
provisions to previously other-than-temporarily impaired debt securities
existing as of the date of initial adoption by making a cumulative-effect
adjustment to the opening balance of retained earnings in the period of
adoption. The cumulative-effect adjustment potentially reclassifies the
noncredit portion of a previously other-than-temporarily impaired debt security
held as of the date of initial adoption from retained earnings to accumulate
other comprehensive income. The adoption of this standard did not have a
material impact on the Company’s results of operations or financial
condition.
In
April 2009, the FASB issued an accounting standard regarding interim
disclosures about fair value of financial instruments. The standard essentially
expands the disclosure about fair value of financial instruments that were
previously required only annually to also be required for interim period
reporting. In addition, the standard requires certain additional disclosures
regarding the methods and significant assumptions used to estimate the fair
value of financial instruments. The adoption of this standard did not have a
material impact on the Company’s results of operations or financial
condition.
In
May 2009, the FASB issued a new accounting standard regarding subsequent
events. This standard incorporates into authoritative accounting literature
certain guidance that already existed within generally accepted auditing
standards, with the requirements concerning recognition and disclosure of
subsequent events remaining essentially unchanged. This guidance addresses
events which occur after the balance sheet date but before the issuance of
financial statements. Under the new standard, as under previous practice, an
entity must record the effects of subsequent events that provide evidence about
conditions that existed at the balance sheet date and must disclose but not
record the effects of subsequent events which provide evidence about conditions
that did not exist at the balance sheet date. This standard added an additional
required disclosure relative to the date through which subsequent events have
been evaluated and whether that is the date on which the financial statements
were issued. For the Company,
this standard was effective beginning July 1, 2009.
In
June 2009, the FASB issued a new standard regarding the accounting for
transfers of financial assets amending the existing guidance on transfers of
financial assets to, among other things, eliminate the qualifying
special-purpose entity concept, include a new unit of account definition that
must be met for transfers of portions of financial assets to be eligible for
sale accounting, clarify and change the derecognition criteria for a transfer to
be accounted for as a sale, and require significant additional disclosure. The
standard is effective for new transfers of financial assets beginning
January 1, 2010. The adoption of this standard is not expected to have a
material impact on the Company’s results of operations or financial
condition.
In
June 2009, the FASB issued an accounting standard that revised the
consolidation guidance for variable-interest entities. The modifications include
the elimination of the exemption for qualifying special purpose entities, a new
approach for determining who should consolidate a variable-interest entity, and
changes to when it is necessary to reassess who should consolidate a
variable-interest entity. The standard is effective January 1, 2010. The
Company is currently evaluating the impact of this standard, but would not
expect it to have a material impact on the Company’s results of operations or
financial condition.
In
June 2009, the Financial Accounting Standards Board (FASB) issued a
standard that established the FASB Accounting Standards Codification (ASC) and amended the
hierarchy of generally accepted accounting principles (ASC) and amended the
hierarchy of generally accepted accounting principles (GAAP) such that the ASC
became the single source of authoritative nongovernmental U.S. GAAP. The ASC did
not change current U.S. GAAP, but was intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place. All previously existing accounting standard
documents were superseded and all other accounting literature not included in
the ASC is considered non-authoritative. New accounting standards issued
subsequent to June 30, 2009 are communicated by the FASB through Accounting
Standards Updates (ASUs). The Company adopted the ASC on July 1, 2009. This
standard did not have an impact on the Company’s results of operations or
financial condition. However, throughout the notes to the financial statements
references that were previously made to various former authoritative U.S. GAAP
pronouncements have been changed to coincide with the appropriate section of the
ASC.
In
August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair
Value, which provides additional guidance on how companies should measure
liabilities at fair value under ASC 820. The ASU clarifies that the quoted price
for an identical liability should be used. However, if such information is not
available, a entity may use, the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted price for an identical liability traded as an asset may be
considered level 1 fair value. This ASU is effective October 1, 2009. The
Company is currently evaluating the impact of this standard, but would not
expect it to have a material impact on the Company’s results of operations or
financial condition.
In
September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC
820 to provide guidance on measuring the fair value of certain alternative
investments such as hedge funds, private equity funds and venture capital funds.
The ASU indicates that, under certain circumstance, the fair value of such
investments may be determined using net asset value (NAV) as a practical
expedient, unless it is probable the investment will be sold at something other
than NAV. In those situations, the practical expedient cannot be used and
disclosure of the remaining actions necessary to complete the sale is required.
The ASU also requires additional disclosures of the attributes of all
investments within the scope of the new guidance, regardless of whether an
entity used the practical expedient to measure the fair value of any of its
investments. This ASU is effective October 1, 2009. The Company is
currently evaluating the impact of this standard, but would not expect it to
have a material impact on the Company’s results of operations or financial
condition.
9
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New
Accounting Pronouncements
In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force, that
provides amendments to the criteria for separating consideration in
multiple-deliverable arrangements. As a result of these amendments,
multiple-deliverable revenue arrangements will be separated in more
circumstances than under existing U.S. GAAP. The ASU does this by establishing a
selling price hierarchy for determining the selling price of a deliverable. The
selling price used for each deliverable will be based on vendor-specific
objective evidence if available, third-party evidence if vendor-specific
objective evidence is not available, or estimated selling price if neither
vendor-specific objective evidence nor third-party evidence is available. A
vendor will be required to determine its best estimate of selling price in a
manner that is consistent with that used to determine the price to sell the
deliverable on a standalone basis. This ASU also eliminates the residual method
of allocation and will require that arrangement consideration be allocated at
the inception of the arrangement to all deliverables using the relative selling
price method, which allocates any discount in the overall arrangement
proportionally to each deliverable based on its relative selling price. Expanded
disclosures of qualitative and quantitative information regarding application of
the multiple-deliverable revenue arrangement guidance are also required under
the ASU. The ASU does not apply to arrangements for which industry specific
allocation and measurement guidance exists, such as long-term construction
contracts and software transactions. The ASU is effective beginning
January 1, 2011. The Company is currently evaluating the impact of this
standard on 3M’s consolidated results of operations and financial
condition.
In
October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That
Include Software Elements—a consensus of the FASB Emerging Issues Task
Force, that reduces the types of transactions that fall within the
current scope of software revenue recognition guidance. Existing software
revenue recognition guidance requires that its provisions be applied to an
entire arrangement when the sale of any products or services containing or
utilizing software when the software is considered more than incidental to the
product or service. As a result of the amendments included in ASU
No. 2009-14, many tangible products and services that rely on software will
be accounted for under the multiple-element arrangements revenue recognition
guidance rather than under the software revenue recognition guidance. Under the
ASU, the following components would be excluded from the scope of software
revenue recognition guidance: the tangible element of the product,
software products bundled with tangible products where the software components
and non-software components function together to deliver the product’s essential
functionality, and undelivered components that relate to software that is
essential to the tangible product’s functionality. The ASU also provides
guidance on how to allocate transaction consideration when an arrangement
contains both deliverables within the scope of software revenue guidance
(software deliverables) and deliverables not within the scope of that guidance
(non-software deliverables). The ASU is effective beginning January 1,
2011. The Company is currently evaluating the impact of this standard on the
Company’s consolidated results of operations and financial
condition.
NOTE
4 – INTANGIBLE ASSETS
Intangible
asset consists of the following:
September
30,
|
March
31,
|
|||
2009
|
2009
|
|||
GMG
System
|
$
|
29,000
|
$
|
29,000
|
Less:
Accumulated amortization
|
(21,750)
|
(18,850)
|
||
Total
|
$
|
7,250
|
$
|
10,150
|
Intangible
assets consist of GMG System which are recorded at cost during the development
stage and amortized over a straight-line basis. The amortization expenses are
$1,450 and $5,800 respectively for the six months ended September 30, 2009
and for the year ended March 31, 2009.
10
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
5 – OFFICERS’ COMPENSATION
The
officer has taken no actual compensation since inception. For financial
statement purposes on the Statement of Operations officer's compensation has
been charged in the amount of $12,500 in the current quarter ending September
30, 2009 and for the quarter ending September 30,
2008. Additional Paid in Capital has been credited for the
corresponding amount in each of the years, respectively.
NOTE
6 – ACCOUNTS RECEIVABLE
Accounts
receivable consists of the following:
September
30,
|
March
31,
|
|||
2009
|
2009
|
|||
Platin
Investment Ltd
|
$
|
1,600
|
$
|
900
|
NOTE
7 – ACCOUNTS PAYABLE
Accounts
payable consists of the following:
September
30,
|
March
31,
|
|||
2009
|
2009
|
|||
Vihar
(software development)
|
$
|
1,430
|
$
|
-
|
N
Blumentrucht
|
-
|
500
|
||
$
|
1,430
|
$
|
500
|
NOTE
8 – DUE TO SHAREHOLDER/OFFICER
Various
funds had been advanced by the Chief Executive Officer, Mr. Ron
Kallus to the Company. As of September 30, 2009 Mr.
Kallus has advanced an aggregate of $31,323. The Officer has forgiven
his right to the interest for the March 31, 2006 loan thus no interest
has been charged or accrued. An Addendum dated September 30, 2009
to the loan agreement extended the loan until March 31,
2011.
NOTE
9 – DUE TO SHAREHOLDERS/OTHERS
Yoav
Kallus, the son of Ron Kallus, the Company CEO, provided Research
& Development services to the Company for $6,250 during the period ended
March 31, 2006. As of September 30, 2009, no payment has
been made to Yoav Kallus, consequently said amount is being
accrued.
NYN
International provides hosting and internet services to the Company. Ron
Kallus, the CEO of the Company is also the president of NYN International
LLC. As of September 30, 2009, NYN International LLC is
owed $6,480.
On July
6, 2007, The Hyett Group, Ltd., a related shareholder loaned the company
$4,000. The loan has a term of 90 days and can be extended by mutual
consent of both parties. The loan is interest
free.
11
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
10 – ACCOUNTING FOR WARRANTS AND DERIVATIVE INSTRUMENTS
The
Company accounts for warrants and derivatives for "Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock,” codified within ASC815. The standard requires
freestanding contracts that are settled in a company's own stock to be
designated as an equity instrument, asset or a liability. In accordance
with the standard, "Accounting for Derivative Instruments and
Hedging Activities" codified within 815", the Company
determined that the warrants issued in connection with the Common Shares
sold to its shareholders should not be classified as a derivative liability due
to the fact that the Registration Rights Agreement specifically states that in
the event the SEC fails to declare the registration statement effective, the
Company has no liability to the warrant holders and has no obligation to pay any
penalties. Furthermore, the Company evaluated the Class A and Class B
Warrants and Class C Warrants to determine if the embedded conversion options
were derivatives pursuant to “Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock,” codified within
ASC815 . At the time the Warrants were issued, the Company determined
that the embedded conversion options are not derivatives because the company
stock was not publicly traded and the underlying shares were not easily
convertible to cash. The company therefore determined that the warrants had no
intrinsic value.
NOTE
11 – COMMITMENTS AND CONTINGENCIES
The
Company is occupying the premises of its President rent free. For
financial statement purposes the Statement of Operations -rent has been
charged for $1,500 for the Quarter ending September 30,
2009 and 2008, respectively. Additional paid in
capital has been credited for the corresponding amount.
The
company signed various contracts to build a Global Messaging Gateway (GMG) and
for hosting its servers. This is a web-hosted application, which provides
message-broadcasting facility, for business to business, personal,
telemarketing, alerting and many more applications.
The
company has an obligation to repay the loan to Mr. Kallus pursuant to the
Officer's loan agreement. As of September 30, 2009 Mr. Kallus
advanced an aggregate of $31,323. The Officer has forgiven his right
to the interest for the March 31, 2006 loan thus no interest has been
charged or accrued. An Addendum dated September 30, 2009 to the loan
agreement extended the loan until March 31, 2011.
NYN
International LLC provides hosting and internet services to the Company and
bills the Company for $2,160 for each quarter. Ron Kallus is the
principal of NYN International LLC. The due to related
shareholders includes the sum of $6,480 owed for hosting and internet services
provided by NYN International LLC.
In
addition the Company is providing its services to a telemarketing company in
Israel that is distributing the services to telemarketing clients in
Israel. The services are being provided to Platin, which is a related
party to the Company.
Legal
Proceedings
There are
no material legal proceedings to which the Company is a party to or which any of
their property is subject.
NOTE
12 – STOCKHOLDERS' DEFICIT
NYN
International, LLC (the accounting acquiror) was organized as a
Limited Liability Company in the State of Texas. No shares were issued to
its founders.
Tribeka
Tek, Inc, (the legal acquiror) was organized in the State of New York
on February 5, 2002. Tribeka Tek, Inc. authorized 1500 common shares
par value $1.00. In February 2002 Tribeka Tek, Inc. issued 1500
common shares par value $1.00 to its founders. On June 29, 2005 Tribeka Tek
board of directors voted to increase the common Shares authorized from 1500
to 200,000,000 and decrease the par value from $1.00 to $0.0001. On
January 18, 2006 the Company authorized a forward split of 826.67 for
each share outstanding, bringing the total issued and outstanding shares
from 1,500 to 1,240,000. On January 18, 2006 the Company issued
2,760,000 restricted common shares par value $0.0001 per share to
shareholders of NYN International LLC in exchange for the rights to its
intellectual properties, bringing the total shares issued and outstanding to
4,000,000.
12
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
12 – STOCKHOLDERS' DEFICIT (continued)
In
February 2006 the Company offered 800,000 Series A Units at $.025 per Unit to
accredited and non-accredited investors in a private placement offering pursuant
to Regulation D 506. Each Series A Units consists of (i) 1 share of the
Company's common stock, $.0001 par value ("Common Stock") and (ii) 1 Series A
(iii) 1 Series B (iv) 1 Series C (v) and 1 Series D Common Stock Purchase
Warrants ("Warrant Series") to purchase shares of the Company's Common Stock,
$.0001 par value. Each Series A, B, C, D Warrants are exercisable at $0.25 per
Warrant. Each Warrant entitles the holder upon exercise, to receive one share of
common stock underlying each Warrant. Warrants are exercisable at intervals as
follows:
(ii) 1
Series A warrants exercisable at the "Initial Exercise Date" beginning 90 days
following effectiveness of Registration Statement and expiring on the 2nd
anniversary from the effective date.
(iii) 1
Series B warrants exercisable at the "Initial Exercise Date" beginning 120 days
following effectiveness of Registration Statement and expiring on the 2nd
anniversary from the effective date.
(iv) 1
Series C warrants exercisable at the "Initial Exercise Date" beginning 150 days
following effectiveness of Registration Statement and expiring on the 2nd
anniversary from the effective date.
(v) 1
Series D warrants exercisable at the "Initial Exercise Date" beginning 180 days
following effectiveness of Registration Statement and expiring on 2nd
anniversary from the effective date.
In
February and March 2006, 400,000 units consisting of 400,000 shares of common
stock and four series of common stock purchase warrants were sold for total
consideration of $10,000.
In May
of 2006, 400,000 shares of common stock and four series of common
stock purchase warrants were issued for research & development
services rendered.
Additional
paid in capital has been credited $56,000 and $15,000 in the periods ended March
31, 2008 and 2007 respectively for officer's compensation and
rent.
On May
28, 2008 the Registrant sold in a private placement transaction an
aggregate $24,000 of Series A Units of its securities, at a price of $.025 per
unit. Each Series A unit consists of One share of the Company's Common
stock, One Series A Warrant, One Series B Warrant, One Series C Warrant and
One Series D Warrant. Each of the four series of warrants entitles
the holder to purchase one share of the Company's Common Stock at an exercise
price of $0.25 per Share. The private placement was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, and
Rule 506 of Regulation D promulgated there under, inasmuch as the securities
were sold to accredited investors only. The shares will bear a 144
Restrictive legend. The Company has not offered Registration Rights to the
subscriber.
On May
28, 2008 the Registrant issued 674,000 shares for services rendered valued at
$16,850 in lieu of cash. The shares issued are restricted shares and
are subject to Rule 144.
Additional
paid in capital has been credited $56,000 in each of the periods ended March 31,
2009 and 2008 respectively for officer's compensation and
rent.
Additional
paid in capital has been credited $14,000 in each of the periods ended June
30, 2009 and 2008 respectively for officer's compensation and
rent.
Additional
paid in capital has been credited $328 in the year ended June 30,
2009 for imputed interest for a loan from Ron Kallus.
Additional
paid in capital has been credited $14,000 in each of the periods ended September
30, 2009 and 2008 respectively for officer's compensation and
rent.
13
VGTel,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
September
30, 2009
(unaudited)
NOTE
12 – STOCKHOLDERS' DEFICIT (continued)
Additional
paid in capital has been credited $336 in the year ended September 30,
2009 for imputed interest for a loan from Ron Kallus.
No
preferred shares have been issued. It is within the discretion of the Board of
Directors to determine the preferences of the preferred stock. The Company has
not yet determined the preferences of the preferred stock.
NOTE
13 – RELATED PARTY TRANSACTIONS
Niva
Kallus is the corporate secretary and the daughter of Ron Kallus, the CEO of the
Company.
Platin
Ltd. is a telemarketing company that is our only customer to date. Platin Ltd.,
is a related party. Israel Hason is the Chief Marketing Officer of our
Company and a Director. Mr. Hason is also the managing partner and principal
shareholder of Platin Ltd. Israel. Mr. Hason has agreed to
recuse himself from any corporate decision relating to Platin Ltd business
relationship with VGTel, Inc.
On
March 1, 2006, Ron Kallus, the Company Chief Executive Officer and Principal
shareholder provided a credit facility to the Company up to a maximum of $20,000
which may be drawn down anytime from March 1, 2006 until May 18, 2007. This
unsecured loan is payable May 18, 2007 and bears an interest rate of prime
plus one (1) calculated on an annual basis payable annually in arrears with
first payment due March 1, 2007 and second payment due May 18, 2007, unless
extended by mutual consent of the parties.
On July
18, 2006, Mr. Kallus executed an amendment to the March 1, 2006 credit facility
increasing the total amount of the credit facility from $20,000 to $50,000 and
extending payable date from May 18, 2007 to December 31, 2007 with the first
interest payment due July 1, 2007 and second payment due December 31,
2007. On May 22, 2007 in a second addendum to the Loan Agreement Mr.
Kallus waived all interest payments for loan
facility, retroactively from the March 1,
2006 and declaring the loan facility as interest free. The
Officer had previously forgiven his right to the interest for the March 31,
2006 loan thus no interest has been charged or accrued.
For the
quarter ending September 30, 2009, the Company has imputed interest using an
interest rate of prime plus 1% for a total of $328 which was charged
to interest expense and credited to additional paid in
capital.
Ethel
Schwartz former President and Ron Kallus current CEO are both officers and
directors of a private R&D company, Digital Power Technologies, Inc. There
are no business relationships or synergies between Digital Power Technologies
and VGTel Inc. Both of these entities operate in different industries and
sectors that have no relationship with each other. There is no plan for the
companies to have relationships in the future. On May 28, 2008 the
Registrant issued 674,000 shares for services rendered valued at $16,850 to
Ethel Schwartz for edgarizing and accounting services in lieu of
cash. The shares issued are restricted shares and are subject to Rule
144. On May 28, 2008 the Registrant sold in a private
placement transaction an aggregate $24,000 of Series A Units of its
securities, at a price of $.025 per unit. The shares were sold to Hyett
Group Ltd. Ethel is a VP of Hyett Group Ltd.
On July
6, 2007, The Hyett Group, Ltd., a related shareholder loaned the company
$4,000. The loan has a term of 90 days and can be extended by mutual
consent of both parties. The loan is interest
free.
Except as
provided herein, the Company has not entered into any transactions with a
related party. Management does not know of any other transaction it will be
entering into with related parties.
The
Company has had no transactions with any promoter or promoters since its
inception. Nothing of value, including money, property, contracts, options or
rights of any kind has been received or will be received by a promoter, director
or indirectly from the Company which is not disclosed.
NYN
International LLC provides hosting and internet services to the Company and
bills the Company for $2,160 for each quarter. Ron Kallus is the
principal of NYN International LLC. The due to related shareholders
includes the sum of $6,480 owed for hosting and internet services provided by
NYN International LLC.
NOTE
14 – SUBSEQUENT EVENTS
On
October 19, 2009, the Board of Directors voted to extend the exercise
expiration for all of the Company's Series A, Series B, Series C and Series D
Warrants. The Warrants exercise have been extended until December 4,
2012.
14
PART
II
Item
2. Management Discussion & Analysis
We are a
development stage company currently testing a newly developed telemarketing
campaign product called Global Messaging Gateway (GMG). The GMG system is
designed to enable the User of the system to set up telemarketing campaigns to
distribute messages to bulk lists of recipients. Messages can be delivered in
the medium of text, voice, Fax or multimedia. Messages can be delivered from one
control center to thousands of clients anywhere in the world simultaneously. The
GMG System uses the internet instead of traditional telephone
equipment.
The
Global Messaging Gateway (GMG) is currently the first and only product of the
Company. We currently have only one User that is using our system. Since
inception, we generated an aggregate of $75,343, of which the sum of $4,800 was
generated during the three month period ending
September 30, 2009. Platin pays a monthly fee
for the lines and a per call fee for each successful call
placed. Platin Ltd., is a related party. Israel Hason is
the Chief Marketing Officer of our Company and a Director. Mr. Hason is also the
managing partner and principal shareholder of Platin Ltd.
Israel. Mr. Hason has agreed to recuse himself from any
corporate decision relating to Platin Ltd business relationship with VGTel,
Inc.
Ongoing
Development of our GMG Systems.
Our
development activities include adding features, fixing problems and integrating
new customer driven ideas. Each new feature is being integrated into the
commercial operating environment and gets tested immediately under real
commercial conditions. During the next 12 months
we will require further development costs of
$15,000. However, we do not have the funds available for
additional development costs. Further development of the GMG system
and other products is dependent on our ability to raise additional
funds.
The
Company plans to raise additional funds in order to expand its business and
fully execute its Plan of Operations. There is no assurance that the
Company will be successful in raising sufficient funds to execute its expansion
agenda. If additional capital is raised through the sale of
additional equity or convertible securities, substantial dilution to our
stockholders is likely to occur which may result in a partial or substantial
loss to your investment in our common stock.
If we are
successful in raising additional funds, we plan to hire and train key
individuals for positions which include global management, marketing, and
administrative. The number of employees hired will be dependent upon a variety
of factors including our progress in implementing our business plan and
available capital. By the first quarter of 2010, we expect to require
approximately 5 employees and anticipate incurring $30,000 per month for
payroll. The hiring of employees will be an ongoing process during the company’s
existence. Additionally, the Company plans to utilize outside marketing and
public relations firms to facilitate strategic alliances with potential
franchisers and telemarketers. Depending on the availability of funds, the
Company plans to spend $50,000 in advertising and marketing of its products and
services during the second Phase of our operations.
Results of
Operations:
Revenues:
Revenues
during the three months ended September 30,
2009 was $4,800 compared to $5,651 for the corresponding period ending
September 30, 2008.
Total
operating expenses for the three months period
ended September 30, 2009 was $21,187 as compared to
$24,315 for the three month period ending September
30, 2008. Our only customer Platin, who is a
related party has been experiencing a decrease in referable business. We
have not been able to attract additional clients.
The
Company reported a net loss for the Quarter period
ending September 30, 2009 of $16,723 as compared to
$18,664 for the Quarter period ending September 30,
2008.
We incurred
$4,110 additional development expenses during the quarter
ending September 30, 2009 as compared to $4,500 for the corresponding
period ended September 30, 2008.
15
Net
loss
The
Company had a cumulative net losses since its inception of of
$379,704 for the period ending September 30,
2009 as compared to $306,082 for the fiscal year
ended September 30, 2008. The increase
in net loss is attributable to the decrease in
revenue during the fiscal quarter ended September 30,
2009.
The
company has not yet succeeded in increasing its
revenues. The Company is currently focusing on
finding additional clients for its GMG System, in hope of diversifying its
clientele. As of September 30, 2009, the Company
has not signed on any new clients for its services. The company is seeking
to raise additional funds in order to engage in marketing of its product to a
wider audience. With the current available funds the company is unable to
initiate a marketing campaign which is necessary in order to become a viable
business. There is no assurance that the company will be successful in raising
funds. If the Company is unable to raise funds in the near future, it may
be forced cease operations or seek an alternative.
As
reflected in the accompanying audited financial statements, we are in the
development stage with a negative cash flow and an accumulated net loss
from inception of $379,704. This raises substantial doubt
about our ability to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company's ability to raise
additional capital and implement its business plan. The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
Liquidity
and Capital Resources:
As
of September 30, 2009 the Company had $955
in cash, compared to $ 2,354 as of September 30,
2008.
Net cash
used in operating activities was $6,108 for the three month ended
September 30, 2009 compared to $32,453 for the period ended
September 30, 2008.
Net cash
provided by investing activities during the three month period ending
September 30, 2009 was $0 compared to $0 for the period
ended September 30, 2008.
Net cash
provided by financing activities for the three month period
ended September 30, 2009 was $4,000 as compared to
$29,682 for the corresponding period ending September 30,
2008.
On
January 2009 the Israeli Parliament passed an anti spam law which allows
telemarketing campaign to call only customers who agreed to receive calls
(OPT-IN), while assessing a high fine for any violation. This change affected
the entire telemarketing activity and as a result, our services to Platin
diminished. Together with Platin we are looking for ways to overcome
this issue, but so far without any success. We are currently in need of
immediate cash to continue our business. However, the current status of the
global market leave us with less hope to obtain the required financial backup
needed for executing our market plan and we will concentrate to use our limited
resources to further strengthening the system features and improving its
ruggedness.
At the
current level of revenues and expenses, in conjunction with the committed loan
from our President, we anticipate we will not have sufficient
funding to operate for the next 12 months. Additionally, we will need to raise
substantial funds in order to launch a broad marketing campaign to attract
clients for our product in order to become a viable business. We cannot offer
assurances that any additional funds will be raised when we require them or that
we will be able to raise funds on suitable terms. Failure to obtain such
financing when needed could delay or prevent our planned development and our
marketing effort which is necessary for our business to become
viable.
The
Company intends to meet its long-term liquidity needs through available cash and
cash flow as well as through additional financing from outside sources. The
Company anticipates raising additional funds from the possible exercise of
Warrants or equity financing with private investors following effectiveness of
the Registration Statement. As of the date of this Prospectus no agreements have
been undertaken to obtain any funding. The Warrants are exercisable at an
exercise price of $0.25 per share. The Company does not expect that warrants
will be exercised if the prevailing price of the Common Stock at such time of
exercise is below or at the exercise price.
Additional
issuances of equity or convertible debt securities will result in dilution to
the current shareholders. Further, such securities might have rights,
preferences or privileges senior to our common stock. Additional financing may
not be available upon acceptable terms, or at all. If adequate funds are not
available or are not available on acceptable terms, we may not be able to fully
execute our Plan of Operations to expand our business, which could significantly
and materially restrict our business operations. If additional capital is raised
through the sale of additional equity or convertible securities, substantial
dilution to our stockholders is likely to occur which may result in a partial or
substantial loss to your investment in our common stock.
If the
Company fails to raise additional funds to execute its expansion plan, it is
likely that the Company will not be able to operate as a viable entity and may
be forced to go out of business.
Material
Commitments
All of
our contracts and agreements, (See Contracts, Agreements & Relationships)
have termination clauses allowing us to terminate the agreements with advance
written notice. We control the pace of the development activities. We
have the ability to curtail these activities to reduce our expenses and preserve
our cash as needed.
We have
an ongoing commitment to pay the costs accounting and administration, and
management believes it will have the capital resources to meet these
expenses.
The
Company does not plan any purchases of significant Equipment in the next 12
months.
Item
3. Controls & Procedures:
The
Company’s Chief Executive Officer who is also the Chief Financial Officer
has evaluated the effectiveness of the Company’s disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
as of September 30, 2009 covered by this Quarterly Report
on Form 10-Q. Based upon such evaluation, the Chief Executive Officer has
concluded that, as of the end of such period, the Company’s disclosure controls
and procedures were not effective as required under Rules 13a-15(e) and
15d-15(e) under the Exchange Act. This conclusion by the Company’s Chief
Executive Officer does not relate to reporting periods after
September 30, 2009
Changes
in Internal Control over Financial Reporting
No change
in the Company’s internal control over financial reporting occurred during the
quarter ended September 30, 2009, that materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
II - OTHER INFORMATION
Item
1 Legal Proceedings.
The
Company is currently not a party to any pending legal proceedings and no such
action by, or to the best of its knowledge, against the Company has been
threatened.
Item 1A: Risk
Factors:
Our
operations and financial results are subject to various risks and uncertainties
that could adversely affect our business, financial condition, results of
operations, and trading price of our common stock. Please refer to our
annual report on Form 10-K for fiscal year 2009 for additional information
concerning these and other uncertainties that could negatively impact the
Company.
16
Item
2. Unregistered Sale of Securities
None
Item
3. Defaults Upon Senior Securities.
None
No matter
was submitted during the quarter ending
September 30, 2009 covered by this report to a vote of the Company’s
shareholders, through the solicitation of proxies or otherwise.
Item
5. Other Information.
None
Exhibit
31.1 Sarbanes Oxley Certification
Exhibit
32.1 Sarbanes Oxley Certification
SIGNATURES
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
VGTEL,
INC.
|
||
/s/
Ron Kallus
|
||
RON
KALLUS
|
||
Title:
|
Chairman,
Chief Executive Officer
|
|
(principal
executive officer)
|
||
/s/
Ron Kallus
Date:
November 12, 2009
|
||
RON
KALLUS
|
||
Title:
|
Chief
Financial Officer
|
|
(principal
financial officer)
|
||
Date:
November 12, 2009
|
|
17