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EX-23.1 - Tungsten Corp. | v187384_ex23-1.htm |
As
filed with the Securities and Exchange Commission on June ___,
2010
Registration
No.333-162730
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-1/A
(Amendment
No. 3)
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ONLINE
TELE-SOLUTIONS INC.
(Exact
name of Registrant as specified in its charter)
Nevada
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7389
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98-0583175
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(State
or other jurisdiction of
incorporation
or organization)
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(Primary
Standard Industrial
Classification
Code Number)
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|
(I.R.S.
Employer
Identification
Number)
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Block
225, 02-213, Tampines St 23
Singapore
521225
Phone:
702-553-3026
(Address,
including zip code, and telephone number, including area code,
of
Registrant’s principal executive offices)
Business
Filings Incorporated
6100 Neal
Road, Suite 880
Reno, NV
89501
Phone:
(800) 981-7183
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies of
all correspondence to:
Gersten
Savage LLP
David E.
Danovitch, Esq.
Jaclyn
Amsel, Esq.
Cheryll
Calaguio, Esq.
600
Lexington Avenue
New York,
NY 10022-6018
Tel:
(212) 752-9700 Fax: (212) 980-5192
Approximate
date of commencement of proposed sale to the public: As soon as practicable
after the effective date of this registration statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, please
check the following box:
þ
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer ¨ (Do not check if
smaller reporting company)
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Smaller
reporting company
þ
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The
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be amended. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer
or sale is not
permitted.
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SUBJECT
TO COMPLETION DATED JUNE 4, 2010
PRELIMINARY
PROSPECTUS
ONLINE
TELE-SOLUTIONS INC.
700,000
SHARES OF COMMON STOCK
OFFERING
PRICE $0.10 PER SHARE
The
selling stockholders named in this prospectus are offering for resale 700,000
shares of our common stock at an offering price of $0.10 per share of common
stock until our shares are quoted on the Over-the-Counter Bulletin Board, and
thereafter at prevailing market prices or privately negotiated prices. We will
pay all expenses incurred in this offering (other than transfer taxes), and the
selling stockholders will receive all of the net proceeds from this
offering.
Our
business is subject to many risks and an investment in our common stock will
also involve a high degree of risk. You should carefully consider the factors
described under the heading “Risk Factors” beginning on page 3 before investing
in our common stock.
There is
currently no public market for our common stock and we have not applied for
listing or quotation on any public market. We have arbitrarily determined the
offering price of $0.10 per share for the shares offered pursuant to this
prospectus. The offering price bears no relationship to our assets, book value,
earnings or any other customary investment criteria. After the effective date of
the registration statement, we intend to try to identify a market maker to file
an application with the Financial Industry Regulatory Authority (“FINRA”) to
have our common stock quoted on the Over-the-Counter Bulletin Board. We
currently have no market maker who is willing to list quotations for our stock.
There is no assurance that an active trading market for our shares will develop,
or, if developed, that it will be sustained.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
No
underwriter or other person has been engaged to facilitate the sale of shares of
common stock in this offering. You should rely only on the information contained
in this prospectus and the information we have referred you to. We have not
authorized any person to provide you with any information about this offering,
Online Tele-Solutions Inc. or the shares of our common stock offered hereby that
is different from the information included in this prospectus. If anyone
provides you with different information, you should not rely on it.
The date
of this prospectus is _________, 2010
ii
TABLE OF
CONTENTS
The
following table of contents has been designed to help you find information
contained in this prospectus. We encourage you to read the entire
prospectus.
Page
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PROSPECTUS
SUMMARY
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1
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RISK
FACTORS
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3
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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10
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TAX
CONSIDERATIONS
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10
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USE
OF PROCEEDS
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10
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DETERMINATION
OF THE OFFERING PRICE
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10
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MARKET
FOR OUR COMMON STOCK
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11
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DIVIDEND
POLICY
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12
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DILUTION
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12
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SELLING
STOCKHOLDERS
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12
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PLAN
OF DISTRIBUTION
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14
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DESCRIPTION
OF SECURITIES
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16
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SHARES
ELIGIBLE FOR FUTURE SALE
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18
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EXPERTS
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19
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LEGAL
REPRESENTATION
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19
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OUR
BUSINESS
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19
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LEGAL
MATTERS
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27
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MANAGEMENT
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27
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EXECUTIVE
COMPENSATION
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29
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COMPENSATION
OF DIRECTORS
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30
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
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30
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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30
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DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
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31
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
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32
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WHERE
YOU CAN GET MORE INFORMATION
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36
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FINANCIAL
STATEMENTS
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F-1
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iii
PROSPECTUS
SUMMARY
You
should read the following summary together with the more detailed information
about our company, the shares of common stock being registered in this offering,
and our financial statements and related note thereto included elsewhere in this
prospectus.
Corporate
Background and Business Overview
We were
incorporated in the state of Nevada on June 5, 2008. Our offices are currently
located at Block 225, 02-213, Tampines St 23, Singapore 521225. Our
U.S.-based telephone number is (702) 553-3026. Our website, which is
currently being developed, is www.online-tele-solutions.com. The
information that is or will be contained on our website does not form a part of
the registration statement of which this prospectus is a part.
We are a
development stage company that has not generated any revenue and has had limited
operations to date. From June 5, 2008 (inception) to January 31, 2010, we have
incurred accumulated net losses of $21,910. As of January 31, 2010, we had total
assets of $35,590, and total liabilities of $7,500, respectively. Based on our
financial history since inception, our independent auditor has expressed
substantial doubt as to our ability to continue as a going concern.
We
intend to develop and offer Internet-based hosted call center services for small
to medium sized companies, or companies with between 10 – 500 employees, that
are seeking to establish their own internal support and telemarketing divisions.
We intend to provide call-center software to our customers which will enable
them to handle outbound calls, inbound calls and a combination of both from
their own locations. We will host their customer calling data on our
servers, and our customers will be able to access the functionality of our
software via a web browser such as Internet Explorer. Our product will
blend together features of Voice over Internet Protocol (“VoIP”) technology and
customer relationship management (“CRM”) software. To date, we have secured
office space, taken steps to retain a transfer agent, and have been in contact
with professional advisors regarding legal compliance, accounting disclosure
statements and financial reporting. We have also begun our planning for
developing a website and searching for a contractor to develop that
website. We intend to launch our “information only” web site during the
fourth quarter of the fiscal year ended January 31, 2011.
Our
business activities during the 12 to 18 months following the date of this
prospectus will be focused on the development of our website, the development of
a network of resellers and the establishment of our brand name. We do not expect
to earn any sales revenue during this time. We anticipate that our future
revenue will come from two primary sources: first, from direct sales to small
and medium business owners that subscribe to our online call center services and
second, from our network of resellers. We anticipate that our operations
will begin to generate revenue approximately 18 to 24 months following the date
of this prospectus.
We can
offer no assurance that we will be successful in developing and offering our
products and services. Any number of factors may impact our ability to
develop our products and services, including our ability to obtain financing if
and when necessary; the availability of skilled personnel; market acceptance of
our products, if they are developed; and our ability to gain market share.
Our business will fail if we cannot successfully implement our business plan or
if we cannot develop or successfully market our products and
services.
1
Summary
Financial Information
As of
January 31, 2010
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As of
January 31, 2009
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Revenues
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$ | - | $ | - | ||||
Operating
Expenses
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$ | 17,410 | $ | 4,500 | ||||
Net
Loss
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$ | (17,410 | ) | $ | (4,500 | ) | ||
Total
Assets
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$ | 35,590 | $ | 50,000 | ||||
Total
Liabilities
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$ | 7,500 | $ | 4,500 | ||||
Total
Stockholders’ Equity
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$ | 28,090 | $ | 45,500 |
Summary
of the Offering
Shares
of common stock being offered by the selling stockholders:
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700,000
shares of our common stock.
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Offering
price:
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$0.10
per share of common stock.
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Number
of shares outstanding before the offering:
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2,200,000
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Number
of shares outstanding after the offering, if all the shares are
sold:
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2,200,000
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Market
for the common stock:
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There
is no public market for our common stock. After the effective date of the
registration statement of which this prospectus is a part, we intend to
try to identify a market maker to file an application on our behalf to
have our common stock quoted on the Over-the-Counter Bulletin Board. In
order for such applicable to be accepted, we will have to satisfy certain
criteria in order for our common stock to be quoted on the
Over-the-Counter Bulletin Board. We currently have no market maker that is
willing to list quotations for our stock. There is no assurance that a
market maker will be willing to quote our stock, that the Financial
Industry Regulatory Authority or FINRA will approve such application, that
a trading market will develop, or, if developed, that it will be
sustained.
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Use
of Proceeds:
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We
will not receive any proceeds from the sale of the common stock by the
selling stockholders pursuant to this prospectus. The selling stockholders
named herein will receive all proceeds from the sale of the shares of our
common stock in this offering. Please see “Selling Stockholders” beginning
on page 12.
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Risk
Factors:
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See
“Risk Factors” beginning on page 3 and the other information in this
prospectus for a discussion of the factors you should consider before
deciding to invest in shares of our common stock.
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Dividend
Policy:
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We
have not declared or paid any dividends on our common stock since our
inception, and we do not anticipate paying any such dividends for the
foreseeable future.
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2
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the following risk factors and other information in this
prospectus before deciding to invest in our common stock. If any of the
following risks actually occur, our business, financial condition, results of
operations and prospects for growth could be seriously harmed. As a result, the
trading price of our common stock could decline and you could lose all or part
of your investment.
Risks
Relating to Our Business
We
are uncertain of our ability to function as a going concern, indicating the
possibility that we may not be able to operate in the future.
To date,
we have completed only the initial stages of our business plan and we can
provide no assurance that we will be able to generate a sufficient amount of
revenue, if any, from our business in order to achieve profitability. It
is not possible at this time for us to predict with assurance the potential
success of our business. The revenue and income potential of our proposed
business and operations are unknown. If we cannot continue as a viable entity,
you may lose some or all of your investment in our common stock.
As
a company in the early stage of development with an unproven business strategy,
our limited history of operations makes evaluation of our business and prospects
difficult.
We were
incorporated on June 5, 2008 and our business is in the development stage.
To date, we have not earned any revenues. Our business prospects are difficult
to predict because of our limited operating history, early stage of development
and unproven business strategy. Our business activities during the 12 to 18
months following the date of this prospectus will be focused on the development
of our website, the development of a network of resellers and the establishment
of our brand name. We may not attain profitable operations and our management
may not succeed in realizing our business objectives.
Our
business will fail if we are unable to develop and implement our call center
solution successfully.
The
success of our business plan is significantly dependent on the successful
development of our call center solution. However, no assurance can be
given that we will be able to develop a call center solution in a timely
manner or at all. Our business will fail if we can not successfully implement
our business plan or successfully market our call center product, services and
capabilities.
We
may not be able to execute our business plan or stay in business without
additional funding.
Our
ability successfully to develop our hosted call center product, to provide our
services, and eventually our ability to generate operating revenues will depend
on our ability to obtain the necessary financing to implement our business plan.
We have raised a total of $50,000 to date through the sale of shares of our
common stock. As of January 31, 2010, we had cash of approximately $20,600
remaining from such financing, which we believe to be sufficient to fund our
operations for the next 4-6 months in order to develop our website, hire a third
party contractor to develop our software and call center capabilities, and
establish profitable operations. However, we will require additional financing
through issuance of debt and/or equity in order to expand our operations or
business plan beyond that time, and such financing, if required, may not be
forthcoming. As has been widely reported, global and domestic financial
markets and economic conditions have been, and continue to be, disrupted and
volatile due to a variety of factors, including the current weak economic
conditions. As a result, the cost of raising money in the debt and equity
capital markets has increased substantially while the availability of funds from
those markets has diminished significantly, even more so for smaller companies
like ours. If such conditions and constraints continue, we may not be able to
acquire additional funds either through credit markets or through equity markets
and, even if additional financing is available, it may not be available on terms
we find favorable. At this time, there are no anticipated sources of
additional funding in place. Failure to secured additional funding when needed
will have an adverse effect on our ability to meet our obligations and remain in
business.
3
We
expect to suffer losses in the immediate future.
Since our
inception on June 5, 2008, we have incurred accumulated net losses of $21,910
and we expect to continue to incur operating losses in the immediate future.
These losses will occur because we do not yet have any revenues to offset the
expenses associated with the implementation of our business plan, the
development of a network of resellers and the development of our website. We
cannot guarantee that we will ever become successful in generating revenues in
the future. We recognize that if we are unable to generate revenues, we will not
be able to earn profits or continue operations. If we are unsuccessful in
addressing these risks, our business will most likely fail.
Our
customers are small and medium-sized businesses, which can be challenging to
cost-effectively reach, acquire and retain.
We plan
to market and sell our application suite to small- and medium-sized businesses
(“SMBs”), or companies with 10 to 500 employees. To grow our revenue, we must
add new customers, sell additional services to existing customers and encourage
existing customers to maintain our services. However, selling to and retaining
SMBs can be more difficult than selling to and retaining large enterprises
because SMB customers:
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are
more price sensitive;
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·
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are
more difficult to reach with traditional marketing
campaigns;
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·
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often
have a higher turnover rate or attrition rate with respect to their
customer base than larger enterprises, which can affect their ability to
steadily support their business and remain in
business;
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·
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often
require higher sales, marketing and support expenditures by vendors that
sell to them per revenue dollar;
and
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·
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are
more vulnerable to negative changes in the general economic environment
that may disrupt continued business
operations.
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If we are
unable to cost-effectively market and sell our service to our target customers,
our ability to grow our revenue quickly and become profitable will be
harmed.
If
our security measures are breached and unauthorized access is obtained to our
customers’ data, we may incur significant liabilities, our service may be
perceived as not being secure and customers may curtail or stop using our
services.
The
product and services we plan to offer will involve the storage of our customers’
sensitive information. If our security measures are breached as a result of
third-party action, employee error, malfeasance or otherwise, and someone
obtains unauthorized access to our customers’ data, we could incur significant
liability to our customers and to individuals or businesses whose information
was being stored by our customers. If this happens, our business may suffer and
our reputation will be damaged. Because techniques used to obtain unauthorized
access to or to sabotage systems change frequently and generally are not
recognized until launched against a target, we may be unable to anticipate these
techniques or to implement adequate preventive measures. If an actual or
perceived breach of our security occurs, the market perception of the
effectiveness of our security measures could be harmed and we could lose sales
and customers. We do not have, and are likely not to have for the foreseeable
future, insurance that will adequately cover any liability to a customer under
these circumstances.
4
We
rely heavily on VoIP and any interruption in service could affect our ability to
provide our service effectively and efficiently.
Our
product and services will leverage on VoIP technology combined with CRM
software. Any interruption or difficulties that may be experienced in our VoIP
service will greatly affect our ability to effectively and efficiently provide
our product and services to our customers and will directly affect our
customers. In turn, our sales will suffer and our revenues will
decline.
If
we are unable to sell our product and service into new markets, our revenue will
not grow as expected.
Our
ability to attract new customers and increase revenue from existing customers
will depend in large part on our ability to introduce and sell our product and
service into new markets. These new markets into which we attempt to sell our
product and our service, whether new vertical markets and/or new countries or
regions, may not be receptive to our offering. If we are unable to successfully
sell our products and/or services into new markets, our revenue will not grow as
expected.
Assertions
by a third party that we infringe its intellectual property, whether successful
or not, could subject us to costly and time-consuming litigation or expensive
licenses.
The
software and technology industries are characterized by the existence of a large
number of patents, copyrights, trademarks and trade secrets and by frequent
litigation based on allegations of infringement or other violations of
intellectual property rights. As we face increasing competition, the possibility
of intellectual property rights claims against us may grow. Our technologies may
not be able to withstand any third-party claims or rights against their
use. Any claim alleging infringement of patents, copyrights, trademarks or
trade secrets could harm our relationships with our customers, may deter future
customers from purchasing our product or service, or could expose us to
litigation for these claims.
We may
have to pay damages or stop using technology found to be in violation of a third
party’s rights if a successful intellectual property claim is brought against us
or a customer. We may have to seek a license for the technology we use, which
may not be available on reasonable terms, if at all. If we are able to
enter into such a license agreement, it may be on terms that will significantly
increase our operating expenses or may require us to restrict our business
activities in one or more respects. As a result, we may also be required to
develop alternative non-infringing technology, which could require significant
effort and expense and may not be accepted by our customers and
prospects.
Material
defects or errors in the software we develop could harm our reputation, may
cause us to become liable to our customers, may result in the loss of existing
customers, or may result in a significant costs to us and impair our ability to
sell our product and provide our service.
The
software applications underlying our services are inherently complex and may
contain material defects or errors, particularly when first introduced or when
new versions or enhancements are released. Any defects that cause interruptions
to the availability of our services could result in:
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·
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a
reduction in sales or delay in market acceptance of our
services;
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5
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·
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sales
credits or refunds to our
customers;
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·
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loss
of existing customers and difficulty in attracting new
customers;
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·
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diversion
of development resources;
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·
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harm
to our reputation; and
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·
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increased
warranty and insurance costs.
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Any
errors, defects or other performance-related issues regarding the software used
for our product and service may result in customers electing to terminate the
purchase of our product and/or our service, or delay or withhold payment to us
which may result in a significant loss for the Company. Customers may also make
warranty claims against us, which could result in an increase in our provision
for doubtful accounts, an increase in collection cycles for accounts receivable
or costly litigation. We do not maintain and do not expect to maintain in the
foreseeable future, insurance adequately to cover these risks.
If
our estimates related to expenditures are erroneous or inaccurate, our business
will fail and you could lose your entire investment.
Our
success is dependent in part upon the accuracy of our management’s estimates of
expenditures for legal and accounting services, including those we expect to
incur as a publicly reporting company, website development, and administrative
expenses, which management estimated to aggregate approximately $50,000 over the
first 12 months of our development phase. If such estimates are erroneous
or inaccurate, or if we encounter unforeseen costs, we may not be able
satisfactorily to execute our business plan, which could result in the failure
of our business and you could lose your entire investment.
We
are in a competitive market which could impact our ability to gain market share
which could harm our financial performance.
The
business of providing hosted call center solutions is competitive. The barriers
to entry on the Internet are relatively low, and we will likely face
competitive pressures from companies that have been established for a period
longer than we have and those that have greater financial resources.
If we cannot gain enough market share, our business and financial performance
will be adversely affected.
We
need to retain key personnel to support our product, service and ongoing
operations.
The
development and the marketing of our product and service will continue to place
a significant strain on our limited personnel, management, and other resources.
Our future success depends upon the continued service of Mario Jakiri Tolentino,
our President, Treasurer and Director, who is developing the relationships on
which we will rely to implement our business plan. The loss of Mr. Tolentino’s
services could negatively impact our ability to develop sell our product, which
could adversely affect our financial results and impair our
operations.
6
Risks
Relating to Our Common Stock
There
is currently no public market for our securities, and there can be no assurance
that any public market will develop or that our common stock will be quoted for
trading.
There is
no public market for our securities and there can be no assurance that an active
trading market for the securities offered herein will develop after this
offering by the selling stockholders, or, if developed, be sustained. After the
effective date of the registration statement of which this prospectus is a part,
we intend to try to identify a market maker to file an application with the
Financial Industry Regulatory Authority (“FINRA”) to have our common stock
quoted on the Over-the-Counter Bulletin Board. We will have to satisfy certain
criteria in order for our application to be accepted. We do not currently
have a market maker that is willing to participate in this application process,
and even if we identify a market maker, there can be no assurance as to whether
we will meet the requisite criteria or that our market maker’s application will
be accepted. Our common stock may never be quoted on the Over-the-Counter
Bulletin Board, or, even if quoted, a public market may not materialize or even
if a public market-materializes will be sustained.
If our
securities are not eligible for initial quotation, or if quoted, are not
eligible for continued quotation on the Over-the-Counter Bulletin Board or a
public trading market does not develop, purchasers of the shares of common stock
may have difficulty selling or be unable to sell their securities should they
desire to do so, rendering their shares effectively worthless and resulting in a
complete loss of their investment.
Because
we will be subject to “penny stock” rules if our shares are quoted on the
Over-the-Counter Bulletin Board, the level of trading activity in our stock may
be reduced.
Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by
penny stock rules adopted by the Securities and Exchange Commission (the “SEC”).
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on some national securities exchanges). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and, if the broker-dealer is the sole market maker, the broker-dealer must
disclose this fact and the broker-dealer’s presumed control over the market, and
monthly account statements showing the market value of each penny stock held in
the customer’s account. In addition, broker-dealers who sell these securities to
persons other than established customers and “accredited investors” must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules. If a trading market does develop for our common stock, these
regulations will likely be applicable, and investors in our common stock may
find it difficult to sell their shares.
FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell
our stock.
FINRA
rules require that, a stockbroker, in recommending an investment to a customer,
have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative, low-priced securities to their
non-institutional customers, stockbrokers must make reasonable efforts to obtain
information about the customer’s financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative, low-priced
securities will not be suitable for certain customers. FINRA requirements will
likely make it more difficult for brokers to recommend that their customers buy
our common stock, which may have the effect of reducing the level of trading
activity in our common stock. As a result, fewer brokers may be willing to make
a market in our common stock, reducing a stockholder’s ability to resell shares
of our common stock.
7
State
securities laws may limit secondary trading, which may restrict the states in
which you can sell the shares offered by this prospectus.
If you
purchase shares of our common stock sold pursuant to this offering, you may not
be able to resell the shares in a certain state unless and until the shares of
our common stock are qualified for secondary trading under the applicable
securities laws of such state or there is confirmation that an exemption, such
as listing in certain recognized securities manuals, is available for secondary
trading in such state. There can be no assurance that we will be successful in
registering or qualifying our common stock for secondary trading, or identifying
an available exemption for secondary trading in our common stock in every state.
If we fail to register or qualify, or to obtain or verify an exemption for the
secondary trading of our common stock in any particular state, the shares of
common stock could not be offered or sold to, or purchased by, a resident of
that state. In the event that a significant number of states refuse to permit
secondary trading in our common stock, the market for the common stock will be
limited which could drive down the market price of our common stock and reduce
the liquidity of the shares of our common stock and a stockholder’s ability to
resell shares of our common stock at all or at current market prices, which
could increase a stockholder’s risk of losing some or all of his
investment.
If
quoted, the price of our common stock may be volatile, which may substantially
increase the risk that you may not be able to sell your shares at or above the
price that you may pay for the shares.
Even if
our shares are quoted for trading on the Over-the-Counter Bulletin Board
following this offering and a public market develops for our common stock, the
market price of our common stock may be volatile. It may fluctuate significantly
in response to the following factors:
|
·
|
variations
in quarterly operating results;
|
|
·
|
our
announcements of significant commissions and achievement of
milestones;
|
|
·
|
our
relationships with other companies or capital
commitments;
|
|
·
|
additions
or departures of key personnel;
|
|
·
|
sales
of common stock or termination of stock transfer
restrictions;
|
|
·
|
changes
in financial estimates by securities analysts, if any;
and
|
|
·
|
fluctuations
in stock market price and volume.
|
Your
inability to sell your shares during a decline in the price of our stock may
increase losses that you may suffer as a result of your investment.
Our
insiders beneficially own a significant portion of our stock, and accordingly,
may have control over stockholder matters, our business and
management.
As of
June 3, 2010, our officer and directors beneficially owned 1,520,000 shares of
our common stock in the aggregate, or approximately 69.09% of our issued and
outstanding common stock. As a result, our officer and directors will have
significant influence to:
|
·
|
Elect
or defeat the election of our
directors;
|
|
·
|
amend
or prevent amendment of our articles of incorporation or
bylaws;
|
|
·
|
effect
or prevent a merger, sale of assets or other corporate transaction;
and
|
|
·
|
affect
the outcome of any other matter submitted to the stockholders for
vote.
|
8
Moreover,
because of the significant ownership position held by our insiders, new
investors may not be able to effect a change in our business or management, and
therefore, shareholders would have no recourse as a result of decisions made by
management.
In
addition, sales of significant amounts of shares held by our officer and
directors, or the prospect of these sales, could adversely affect the market
price of our common stock. Management’s stock ownership may discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain
control of us, which in turn could reduce our stock price or prevent our
stockholders from realizing a premium over our stock price.
We
arbitrarily determined the price of the shares of our common stock to be resold
by the selling stockholders pursuant to this prospectus, and such price may not
reflect the actual market price for the securities.
The
initial offering price of $0.10 per share of common stock offered by the selling
stockholders pursuant to this prospectus was determined by us arbitrarily. The
price is not based on our financial condition and prospects, market prices of
similar securities of comparable publicly traded companies, certain financial
and operating information of companies engaged in similar activities to ours, or
general conditions of the securities market. The price may not be indicative of
the market price, if any, for the common stock that may develop in the trading
market after this offering. The market price of the securities offered herein,
if any, may decline below the initial public price at which our stock is quoted.
Moreover, recently the stock markets have experienced extreme price and volume
fluctuations which have disproportionately had a negative effect impact on
smaller companies. In the past, securities class action litigation has often
been instituted against various companies following periods of volatility in the
market price of their securities. If instituted against us, regardless of the
outcome, such litigation would result in substantial costs and a diversion of
management’s attention and resources, which would increase our operating
expenses and affect our financial condition and business
operations.
Because
we do not intend to pay any dividends on our common stock, holders of our common
stock must rely on stock appreciation for any return on their
investment.
We have
not declared or paid any dividends on our common stock since our inception, and
we do not anticipate paying any such dividends for the foreseeable future.
Accordingly, holders of our common stock will have to rely on stock
appreciation, if any, to earn a return on their investment in our common
stock.
Additional
issuances of our securities may result in immediate dilution to existing
shareholders.
We are
authorized to issue up to 50,000,000 shares of common stock, $0.001 par
value per share, of which 2,200,000 shares of common stock are currently issued
and outstanding. Our Board of Directors has the authority to cause us to issue
additional shares of common, and to determine the rights, preferences and
privilege of such shares, without consent of any of our stockholders. We may
issue shares in connection with financing arrangements or otherwise. Any such
issuances will result in immediate dilution to our existing shareholders’
interests, which will negatively affect the value of your
shares.
9
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements and information relating to our
business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. These statements reflect our
current views and assumptions with respect to future events and are subject to
risks and uncertainties. Forward-looking statements are often identified by
words like: “believe,” “expect,” “estimate,” “anticipate,” “intend,” “project”
and similar expressions or words which, by their nature, refer to future events.
In some cases, you can also identify forward-looking statements by terminology
such as “may,” “will,” “should,” “plans,” “predicts,” “potential” or “continue”
or the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled Risk Factors
beginning on page 3, that may cause our or our industry’s actual results, levels
of activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. In addition, you are directed to
factors discussed in the “Management’s Discussion and Analysis of Financial
Condition and Results of Operation” section beginning on page 32, and the
section entitled “Our Business” beginning on page 19, as well as those discussed
elsewhere in this prospectus. Other factors include, among others: general
economic and business conditions; industry capacity; industry trends;
competition; changes in business strategy or development plans; project
performance; availability, terms, and deployment of capital; and availability of
qualified personnel.
These
forward-looking statements speak only as of the date of this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, or achievements. Except as required by applicable law, including the
securities laws of the United States, we expressly disclaim any obligation or
undertaking to disseminate any update or revisions of any of the forward-looking
statements to reflect any change in our expectations with regard thereto or to
conform these statements to actual results.
TAX
CONSIDERATIONS
We are
not providing any tax advice as to the acquisition, holding or disposition of
the securities offered herein. In making an investment decision, investors are
strongly encouraged to consult their own tax advisor to determine the U.S.
federal, state and any applicable foreign tax consequences relating to their
investment in our securities.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the common stock by the selling
stockholders pursuant to this prospectus. The selling stockholders named herein
will receive all proceeds from the sale of the shares of our common stock in
this offering. Please see “Selling Stockholders” beginning at page
12.
We will
pay all expenses (other than transfer taxes) of the selling stockholders in
connection with this offering.
DETERMINATION
OF THE OFFERING PRICE
There is
no established public market for our shares of common stock. The offering price
of $0.10 per share was determined by us arbitrarily. We believe that this price
reflects the appropriate price that a potential investor would be willing to
invest in our common stock at this stage of our development. This price bears no
relationship whatsoever to our business plan, the price paid for our shares by
our founder, our assets, earnings, book value or any other criteria of value.
The offering price should not be regarded as an indicator of the market price,
if any, of the common stock that may develop in a trading market after this
offering, which is likely to fluctuate.
10
The
selling stockholders will offer the shares of common stock for resale at $0.10
per share until our shares are quoted on the Over-the-Counter Bulletin Board,
and thereafter at prevailing market prices or privately negotiated prices. See
“Plan of Distribution” beginning at page 14 for additional
information.
MARKET
FOR OUR COMMON STOCK
Market
Information
There is
no established public market for our common stock.
After the
effective date of the registration statement of which this prospectus forms a
part, we intend to try to identify a market maker to file an application with
the Financial Industry Regulatory Authority, Inc., or FINRA, to have our common
stock quoted on the Over-the-Counter Bulletin Board. We will have to satisfy
certain criteria in order for our application to be accepted. We do not
currently have a market maker that is willing to participate in this application
process, and even if we identify a market maker, there can be no assurance as to
whether we will meet the requisite criteria or that our application will be
accepted. Our common stock may never be quoted on the Over-the-Counter Bulletin
Board, or, even if quoted, a liquid or viable market may not materialize. There
can be no assurance that an active trading market for our shares will develop,
or, if developed, that it will be sustained.
We have
issued 2,200,000 shares of our common stock since our inception on June 5, 2008.
There are no outstanding options or warrants or securities that are convertible
into shares of common stock.
Holders
We had
37 holders of record of our common stock as of June 3, 2010.
Securities
Authorized for Issuance under Equity Compensation Plans
We have
not established any compensation plans under which equity securities are
authorized for issuance.
11
DIVIDEND
POLICY
We have
not paid any dividends since our incorporation and do not anticipate the payment
of dividends in the foreseeable future. At present, our policy is to retain
earnings, if any, to develop and market our product. The payment of dividends in
the future will depend upon, among other factors, our earnings, capital
requirements, and operating financial conditions.
DILUTION
The
shares of common stock to be sold by the selling stockholders are shares that
are currently issued and outstanding. Accordingly, there will be no dilution to
our existing stockholders as a result of the offering by the selling
stockholders pursuant to this prospectus.
SELLING
STOCKHOLDERS
The
selling stockholders named in this prospectus are offering all of the 700,000
shares of common stock offered through this prospectus. The selling stockholders
acquired their securities between August 1, 2008 and October 27, 2008, through a
private placement of our common stock effected pursuant to Regulation S of the
Securities Act of 1933, as amended (the “Securities Act”), thus exempting such
offering from the registration requirements of the Securities Act.
The
following table provides as of June 3, 2010, information regarding the
beneficial ownership of our common stock held by the selling stockholders,
including:
|
1.
|
The
number and percentage of shares beneficially owned prior to this
offering;
|
|
2.
|
The
total number of shares to be offered hereby;
and
|
|
3.
|
The
total number and percentage of shares that will be beneficially owned upon
completion of this offering.
|
All
expenses incurred with respect to the registration of the offering by the
selling stockholders of these shares of common stock (other than transfer taxes)
will be borne by us, but we will not be obligated to pay any underwriting fees,
discounts, commissions or other expenses incurred by the selling stockholders in
connection with the sale of such shares.
The
shares beneficially owned have been determined in accordance with rules
promulgated by the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. The information in the table below
is current as of the date of this prospectus. All information contained in the
table below is based upon information provided to us by the selling stockholders
and we have not independently verified this information. The selling
stockholders are not making any representation that any shares covered by this
prospectus will be offered for sale. The selling stockholders may from time to
time offer and sell pursuant to this prospectus any or all of the common stock
covered hereby.
For
purposes of this table, beneficial ownership is determined in accordance with
the SEC rules, and includes investment power with respect to shares and shares
owned pursuant to warrants or options exercisable within 60 days, if applicable.
Except as indicated below, the selling stockholders are not the beneficial owner
of any additional shares of common stock or other equity securities issued by us
or any securities convertible into, or exercisable or exchangeable for, our
equity securities.
We may
require the selling stockholders to suspend the sales of the securities offered
by this prospectus upon the occurrence of any event that makes any statement in
this prospectus or the related registration statement untrue in any material
respect or that requires the changing of statements in these documents in order
to make statements in those documents not misleading.
12
None of
the selling stockholders:
(i)
has had a material relationship with us or any of our affiliates other than as a
stockholder at any time within the past three years, except for Yolanda B.
Orendain, who is the wife of Owen A. Orendain, one of the Company’s
directors;
(ii) has
served as one of our officers or directors; nor
(iii) is
a registered broker-dealer or an affiliate of a broker-dealer.
Beneficial Ownership
Prior to this Offering(1)
|
Number of
Shares
|
Beneficial Ownership
After Offering
|
||||||||||||||||||
Name of Selling Stockholder
|
Number of
Shares
|
Percent(2)
|
Being
Offered
|
Number of
Shares
|
Percent(2)
|
|||||||||||||||
Katrina
Orpilla
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Balmeo
Florabelle Flora
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Eden
I. Garcia
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Elizabeth
T. Raza
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Crisanta
Tenebro
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Erneoyn
Soriano Tuusan
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Joenel
Del Rosario Acedre
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Louie
A De La Cruz
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Leila
Arana Atilano
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Bernadette
Alvarez
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Eugene
G. Valencia(3)
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Dorothy
B. Valencia(3)
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Mohamed
Shafii Bin Abdollah
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Mohamed
Ridwan Bin Noor Mohamed
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Hasnah
Binte Abdul Hamid
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Faisal
Khan Bin Hussein Khan Surattee
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Jowi
Joven
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Lee
Wai Kay(4)
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Marina
Returco Lee(4)
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Tisha
Mei Pulmones
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Marcelina
De La Cruz
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Crecelia
Ritchie Anne N. Villaflor
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Benedicto
Donato Lunar
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Merian
C. Bulanadi
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Myla
Cena Medrano
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Angela
L. Benedicto
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Ma
Gemma Velia Navarra Apura
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Lenette
M. Uy
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Catherine
Isip Faundo
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Florence
Dela Cruz Batara
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Yolanda
B. Orendain(5)
|
20,000 | * | 20,000 | 0 | 0 |
13
Beneficial Ownership
Prior to this Offering(1)
|
Number of
Shares
|
Beneficial Ownership
After Offering
|
||||||||||||||||||
Name of Selling Stockholder
|
Number of
Shares
|
Percent(2)
|
Being
Offered
|
Number of
Shares
|
Percent(2)
|
|||||||||||||||
Mary
Elizabeth Dumale
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Nina
Milagros S. Gabriel
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Gaudette
Dumlao Orense
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
Amelito
D. Velasquez
|
20,000 | * | 20,000 | 0 | 0 | |||||||||||||||
TOTAL
|
700,000 | 31.82 | % | 700,000 | 0 | 0 |
*
|
Represents
less than 1%
|
(1)
|
The
named party beneficially owns and has sole voting and investment power
over all shares or rights to these shares, unless otherwise shown in the
table. The numbers in this table assume that the selling
stockholders will not sell shares of common stock not being offered
pursuant to this prospectus or purchase additional shares of common stock,
and assumes that all shares offered are
sold.
|
(2)
|
Applicable
percentage of ownership is based on 2,200,000 shares of common stock
outstanding as of June 3, 2010.
|
(3)
|
Eugene
G. Valencia and Dorothy B. Valencia are husband and wife, and accordingly
collectively own an aggregate of 40,000
shares.
|
(4)
|
Lee
Wai Kay and Marino Returco Lee are husband and wife, and accordingly
collectively own an aggregate of 40,000
shares.
|
(5)
|
Yolanda
B. Orendain is the wife of Owen A. Orendain, one of the Company’s
directors. Mr. Orendain expressly disclaims beneficial ownership of
the shares of common stock of the Company owned by his
wife.
|
PLAN
OF DISTRIBUTION
This
prospectus relates to the registration 700,000 shares of our common stock on
behalf of the selling stockholders named herein.
Each
selling stockholder may sell some or all of his, her or its shares at a fixed
price of $0.10 per share until our shares are quoted on the Over-the-Counter
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices. Sales by the selling stockholders must be made at the fixed
price of $0.10 until a market develops for our common stock.
The
shares may be sold or distributed from time to time by the selling stockholders
or by pledgees, donees or transferees of, or successors in interest to, the
selling stockholders, directly to one or more purchasers (including pledgees) or
through brokers or dealers who act solely as agents. The distribution of the
shares may be effected in one or more of the following methods:
|
·
|
ordinary
broker transactions, which may include long or short
sales;
|
|
·
|
transactions
involving cross or block trades on any securities or market where our
common stock is trading;
|
|
·
|
purchases
by brokers or dealers as principal and resale by such purchasers for their
own accounts pursuant to this
prospectus;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker solicits
purchasers;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
at
the market to or through market makers or into an existing market for the
shares;
|
14
|
·
|
through
transactions in options, swaps or other derivatives (whether exchange
listed or otherwise);
|
|
·
|
in
other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
or
|
|
·
|
any
combination of the foregoing.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
In
addition, the selling stockholders may enter into hedging transactions with
broker-dealers who may engage in shares in the course of hedging the positions
they assume with the selling stockholders. The selling stockholders may also
enter into option or other transactions with broker-dealers that require the
delivery by such broker-dealers of the shares, which shares may be resold
thereafter pursuant to this prospectus.
Brokers,
dealers, or agents participating in the distribution of the shares may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agent (which compensation as to a particular
broker-dealer may be in excess of customary commissions). Neither the selling
stockholders nor we can presently estimate the amount of such compensation. We
know of no existing arrangements between the selling stockholders and any
broker, dealer or agent relating to the sale or distribution of the shares. We
do not anticipate that either our selling stockholders or we will engage an
underwriter in the selling or distribution of our shares.
We have
agreed to bear the expenses of the registration of the shares, including legal
and accounting fees, and such expenses are estimated to be approximately
$19,000.
The
selling stockholders named in this prospectus must comply with the requirements
of the Securities Act and the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) in their offer and sale of their shares of common stock. The
selling stockholders and any broker-dealers who execute sales for the selling
stockholders may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In particular, during such times
as the selling stockholders may be deemed to be engaged in a distribution of the
common stock, and therefore be considered to be underwriters, they must comply
with applicable laws and may among other things:
|
1.
|
Not
engage in any stabilization activities in connection with our common
stock;
|
|
2.
|
Furnish
each broker or dealer through which common stock may be offered, such
copies of this prospectus from time to time, as may be required by such
broker or dealer, and
|
|
3.
|
Not
bid for or purchase any of our securities or attempt to induce any person
to purchase any of our securities permitted under the Exchange
Act.
|
Any
commissions received by broker-dealers and any profit on the resale of shares
sold by them while acting as principals might be deemed to be underwriting
discounts or commissions under the Securities Act.
State
Securities - Blue Sky Laws
Transfer
of our common stock may be restricted under the securities regulations or laws
promulgated by various states and foreign jurisdictions, commonly referred to as
“Blue Sky” laws. Absent compliance with such individual state laws, our common
stock may not be traded in such jurisdictions. Because the securities registered
hereunder have not been registered for resale under the Blue Sky laws of any
state, the holders of such shares and persons who desire to purchase them in any
trading market that might develop in the future, should be aware that there may
be significant state Blue Sky-law restrictions upon the ability of investors to
sell the securities and of purchasers to purchase the securities. Accordingly,
investors may not be able to liquidate their investments and should be prepared
to hold the shares of our common stock for an indefinite period of
time.
15
“Penny
Stock” Restrictions
Broker-dealer
practices in connection with transactions in “penny stocks” are regulated by
penny stock rules adopted by the SEC. Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities registered on
some national securities exchanges). The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and, if the broker-dealer is the sole
market maker, the broker-dealer must disclose this fact and the broker-dealer’s
presumed control over the market, and monthly account statements showing the
market value of each penny stock held in the customer’s account. In addition,
broker-dealers who sell these securities to persons other than established
customers and “accredited investors” must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. Consequently, these
requirements may have the effect of reducing the level of trading activity, if
any, in the secondary market for a security subject to the penny stock rules. If
a trading market does develop for our common stock, these regulations will
likely be applicable, and investors in our common stock may find it difficult to
sell their shares.
Regulation
M
We have
informed the selling stockholders that Regulation M promulgated under the
Exchange Act may be applicable to them with respect to any purchase or sale of
our common stock. In general, Rule 102 under Regulation M prohibits any person
connected with a distribution of our common stock from directly or indirectly
bidding for, or purchasing for any account in which it has a beneficial
interest, any of the shares or any right to purchase the shares, for a period of
one business day before and after completion of its participation in the
distribution.
During
any distribution period, Regulation M prohibits the selling stockholders and any
other persons engaged in the distribution from engaging in any stabilizing bid
or purchasing our common stock except for the purpose of preventing or retarding
a decline in the open market price of the common stock. None of these persons
may effect any stabilizing transaction to facilitate any offering at the market.
As the selling stockholders will be offering and selling our common stock at the
market, Regulation M will prohibit them from effecting any stabilizing
transaction in contravention of Regulation M with respect to the
shares.
We also
have advised the selling stockholders that they should be aware that the
anti-manipulation provisions of Regulation M under the Exchange Act will apply
to purchases and sales of shares of common stock by the selling stockholders,
and that there are restrictions on market-making activities by persons engaged
in the distribution of the shares. Under Regulation M, the selling stockholders
or their agents may not bid for, purchase, or attempt to induce any person to
bid for or purchase, shares of our common stock while such selling stockholders
are distributing shares covered by this prospectus. Regulation M may prohibit
the selling stockholders from covering short sales by purchasing shares while
the distribution is taking place, despite any contractual rights to do so. We
have advised the selling stockholders that they should consult with their own
legal counsel to ensure compliance with Regulation M.
DESCRIPTION
OF SECURITIES
Common
Stock
Our
authorized capital stock consists of 50,000,000 shares of common stock, par
value $ 0.001 per share.
The
holders of our common stock:
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·
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Have
equal ratable rights to dividends from funds legally available therefore,
when, as and if declared by our Board of
Directors;
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·
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Are
entitled to share ratably in all of our assets available for distribution
to holders of common stock upon liquidation, dissolution or winding up of
our affairs;
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16
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·
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Do
not have pre-emptive, subscription or conversion rights and there are no
redemption or sinking fund provisions or rights;
and
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Are
entitled to one non-cumulative vote per share on all matters on which
stockholders may vote.
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The
shares of common stock are not subject to any future call or assessment and all
have equal voting rights. There are no special rights or restrictions of any
nature attached to any of the common shares and they all rank at equal rate
or pari
passu , each with the other, as to all benefits, which might
accrue to the holders of the common shares. All registered stockholders are
entitled to receive a notice of any general annual meeting to be convened by our
Board of Directors.
At any
general meeting, subject to the restrictions on joint registered owners of
common shares, on a showing of hands every stockholder who is present in person
and entitled to vote has one vote, and on a poll every stockholder has one vote
for each share of common stock of which he is the registered owner and may
exercise such vote either in person or by proxy. To the knowledge of our
management, at the date hereof, our officer and directors are the only persons
to exercise control, directly or indirectly, over more than 10% of our
outstanding common shares. See “Security Ownership of Certain Beneficial Owners
and Management.”
We refer
you to our Articles of Incorporation and Bylaws, copies of which were filed with
the registration statement of which this prospectus is a part, and to the
applicable statutes of the State of Nevada for a more complete description of
the rights and liabilities of holders of our securities.
As of
June 3, 2010, there were 2,200,000 shares of our common stock issued and
outstanding.
Options,
Warrants and Rights
There are
no outstanding options, warrants, or similar rights to purchase any of our
securities.
Preferred
Stock
We are
not authorized to issue preferred stock.
Non-cumulative
Voting
Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in such event, the holders of the remaining shares will not be able
to elect any of our directors.
Cash
Dividends
As of the
date of this prospectus, we have not paid any cash dividends to stockholders.
The declaration of any future cash dividend will be at the discretion of our
Board of Directors and will depend upon our earnings, if any, our capital
requirements and financial position, our general economic and other pertinent
conditions. It is our present intention not to pay any cash dividends in the
foreseeable future, but rather to reinvest earnings, if any, into our
business.
17
Transfer
Agent
We do not
currently have a Transfer Agent but we are in the process of retaining
one.
SHARES
ELIGIBLE FOR FUTURE SALE
There is
no public market for our common stock. We cannot predict the effect, if any,
that market sales of shares of our common stock or the availability of shares of
our common stock for sale will have on the market price of our common stock.
Sales of substantial amounts of our common stock in the public market could
adversely affect the market prices of our common stock and could impair our
future ability to raise capital through the sale of our equity
securities.
We
currently have outstanding an aggregate of 2,200,000 shares of our common stock.
Of these shares, upon effectiveness of the registration statement of which this
prospectus forms a part, the 700,000 shares covered hereby will be freely
transferable without restriction or further registration under the Securities
Act.
The
remaining 1,500,000 restricted shares of common stock to be outstanding are
owned by our officer and directors, known as our “affiliates,” and may not be
resold in the public market except in compliance with the registration
requirements of the Securities Act or under an exemption under Rule 144 under
the Securities Act or otherwise.
Rule
144
In
general, under Rule 144 as currently in effect, a person who is not one of our
affiliates and who is not deemed to have been one of our affiliates at any time
during the three months preceding a sale and who has beneficially owned shares
of our common stock that are deemed restricted securities for at least six
months would be entitled after such six-month holding period to sell the common
stock held by such person, subject to the continued availability of current
public information about us (which current public information requirement is
eliminated after a one-year holding period).
A person
who is one of our affiliates, or has been an affiliate of ours at any time
during the three months preceding a sale, and who has beneficially owned shares
of our common stock that are deemed restricted securities for at least six
months would be entitled after such six-month holding period to sell his or her
securities, provided that he or she sells an amount that does not exceed 1% of
the number of shares of our common stock then outstanding, or 22,000 shares
immediately after this offering by the selling stockholders (or, if our common
stock is listed on a national securities exchange, the average weekly trading
volume of the shares during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale), subject to the continued
availability of current public information about us, compliance with certain
manner of sale provisions, and the filing of a Form 144 notice of sale if the
sale is for an amount in excess of 5,000 shares or for an aggregate sale price
of more than $50,000 in a three-month period.
Rule 144
is not available for resales of restricted securities of shell companies or
former shell companies until one year elapses from the time that such company is
no longer considered a shell company.
18
EXPERTS
The
financial statements included in this prospectus, and in the registration
statement of which this prospectus is a part, have been audited by Li &
Company, PC, 178 Tamarack Circle, Skillman, NJ 08558, an independent
registered public accounting firm, to the extent and for the period set forth in
their report appearing elsewhere herein and in the registration statement, and
are included in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis or had, or
is to receive, in connection with the offering, a substantial interest, directly
or indirectly, in the us, nor was any such person connected with us as a
promoter, managing or principal underwriter, voting trustee, director, officer
or employee.
LEGAL
REPRESENTATION
The
validity of the issuance of the common stock offered hereby will be passed upon
for us by Gersten Savage LLP, 600 Lexington Avenue, New York, New York 10022,
included in the opinion letter filed as an exhibit to the registration statement
of which this prospectus forms a part.
OUR
BUSINESS
OVERVIEW
We were
incorporated in the state of Nevada on June 5, 2008. Our offices are currently
located at Block 225, 02-213, Tampines St 23, Singapore 521225. Our U.S.-based
telephone number is (702) 553-3026. Our website, which is currently
being developed, is www.online-tele-solutions.com. The
information that is or will be contained on our website does not form a part of
the registration statement of which this prospectus is a part.
We intend
to provide online hosted call center services for small- and medium-sized
companies, which is described further below.
MARKET
OPPORTUNITY
Many
businesses are using call centers to gain visibility in the marketplace, some
for direct sales and marketing, while others use call centers to resolve
customer product and service inquiries. Businesses of all sizes use
call centers, including Fortune 500 companies with multi-national operations,
and small businesses, such as local banks, insurance companies and hospitals,
use call centers for a variety of customer service, marketing and sales
programs.
Most call
centers have used Customer Relationship Management (“CRM”) software programs
like ACT! by Sage Software, one of the leading selling contact and
customer management software programs, to track and record sequential contacts
and discussions with customers. Initially, CRM software programs were loaded
onto a personal computer as a stand-alone application. As such, a
company using CRM would be required to purchase one copy for every personal
computer that served as a workstation for its staff. Today, with the
use of local area networks, CRM software has been adapted for simultaneous
multi-users.
We
believe that the Internet has become a universal delivery
platform. Through the Internet existing vendors are able to refine
the CRM software into an Internet-delivered service and are able to enhance that
product offering by hosting it on a company’s server(s) and delivering it to
individual customers via the Internet. We intend to capitalize on
this particular delivery method by offering a hosted call center service that
borrows the style of methodology being offered by existing vendors and packaging
it for the small business sector. Based on our initial research, we
believe we can deliver a hosted call center solution that will be affordable in
cost and equal to, and in some cases surpass, those call center solutions that
are currently available in the market.
19
A hosted
call center is a call center without in-house distribution equipment. The PBX,
automated call distributor (“ACD”) and related equipment are hosted by a third
party. Virtual call centers, also called "hosted call centers," enable agents to
work in remote locations. Calls may come in and out via regular telephone lines
or voice over IP (VoIP).
We
provide a hosted environment that will allow our customer to have their own call
center without investing in an in-house solution. We intend to provide
call-center software to our customers which will enable them to handle outbound
calls, inbound calls and a combination of both from their own
locations. We will host their customer calling data on our servers,
and our customers will be able to access the functionality of our software via a
web browser such as Internet Explorer. We refer to this in this
prospectus our “hosted call center” or “hosted software” solution, services or
product.
We
believe that many companies require a robust yet inexpensive integrated call
center solution that combines best practices of CRM with VoIP in order to
maintain contact with their existing customers and establish contact with
prospective customers. Through our online hosted call center
services, we intend to address such needs by providing a software solution for
small call centers with advanced functionality that is typically available only
in high-end solutions, such as CRM, VoIP and telephony-CRM
integration.
Our
intended customers are small call centers and businesses seeking to set-up their
own call centers. Our intended customers are businesses with between 10
and 500 employees, particularly the lower and middle range of this market, or
companies with fewer than 200 employees. By subscribing to our
service, these businesses will use our hosted call center solution rather than
deploy their own, which, we believe, in turn, will provide them with substantial
economic savings as well as the opportunity to focus on their core
competency. Moreover, our product/service will eliminate the need for
companies seeking to establish a call center to retain the personnel to maintain
their operations.
PRODUCTS
AND SERVICES
Our research
has helped us better to understand the call center products currently available
in the market, as well as how we can develop a product to fill the gap in the
marketplace. We believe that existing online call center products appear to
restrict or limit the number of advanced functions available to subscribers,
choosing instead to attract subscribers with low prices rather than the quality
of the product or the functions made available to each customer. Additionally,
upon subscription, most existing companies that provide hosted call center
services require their customers to pay additional fees for separately priced
modules or functions.
As
described above, we intend to provide call-center software to our customers
which will enable them to handle outbound calls, inbound calls and a combination
of both from their own locations. We will host their customer calling
data on our servers, and our customers will be able to access the functionality
of our software via a web browser such as Internet Explorer. Our
online hosted call center services will include the best practices of CRM, web
technologies and VoIP. Our hosted call center product offering will
target the needs of the small and medium sized call center operators, companies
seeking to deploy their own internal call center, or individual
customers. By subscribing to our service and through the use of our
product, our customers will have the ability to handle outbound calls, inbound
calls and a combination of both.
We can
offer no assurance that we will be successful in developing and offering our
products and services. Any number of factors may impact our ability
to develop our products and services, including our ability to obtain financing
if and when necessary; the availability of skilled personnel; market acceptance
of our products, if they are developed; and our ability to gain market
share. Our business will fail if we cannot successfully implement our
business plan or if we cannot develop or successfully market our products and
services.
Registration
Process
Upon
visiting our web site, customers will find general information about our Company
and about the products and services we provide. Interested parties will be able
to register with us at no cost and upon registration, each subscriber will
receive email updates, a quarterly newsletter which we plan to produce once
our business is operational and other pertinent announcements that may be
disseminated to customers and potential customers.
We intend
for the online registration process to collect contact information about
the subscriber. We anticipate that this data will be converted to form part of
the subscriber’s private section on our web site. A survey will also be
conducted wherein each subscriber will be requested to share his, her or its
objectives or reasons for interest in our product. Collecting and reviewing this
type of information will assist our staff in future discussions with the
subscriber and will further assist us in our product
development.
20
Subscriber
Portal
Our plans
anticipate that once the registration process is complete, each subscriber will
be directed to the “Subscriber Portal.” The Subscriber Portal will be a
dedicated web page created for each subscriber that registers with us. Each
subscriber that chooses to register for our services will be able to access our
product and service immediately upon payment through the Subscriber
Portal. The Subscriber Portal will be developed around a CRM platform
that provides each customer with an easy-to-use web interface. Information about
the qualitative and quantitative nature of customer contacts will be managed
from a single user’s interface.
Our
product will be developed in modular fashion, which means it will be developed
as separate functional modules rather than one program, and then linked together
so as to offer an integrated solution for our customers. We believe
that developing our software this way will provide greater flexibility for
future development and customization of the software. It will also
enable us to provide the users of the software with the ability to add and drop
functions, and customize the software for their use.
Each
customer will also be given the ability to customize the feel and look of the
Subscriber Portal. In addition, each customer will be able to add and
delete functions from his, her or its Subscriber Portal. This function is
intended to simplify the interface for those customers who do not need the full
functionality of our product.
Access
Levels
Customers
will have multiple access levels to the Subscriber Portal, one for the
subscribing company’s general use (the Company Access), one for the company’s
managers and one for each user at the Company.
Company
Access – We will provide a subscribing company with general access which
will permit the subscribing company to manage, add, edit and suspend Manager and
User Accesses.
Manager
Access – Those with Manager Access will be able to add, edit and suspend
the access of particular Users assigned to such Manager. Managers are also able
to access active conversation between users and are given the ability to join
active conversations between users, as well as give instruction to support
staff. Moreover, Managers are able to record calls, whether randomly
or all calls for specific operators as well as review the calls and the records
of certain operators.
Users
Access –This is the interface that each user will use to access customer
records needed to support a customer or a process.
Administrative
Portal
The
Administrative Portal section of the web site is for our Company’s use through
which we will be able to handle the back office functions of working with our
customers. The Administrative Portal will be password protected and will feature
high level encryption in order to prevent unauthorized access. Our
officer and employees will be able to monitor web site activity, activate and
revoke password access as deemed necessary and produce monthly, quarterly and
annual reports as needed through the Administrative Portal.
21
PRODUCT
DEVELOPMENT TIMELINE
Early Stage
Development - We
are currently building our website and to date have completed approximately 75%
of its development. We plan to launch an “information only” web site
during the fourth quarter of the fiscal year ended January
31, 2011. By doing so our plan is to be able to begin
building interest in our Company during the development phase, and that this
will encourage web site visitors to return at a later date.
Hiring
of Contractor for
Software Development – We intend to hire an outside contractor for
software development, which will entail integrating an open source telephony
software program with an open source CRM program. We identified several
prospective candidates through internet searches and through our officer’s and
directors’ personal contacts, and considered their design and development skills
and experience, as well as their pricing. Ultimately, we selected a contractor
to complete the initial database design that was recommended to us and whose
prices were reasonable and within our budget. We expect the initial
work, which includes completion of our “information only” website and initial
database design, will be completed within approximately three months from the
date of this prospectus, or during the third quarter of our fiscal year ended
January 31, 2011. We expect the balance of the project, which
includes development of our software, will be completed during the fourth
quarter of our fiscal year ended January 31, 2011 or during the first quarter of
our fiscal year ended January 31, 2012. We will require additional funding in
order to complete plans beyond our initial budget for developmental
expenses.
Data Center
Selection – The selection of a data center which leases and collocate
servers, where we will host our servers, is essential to our success. Service
quality and reliability are critical to our selection process. We
intend to commence these leases immediately after the software development phase
is complete. We plan to commence leases for two development servers
during the fourth quarter of fiscal 2011 or the first quarter of fiscal 2012,
and lease two production servers during the second or third quarters of fiscal
2012.
Evaluation - We intend to invest in two
computers to be used as development servers. One will be used for the telephony
software and the other one for the CRM software.
We will
evaluate several telephony and CRM software and determine which solution best
serves our needs. We will develop a requirement list that will assist us in the
selection of software. The selection will be based on:
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Availability
of needed functionality in the
software;
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The
ability to customize and add functionality to software;
and
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The
ability to integrate the telephony software to the CRM
software
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We
anticipate that the process of evaluating telephony and CRM software will take
approximately two months.
Specifications
and High-Level Design -
- We intend to develop, with the assistance of our contractor, the
detailed specifications for the product. This includes:
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The
way the telephony and CRM software interact with each
other;
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Adapting
the CRM and VoIP softwares to work in a hosted environment;
and
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Developing
the graphical interfaces for the user as well as the back office
administrative area
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It is
anticipated that this process will take approximately one and a half
months.
Installation and
Integration -
During this phase, our contractor will install the telephony and CRM software
and commence the integration of the two in order to determine whether each
component works seamlessly with the other. It is during this phase
that it is determined whether our telephony system will accurately be able to
detect the phone number of a customer service representative upon receipt of a
call and whether such information is accurate and effectively passed into the
CRM software. Upon receipt by the CRM software of the required
information, our system will cross reference it with the database and load the
customer’s information to the customer service representative
computer.
It is
anticipated that the Installation and Integration phase will take approximately
two months.
Customization of
Customer Interface(s) - During this phase, we
will modify each interface to include telephony specific functions such as
answering a call, making a call, recording a call, measuring the length of the
call and the like, as required by each customer. We expect this phase
to take approximately three months of development.
Development of
Reseller Interface -
- We will develop a Reseller Interface which will enable each
reseller to review the number of sales made, the commission earned by each
reseller, commission paid to each reseller and the commission he is owed by our
Company. We expect that we will spend three weeks on the development of the
reseller interface.
22
Integration of
the Solution to our web site - Our outside contractor
will be responsible for the integration of the product into our web site. The
integration process is intended to enable our customers to register for service
from our web site and further permit agents to login to their accounts from our
site. Our site will also include a free demonstration which potential customers
can subscribe to. We expect that this process will take approximately one
month.
Development of
training material - Our officer, with the
assistance of our contractor, will be responsible for the development of the
necessary training materials and Frequently Asked Questions for future
customers’ use. The training material will be available on our web
site.
Beta Trial
- We intend to conduct a Beta trial with a select group of
resellers and customers prior to the formal launch of our product. The feedback
of the trial will be used to affect future modifications and enhancement to
our initial system. We expect that the Beta test period will
last approximately three weeks and any necessary corrections or improvements to
our system based on the Beta trial will take another three weeks. Non-critical
feedback will be incorporated into the development schedule for our
second year of operations.
We plan
to use industry-standard, 128-bit encryption for all web pages delivered to our
customers, and to encrypt our customers’ data on our system in order to secure
their information.
Fees
and Payment Method
For our
product and services, we intend to charge a $1,000 one-time set-up fee per
customer. We will then charge a flat fee of $100 per user at the company, per
month. We plan to generate additional revenue from providing services
for inbound and outbound calls. We will charge $0.02 for outgoing minutes and
$0.016 for incoming minutes.
We will
initially block outgoing calls to regions outside of Canada and United
States. Calls coming in from regions other than the United States and
Canada will not be similarly restricted. We intend to unblock
outgoing international calls upon developing a pre-paid solution through which
our customers will be able to make international calls as long as they have a
positive balance in their account with us; and implementing processes to
minimize the impact of fraudulent calls. Since call centers primarily
serve a regional or national service area, we do not believe that blocking calls
to regions outside the United States and Canada will impact the success or our
business or our ability to gain customers and create revenues.
Variable
telephony charges will depend on the number of minutes used.
We plan
to use the internationally recognized PayPal.com system (http://www.paypal.com/)
for all financial transactions. PayPal is a credit card merchant and
a financial services company that accepts and clears all customer credit card
payments on behalf of participating merchants, such as our
company. We intend to use PayPal because it does not require a
long-term commitment.
COMPETITION
AND COMPETITIVE STRATEGY
Our
intended business is in a competitive industry segment. Hosted CRM product
offerings have been around for a number of years. However, hosted
call center solutions are new to the market.
As
described above, a hosted call center is a call center without in-house
distribution equipment. The PBX, automated call distributor (“ACD”) and related
equipment are hosted by a third party. Virtual call centers, also called "hosted
call centers," enable agents to work in remote locations. Calls may come in and
out via regular telephone lines or VoIP. Hosted CRM software products
are products that track and record sequential contacts and discussions with
customers, but typically do not include an integration to VoIP or phone
services. A hosted CRM/call center solution combines these two
services.
We have
identified two companies that are offering products and services very similar to
our prospective offering and these competitors have significantly greater
resources than we do. They are Five9, Inc. and Vocalcom.
Five9,
Inc.: Based on a study of the literature provided on its website,
Five9, Inc. (www.Five9.com) offers inbound and outbound calling solutions, but
does not seem to offer a complete CRM/call center solution because it does not
offer its own CRM solution. Instead, its customers are required to
integrate with a 3rd party CRM provider which adds extra costs. Below
is a cost comparison between our combined solution and the cost of paying for
Five9.com. The information in the table assumes a call center with 5
stations.
23
Five9, Inc.
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Online-Tele
Solutions
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Set-up
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$
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1,200.0
|
$
|
1,000.0
|
||||
Monthly
|
$
|
625.0
|
$
|
500.00
|
||||
Usage
|
$0.023/min for
inbound
$0.016/min
for outbound
|
$0.02
for inbound
$0.016
for outbound
|
Vocalcom:
Vocalcom is a company that provides call center software and VoIP solutions.
Based on information available on Vocalcom’s website in July 2009 (
http://www.vocalcom.com ), the company has approximately 500,000 agents which
are using its products in 38 countries around the world. The company
currently charges a fee of $1,500 per user per month, compared to our fixed
monthly fees of $500.00.
We
believe that these companies price their services on the basis of a large
business customer, or companies with over 500 employees that need to access the
call center software. In order to be able to provide a fully
integrated solution at a lower cost to those of our competitors, we intend to
market our services to smaller companies, or companies with between 10 and 500
employees, and target the lower and middle range of this market, or companies
with fewer than 200 employees. Our research shows that a majority of
companies dedicate 5% to 10% of their total employees to operate a call
center. For example, companies with 200 or fewer employees will seek
to create call centers of 10 to 20 staff members. Software solutions
for smaller call centers do not need to be as complex as solutions for larger
call centers, and therefore are less expensive to develop, maintain and
service. Our call center solution will be developed for this small
call center market and therefore will be cheaper. Our cost savings will be
passed on to our customers.
There are
several other private companies that offer hosted CRM-only solution but based on
our research, most of these companies do not offer integrated call center
solutions while others offer on-site products and integration services. We do
not deem these companies to be in direct competition with us.
MARKETING
& SALES STRATEGY
Our
marketing strategy will be focused on developing a network of resellers and
building our brand name. We plan to use a number of marketing tactics to develop
brand name.
Our
directors have used and will continue to use their own network of personal
contacts in the small and medium business sector in order to generate business
for us. This included direct telephone contact, email correspondence
and email newsletters. To date, our initial contacts have generated
limited interest in our Company, but no sales have developed as a result of
their initial marketing efforts. Additionally, we intend to use
online demonstrations as a marketing tool once we have arranged sufficient
contacts in the judgment of our officers and directors.
As
part of our growth strategy, we plan to identify, recruit and develop a network
of resellers that are already working with small business owners. At that same
time, we intend to sell directly to end users through our web site. Our goal is
to shift the sales and marketing operations to our reseller community over a
period of several years. To date, we have not yet identified any
resellers. We intend to begin developing our network of resellers
when we complete our beta website.
Our research
has led us to conclude that an effective component of a marketing strategy to
identify business owners is through their professional advisors. We plan to
promote our products and services to information technology services firms with
online email campaigns, testimonials in online advertising pieces and articles
submitted to national and regional chapters about trends in small and medium
size businesses. We intend to begin examining other marketing and
promotional activities such as attending business trade shows to gain brand name
exposure and attract more customers after we have established and implemented
our initial marketing strategy and have had an opportunity to evaluate their
success.
We also
expect to attract customers through our web site. Once a potential reseller has
subscribed with us, we intend to initiate contact with the reseller through
one-on-one and group telephone discussions. During that time we will have an
opportunity to learn more about the reseller’s business and how he, she or it
engages small and medium business owners, the type of services he, she or it
offers and how our product offering fits into what the reseller
does. We also intend to conduct online training and orientation
sessions.
24
We also
intend to use our “information only” web site as an online marketing tool. Our
directors will use email to send out general information to potential
subscribers and resellers and direct them to our web site for more details and
to view the online demonstration.
Online
Advertising
We intend
to undertake an online advertising campaign using Google Adwords as a component
of our marketing strategy. We have selected Google because of its status as one
of the leading online search engines. The Google Adwords program will allow us
the flexibility to customize the advertising campaign around our choice of
keywords, length of time and frequency of insertions and the option to start and
stop at times that are convenient to our schedule. We believe that using the
Google Adwords will give us the maximum amount of online coverage at an
affordable price and the flexibility to closely monitor the costs of the
campaign. We plan to use keywords that an online web visitor may use
when looking for information about hosted call centers.
We may
also in the future consider publishing quarterly newsletters as an additional
marketing tool. If we undertake to use this marketing device, we
would distribute these newsletters to potential customers identified through
uses of bulk mailing lists which we would purchase.
Industry
Trade Shows
Our
directors will be attending industry trade shows and offering to appear as guest
speakers in order to boost our brand and our offerings in the marketplace. This
is an important opportunity to meet face-to-face with potential subscribers and
resellers.
Search
Engine Optimization
Another
facet of our marketing plan is to work on search engine optimization. Search
engines are designed to search out keywords as online users look for the
information they want. Meta-tags act as keywords that reside in the hidden
infrastructure of a web page and help to highlight a web page when someone is
using a search engine to find information. Relevant content is also essential to
obtain higher ranking. For example, by including keywords such
as
“call center” on our web page, the search engines
will identify our web pages as a match for the search request. The effect of
this marketing tactic is to have our web page appear higher on the list of
results for the online user looking for information about a call center. Our
research shows that the majority of online visitors typically look at the search
results in descending order. The higher up the list a search result appears, the
higher the probability that the online user will click through to the web
site.
Sales
Revenue
We
anticipate that our revenue will come from two primary sources: first, from
direct sales to small and medium business owners that subscribe to our online
call center services and second, from our network of resellers. We
anticipate that our operations will begin to generate revenue approximately 18
to 24 months following the date of this prospectus.
25
One of
our long-term goals is to educate and develop our network of resellers to be
able to handle sales inquiries. In order to achieve this, we intend to actively
solicit resellers during the 18 months following the date of this prospectus. We
plan to have our reseller network attend routine and periodic training
throughout their tenure to assure their competitiveness. To date we
have not identified any resellers, although we intend to continue this
approach.
Our research
suggests that resellers will come from a number of business categories. We
anticipate working with resellers that include information technology companies,
computer system integrators, management consultants, telephone interconnect
companies and others companies that are involved in selling to small and medium
businesses. A large part of our sales process will be devoted to online training
of resellers and helping them to market our product to end users.
Our
directors have already identified a number of prospective resellers through
extensive internet research for information technology (“IT”) professional
services companies, and plan to approach them during the product development
period. We intend to target businesses through their IT providers,
and accordingly intend to focus on resellers that have national and regional
reach. We also plan to invite a small group to participate as
Beta-test sites during the development process. We anticipate that the Beta-test
sites will lead to the development of the initial members of our reseller
community.
We will
compensate our resellers on a commission basis, based on an agreed-upon
percentage of the recurring monthly fee we will charge to our
customers.
To
date, we have focused on product development and executing the initial stage of
the marketing effort. We have not earned any sales revenue during this
time.
SOURCES
AND AVAILABILITY OF PRODUCTS AND SUPPLIES
We
believe there are no constraints on the sources or availability of products and
supplies related to our development of our website and Internet-based
business.
PATENTS,
TRADEMARKS, LICENSES, FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS &
CONCESSIONS
We intend
to protect our website with copyright laws. Beyond our trade name, we do not
hold any other intellectual property.
EFFECT
OF EXISTING OR PROBABLE GOVERNMENT REGULATION
We do not
believe that government regulation will have a material impact on the way we
conduct our business, however, any government regulation imposing greater fees
for Internet use or restricting information exchange over the Internet could
result in a decline in the use of the Internet and the viability of
Internet-based services, which could harm our business and operating
results.
RESEARCH
AND DEVELOPMENT ACTIVITIES AND COSTS
We have
not incurred any research and development costs to date. We have plans to
undertake certain research and development activities during the first 12 months
following the date of this prospectus related to the development of our
website.
EMPLOYEES
We have
commenced only limited operations, and therefore currently have no employees
other than our sole officer, who spends approximately 10 hours a week on our
business. Within the next twelve months, we intend to hire a
full-time employee who will act as an executive sales person and first level
support. His or her responsibility will include contacting potential resellers,
responding to inquiries and training new resellers and
subscribers.
26
As our
business and operations increase, we will hire full time management and
administrative support personnel.
DESCRIPTION
OF PROPERTY
We do not
own any real property. Our sole officer provides us with space located at Block
225, 02-213, Tampines St 23, Singapore, free of charge for at least the next 12
months. This location serves as our primary office for planning and
implementing our business plan. We believe this space is sufficient
for our current purposes and will be sufficient for the foreseeable
future.
REPORTS
TO STOCKHOLDERS
We are
not currently a reporting company, but upon effectiveness of the registration
statement of which this prospectus forms a part, we will be required to file
reports with the SEC pursuant to the Exchange Act. These reports include annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K. You may obtain copies of these reports from the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549, on official business days during
the hours of 10 A.M. to 3 P.M. or on the SEC’s website, at www.sec.gov. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330.
We will
also make these reports available on our website once our website is completed
and launched.
LEGAL
MATTERS
We know
of no existing or pending legal proceedings against us, nor are we involved as a
plaintiff in any proceeding or pending litigation. There are no proceedings in
which any of our directors, officer or any of their respective affiliates, or
any beneficial stockholder, is an adverse party or has a material interest
adverse to our interest. Our address for service of process in Nevada is c/o
Business Filings Incorporated, 6100 Neal Road, Suite 880, Reno, NV
89501.
MANAGEMENT
The name,
age and position of each of our current directors and executive officers are as
follows:
Name
|
Age
|
Position
|
||
Mario
Jakiri Tolentino
|
42
|
President,
Treasurer and Director
|
||
Owen
A. Orendain
|
40
|
Director
|
Mario Jakiri
Tolentino – Mr.
Tolentino has served as our Treasurer and Director since our inception on June
5, 2008. He was appointed President on March 1, 2009 following the
resignation of Mr. Geronimo Ferrer Abelanes as President, Secretary and Director
on the same date. Mr. Tolentino is an engineer who specializes in the
area of satellite communications and VoIP telephony systems. Since 2005, he has
worked as the SATCOMM Engineer for Rignet PTE Ltd. of Singapore where he is
responsible for working with customers to document specifications, design and
develop satellite based communication sub-systems. From 1997 to 2005,
Mr. Tolentino worked as a Satellite Engineer for ST Teleport PTE Ltd., also in
Singapore. In this role he was responsible for the operation and maintenance of
a satellite ground station, operation and control booth uplink, downlink of
broadcast services and customer system co-locate services of IP over satellite
VSAT network. He was also responsible for operating and maintaining the VSAT
hub, organizing resources and configuration requirements, troubleshooting and
system optimization. Mr. Tolentino graduated from the Saint Louis University in
Baguio City, Philippines with a BSC in Electronics and Communication Engineering
in 1989. He has also completed industry technical course in Global VSAT
Technology, level 1 & 2, GVF (USA Standard).
27
Owen A.
Orendain – Mr. Orendain was appointed our Director on March 1, 2009
following the resignation of Mr. Abelanes as a director on the same
date. Mr. Orendain is an engineer who focuses on media content for
Ascent Media Pte Ltd., a provider of creative and technical services to the
media and entertainment industries in Singapore. He has held various
engineering positions with Ascent since September 1997. From August
1995 to September 1997, Mr. Orendain was a broadcast controller with ST Teleport
Pte Ltd., a satellite and fibre communications solutions provider also in
Singapore. He has held this position since 2004. Mr. Orendain
attained a Bachelor of Science in Electronics and Communications Engineering
from the Intramuros Manila, Philippines, in March 1993.
Board
Composition
Our
Bylaws provide that the Board of Directors shall consist of at least one member,
and that our shareholders shall establish by resolution the number of directors
from time to time. Each director serves for a term that expires until the next
annual meeting of shareholders and until his successor shall have been elected
and qualified, or until his earlier resignation, removal from office, or
death.
Committees
of the Board of Directors
We do not
presently have a separately constituted audit committee, compensation committee,
nominating committee, executive committee or any other committees of our Board
of Directors. Nor do we have an audit committee “financial expert.” As such, our
entire Board of Directors acts as our audit committee and handles matters
related to compensation and nominations of directors.
Potential
Conflicts of Interest
Since we
do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors, one of whom also serves as an officer of the
Company. Thus, there is an inherent conflict of interest.
Director
Independence
We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
Our determination of independence of directors is made using the definition of
“independent director” contained in Rule 5000(a)(19) of the Marketplace Rules of
the NASDAQ Stock Market (“NASDAQ”), even though such definitions do not
currently apply to us because we are not listed on NASDAQ. We have determined
that Mr. Orendain is “independent” within the meaning of such rules, and that
Mr. Tolentino does not currently meet the definition of “independent” as a
result of his current position as our President and Treasurer.
28
Significant
Employees
We have
no significant employees other than the officer described above.
Involvement
in Certain Legal Proceedings
No
director, person nominated to become a director, executive officer, promoter or
control person of our company has, during the last five years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, nor (iii)
any bankruptcy petition been filed by or against the business of which such
person was an executive officer or a general partner, whether at the time of the
bankruptcy or for the two years prior thereto.
Stockholder
Communications with the Board
We have
not implemented a formal policy or procedure by which our stockholders can
communicate directly with our Board of Directors. Nevertheless, every effort
will be made to ensure that the views of stockholders are heard by the Board of
Directors, and that appropriate responses are provided to stockholders in a
timely manner. During the upcoming year, our Board will continue to monitor
whether it would be appropriate to adopt such a process.
EXECUTIVE
COMPENSATION
We have
not paid since our inception, nor do we owe, any compensation to current or
former officers for their services. We have not entered into any arrangements or
employment agreements with our current sole officer, Mr. Tolentino, pursuant to
which he will be compensated for any services provided to us as an officer, and
we do not anticipate entering into any such arrangements or agreements with him
or any future officer in the foreseeable future.
Outstanding
Equity Awards at 2010 Fiscal Year-End
We do not
currently have a stock option plan nor any long-term incentive plans that
provide compensation intended to serve as an incentive for performance. No
individual grants of stock options or other equity incentive awards have been
made to our officers or directors since our inception; accordingly, none were
outstanding at January 31, 2010.
Employment
Contracts, Termination of Employment, Change-in-Control
Arrangements
There is
currently no employment or other contract or arrangement with our sole officer.
There are no compensation plans or arrangements, including payments to be made
by us, with respect to our sole officer that would result from his resignation,
retirement or other termination from us. There are no arrangements for our
officer that would result from a change-in-control.
29
COMPENSATION
OF DIRECTORS
We have
not compensated our directors for their service on our Board of Directors since
our inception. There are no arrangements pursuant to which directors will be
compensated in the future for any services provided as a director.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On June
5, 2008, we issued 750,000 shares of our common stock to Mr. Tolentino for a
purchase price of $0.01 per share, or aggregate proceeds of
$7,500. We also issued 750,000 shares of our common stock to Mr.
Abelanes, our former officer and director, for a purchase price of $0.01 per
share, or aggregate proceeds of $7,500. Following the issuance of
these shares, Mr. Abelanes decided to leave the Company for personal reasons,
and sold his shares to Owen A. Orendain, an existing shareholder, for a price of
$0.01 per share (the same price at which he purchased the shares from the
Company). The 750,000 shares of common stock were transferred from
Mr. Abelanes to Mr. Orendain on October 23, 2009. Subsequently,
Mr. Orendain was appointed a director of the Company.
We have
not entered into any other transaction, nor are there any proposed transactions,
in which our directors and officer, or any significant stockholder, or any
member of the immediate family of any of the foregoing, had or is to have a
direct or indirect material interest.
Our
officer and directors may be considered promoters of the Company due to their
participation in and management of the business since our
incorporation.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership of our
common stock as of June 3, 2010 for our officer and directors. There
is no other person or group of affiliated persons, known by us to beneficially
own more than 5% of our common stock.
We have
determined beneficial ownership in accordance with the rules of the SEC. These
rules generally attribute beneficial ownership of securities to persons who
possess sole or shared voting power or investment power with respect to those
securities. The person is also deemed to be a beneficial owner of any security
of which that person has a right to acquire beneficial ownership within 60 days.
Unless otherwise indicated, the persons identified in this table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them, subject to applicable community property laws, and the address
for each person listed in the table is c/o Online Tele-Solutions Inc., Block
225, 02-213, Tampines St 23, Singapore 521225.
The
percentage ownership information shown in the table below is calculated based on
2,200,000 shares of our common stock issued and outstanding as of June 3, 2010.
We do not have any outstanding options, warrants or other securities exercisable
for or convertible into shares of our common stock.
Title of Class
|
Name of Beneficial Owner
|
Amount and Nature
of Beneficial Ownership
|
Percentage of
Class
|
|||||||
Common
Stock
|
Mr. Mario Jakiri Tolentino,
|
750,000
|
34.09
|
%
|
||||||
President, Treasurer and Director
|
||||||||||
Common
Stock
|
Mr. Owen A. Orendain, Director(1)
|
770,000
|
35.00
|
%
|
||||||
All
officers and directors as a group (2 persons)
|
1,520,000
|
69.09
|
%
|
30
(1) Represents
750,000 shares of common stock owned directly and 20,000 shares of common stock
owned by Mr. Orendain’s wife. Mr. Orendain expressly disclaims
beneficial ownership with respect to the shares of common stock owned by his
wife.
We are
unaware of any contract or other arrangement the operation of which may at a
subsequent date result in a change in control of our Company.
We do not
have any issued and outstanding securities that are convertible into common
stock. Other than the shares covered by the registration statement of which this
prospectus is a part, we have not registered any shares for sale by stockholders
under the Securities Act. None of our stockholders are entitled to registration
rights.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to our directors, officers or persons controlling us,
we have been advised that it is the SEC’s opinion that such indemnification is
against public policy as expressed in such act and is, therefore,
unenforceable.
31
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATION
The
following discussion of our financial condition and results of operation should
be read in conjunction with the financial statements and related notes that
appear elsewhere in this prospectus. This discussion contains forward-looking
statements and information relating to our business that reflect our current
views and assumptions with respect to future events and are subject to risks and
uncertainties, including the risks in the section entitled Risk Factors
beginning on page 3, that may cause our or our industry’s actual results, levels
of activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
These
forward-looking statements speak only as of the date of this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, or achievements. Except as required by applicable law, including the
securities laws of the United States, we expressly disclaim any obligation or
undertaking to disseminate any update or revisions of any of the forward-looking
statements to reflect any change in our expectations with regard thereto or to
conform these statements to actual results.
Overview
We were
incorporated in the state of Nevada on June 5, 2008. Our offices are currently
located at Block 225, 02-213, Tampines St 23, Singapore 521225. Our U.S.-based
telephone number is (702) 553-3026. Our website, which is currently
being developed, is www.online-tele-solutions.com . The
information that is or will be contained on our website does not form a part of
the registration statement of which this prospectus is a part.
We are a
development stage company that has not generated any revenue and has had limited
operations to date. From June 5, 2008 (inception) to January 31, 2010, we have
incurred accumulated net losses of $21,910. As of January 31, 2010, we had total
assets of $35,590, and total liabilities of $7,500, respectively. Based on our
financial history since inception, our independent auditor has expressed
substantial doubt as to our ability to continue as a going concern.
We
intend to develop and offer Internet-based hosted call center services for small
to medium sized companies, or companies with between 10 – 500 employees, that
are seeking to establish their own internal support and telemarketing divisions.
We intend to provide call-center software to our customers which will enable
them to handle outbound calls, inbound calls and a combination of both from
their own locations. We will host their customer calling data on our
servers, and our customers will be able to access the functionality of our
software via a web browser such as Internet Explorer. Our product
will blend together features of Voice over Internet Protocol (“VoIP”) technology
and customer relationship management (“CRM”) software. To date, we have secured
office space, taken steps to retain a transfer agent, and have been in contact
with professional advisors regarding legal compliance, accounting disclosure
statements and financial reporting. We have also begun our planning for
developing a website and searching for a contractor to develop that
website. We intend to launch our “information only” web
site during the fourth quarter of fiscal year ended January
31, 2011.
Our
business activities during the 12 to 18 months following the date of this
prospectus will be focused on the development of our website, the development of
a network of resellers and the establishment of our brand name. We do not expect
to earn any sales revenue during this time. We anticipate that our
future revenue will come from two primary sources: first, from direct sales to
small and medium business owners that subscribe to our online call center
services and second, from our network of resellers. We anticipate
that our operations will begin to generate revenue approximately 18 to 24 months
following the date of this prospectus.
We can
offer no assurance that we will be successful in developing and offering our
products and services. Any number of factors may impact our ability
to develop our products and services, including our ability to obtain financing
if and when necessary; the availability of skilled personnel; market acceptance
of our products, if they are developed; and our ability to gain market
share. Our business will fail if we cannot successfully implement our
business plan or if we cannot develop or successfully market our products and
services.
32
Activities to
date
Our
directors have done extensive research into this business opportunity,
which includes internet searches using Google and Yahoo search engines and
speaking with their personal contacts, over the past three
months. Based on the feedback from our own personal network and
industry contacts, we are confident, although no assurance can be given, that we
can develop a competitive product offering that meets the needs of the small
business sector.
We
have secured office space, are in the process of retaining a transfer agent, and
have been in contact with professional advisors regarding legal compliance,
accounting disclosure statements and financial reporting. We have also begun our
planning for developing a website and have sourced a contractor for our website
design and software development. We are currently building our
website and to date have completed approximately 75% of its
development. We plan to launch an “information only” web site
during the fourth quarter of the fiscal year ended January 31, 2011. Finally, we
have begun market research of our product and are exploring additional marketing
strategies.
During
fiscal 2010, the bulk of our funds were spent on legal, accounting and product
development. We have not yet spent any funds on marketing. We intend
to begin incurring marketing expenses during the fourth quarter of fiscal 2011
or the first quarter of fiscal 2012. We are also currently
negotiating with the software developer for further developing our software once
the initial database design is complete.
Revenues
and Results of Operations
We have
not generated any revenues since our inception on June 5,
2008. During the period from inception to January 31, 2010, our
operating expenses were primarily comprised of professional fees of $17,981 and
general and administrative expenses of $3,929. Our professional fees
were significantly higher during the fiscal year ended January 31, 2010 than
those during the fiscal year ended January 31, 2009, as a result of increased
legal and accounting fees relating to the preparation of this prospectus and the
registration statement of which it is a part.
Our total
assets at January 31, 2010 were $35,590, consisting of cash on hand of $20,590
and a deposit of $15,000 towards the development of our website. At
January 31, 2009, our assets consisted of $50,000 of cash on hand.
We
currently anticipate that our legal and accounting fees will increase over the
next 12 months as a result of becoming a reporting company with the SEC, and
will be approximately $7,400.
Expenditures
and Plan of Operation for the Remainder of Fiscal 2011
In the
table below there is a breakdown of our anticipated budget for development of
our business, which we estimated to be approximately $50,000 spread over a
twelve month period.
Months
1-3
|
Months 4-6
|
Months 7-9
|
Months 10-12
|
12 Month
Total
|
||||||||||||||||
Legal
/ Accounting
|
$
|
2,000.00
|
$
|
1,500.00
|
$
|
1,500.00
|
$
|
2,400.00
|
$
|
7,400.00
|
||||||||||
Transfer
Agent
|
$
|
2,500.00
|
-
|
-
|
-
|
$
|
2,500.00
|
|||||||||||||
Corporate
Collateral
|
-
|
$
|
500.00
|
$
|
500.00
|
-
|
$
|
1,000.00
|
||||||||||||
Marketing
|
-
|
$
|
500.00
|
$
|
2,000.00
|
$
|
5,000.00
|
$
|
7,500.00
|
|||||||||||
Product
Development
|
$
|
3,000.00
|
$
|
5,000.00
|
$
|
5,000.00
|
$
|
5,000.00
|
$
|
18,000.00
|
||||||||||
Server
Leasing & Colocation
|
$
|
400.00
|
$
|
600.00
|
$
|
600.00
|
$
|
1,800.00
|
$
|
3,400.00
|
||||||||||
PSTN
Connectivity
|
$
|
2,000.00
|
$
|
300.00
|
$
|
600.00
|
$
|
2,900.00
|
||||||||||||
Telephone
+ web hosting
|
$
|
150.00
|
$
|
150.00
|
$
|
150.00
|
$
|
250.00
|
$
|
700.00
|
||||||||||
Support
& Sales Staff
|
-
|
-
|
$
|
1,500.00
|
$
|
1,500.00
|
||||||||||||||
Office
Rental
|
$
|
600.00
|
$
|
600.00
|
$
|
600.00
|
$
|
600.00
|
$
|
2,400.00
|
||||||||||
Office
Supplies
|
$
|
400.00
|
$
|
400.00
|
$
|
400.00
|
$
|
400.00
|
$
|
1,600.00
|
||||||||||
Miscellaneous
Admin.
|
$
|
275.00
|
$
|
275.00
|
$
|
275.00
|
$
|
275.00
|
$
|
1,100.00
|
||||||||||
Total
|
$
|
9,325.00
|
$
|
11,525.00
|
$
|
11,325.00
|
$
|
17,825.00
|
$
|
50,000.00
|
As of the
date of this prospectus, we have completed months 1 – 8 of this estimated
budget. .
During
the fiscal year ended January 31, 2010 and the first quarter of fiscal 2011
through the date of this prospectus, we have secured office space, are in the
process of retaining a transfer agent, and have been in contact with
professional advisors regarding legal compliance, accounting disclosure
statements and financial reporting. We have also begun our planning for
developing a website and have sourced a contractor for our website design and
software development. We are currently building our website and to
date have completed approximately 75% of its development. We plan to
launch an “information
only” web site during the fourth quarter of the fiscal year ended January
31, 2011. Finally, we have begun market research of our product and
are exploring additional marketing strategies.
During
fiscal 2010, the bulk of our funds were spent on legal, accounting and product
development. We have not yet spent any funds on marketing. We intend
to begin incurring marketing expenses during the fourth quarter of fiscal 2011
or the first quarter of fiscal 2012. We are also currently
negotiating with the software developer for further developing our software once
the initial database design is complete.
During
the remainder of our fiscal year ended January 31, 2011, we intend to complete
development of our website and our software. If our website is
completed during the anticipated timeframe, we also intend to lease two
development servers during the fourth quarter of fiscal 2011.
Liquidity
and Capital Resources
We are a
development stage company with no operating history. We have not generated any
revenues. Accordingly, there is no operating history by which to evaluate the
likelihood of our success or our ability to exist as a going concern. We
anticipate our company will experience substantial growth during the next two
years. This period of growth and the start-up of the business are likely to be a
significant challenge to us.
33
Based
on our budget shown above, we anticipate needing approximately $20,000 to meet
our requirements for operating needs for the remainder of months 9-12 of the
estimated budget. We believe that our current cash on hand will
be sufficient to allow us to complete development of our website, and implement
our marketing plan during that time frame. However, no assurance can
be given that we will be able to do so. Additionally, we will need to
obtain financing in order to sustain our operations beyond the end of month
12. We anticipate that our future cash needs will be approximately
$25,000 to $35,000 for the twelve month period following the end of month 12,
and we do not currently have any arrangements for financing such
amount. We anticipate obtaining such financing by way of public or
private offerings of our debt and/or equity securities. No assurance can be
given that any financing, borrowing or sale of equity or debt will be possible
when needed or that we will be able to negotiate acceptable terms in a timely
fashion or even available at all. In addition, our access to capital is affected
by prevailing conditions in the financial and equity capital markets, as well as
our own financial condition.
Even if
we do complete the implementation of our business plan, we may not be able to
generate sufficient revenues to become profitable.
Going
Concern Consideration
The
report of our independent registered accounting firm expresses concern about our
ability to continue as a going concern based on the absence of significant
revenues, recurring losses from operations, and our need for additional
financing in order to fund our projected loss in 2011.
Recently
Issued Accounting Pronouncements
Below is
a listing of recently issued accounting standards. The adoption of these and
other new statements is not expected to have a material effect on our current
financial position, results or operations, or cash flows.
In June
2003, the SEC adopted final rules under Section 404 of the Sarbanes-Oxley Act of
2002 (“Section 404”), as amended by SEC Release No. 33-9072 on October 13, 2009.
Commencing with the Company’s Annual Report for the fiscal year ended January
31, 2011, the Company is required to include a report of management on the
Company’s internal control over financial reporting. The internal control report
must include a statement of management’s responsibility for establishing and
maintaining adequate internal control over financial reporting for the Company;
of management’s assessment of the effectiveness of the Company’s internal
control over financial reporting as of year end; of the framework used by
management to evaluate the effectiveness of the Company’s internal control over
financial reporting; and that the Company’s independent accounting firm has
issued an attestation report on management’s assessment of the Company’s
internal control over financial reporting, which report is also required to be
filed as part of the Annual Report on Form 10-K.
In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP which was launched on July 1, 2009. The Codification does
not change current U.S. GAAP, but is 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 existing accounting standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15,
2009.
In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section
480-10-S99” which represents an update to section 480-10-S99,
distinguishing liabilities from equity, per EITF Topic D-98, Classification and
Measurement of Redeemable Securities . The Company does not
expect the adoption of this update to have a material impact on its consolidated
financial position, results of operations or cash flows.
In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value” , which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities. This update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset, and b. Quoted
prices for similar liabilities or similar liabilities when traded as assets. 2.
Another valuation technique that is consistent with the principles of topic 820;
two examples would be an income approach, such as a present value technique, or
a market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements. The Company does
not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash
flows.
34
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per Share –
Amendments to Section 260-10-S99”, which represents technical corrections
to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings
Per Share for a Period that includes a Redemption or an Induced Conversion of a
Portion of a Class of Preferred Stock and EITF Topic
D-42, The Effect of
the Calculation of Earnings per Share for the Redemption or Induced Conversion
of Preferred Stock . The Company does not expect the adoption of this
update to have a material impact on its consolidated financial position, results
of operations or cash flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees” . This update represents a
correction to Section 323-10-S99-4, Accounting by an
Investor for Stock-Based Compensation Granted to Employees of an Equity Method
Investee . Additionally, it adds observer comment Accounting Recognition
for Certain Transactions Involving Equity Instruments Granted to Other Than
Employees to the Codification. The Company does not expect the
adoption to have a material impact on its consolidated financial position,
results of operations or cash flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)” , which
provides amendments to Subtopic 820-10, Fair Value Measurements and
Disclosures-Overall, for the fair value measurement of investments in certain
entities that calculate net asset value per share (or its equivalent). The
amendments in this update permit, as a practical expedient, a reporting entity
to measure the fair value of an investment that is within the scope of the
amendments in this update on the basis of the net asset value per share of the
investment (or its equivalent) if the net asset value of the investment (or its
equivalent) is calculated in a manner consistent with the measurement principles
of Topic 946 as of the reporting entity’s measurement date, including
measurement of all or substantially all of the underlying investments of the
investee in accordance with Topic 820. The amendments in this update also
require disclosures by major category of investment about the attributes of
investments within the scope of the amendments in this update, such as the
nature of any restrictions on the investor’s ability to redeem its investments a
the measurement date, any unfunded commitments (for example, a contractual
commitment by the investor to invest a specified amount of additional capital at
a future date to fund investments that will be make by the investee), and the
investment strategies of the investees. The major category of investment is
required to be determined on the basis of the nature and risks of the investment
in a manner consistent with the guidance for major security types in U.S. GAAP
on investments in debt and equity securities in paragraph 320-10-50-1B. The
disclosures are required for all investments within the scope of the amendments
in this update regardless of whether the fair value of the investment is
measured using the practical expedient. The Company does not expect the adoption
to have a material impact on its consolidated financial position, results of
operations or cash flows.
In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-01 “Equity Topic 505 –
Accounting for Distributions to Shareholders with Components of Stock and
Cash” , which clarify that the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a potential
limitation on the total amount of cash that all shareholders can elect to
receive in the aggregate is considered a share issuance that is reflected in EPS
prospectively and is not a stock dividend for purposes of applying Topics 505
and 260 (Equity and Earnings Per Share (“EPS”)). Those distributions
should be accounted for and included in EPS calculations in accordance with
paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting
Standards codification. The amendments in this Update also provide a
technical correction to the Accounting Standards Codification. The
correction moves guidance that was previously included in the Overview and
Background Section to the definition of a stock dividend in the Master
Glossary. That guidance indicates that a stock dividend takes nothing
from the property of the corporation and adds nothing to the interests of the
stockholders. It also indicates that the proportional interest of
each shareholder remains the same, and is a key factor to consider in
determining whether a distribution is a stock dividend.
In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-02 “Consolidation Topic
810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a
Scope Clarification” , which provides amendments to Subtopic 810-10 and
related guidance within U.S. GAAP to clarify that the scope of the decrease in
ownership provisions of the Subtopic and related guidance applies to the
following:
|
1.
|
A
subsidiary or group of assets that is a business or nonprofit
activity
|
|
2.
|
A
subsidiary that is a business or nonprofit activity that is transferred to
an equity method investee or joint
venture
|
|
3.
|
An
exchange of a group of assets that constitutes a business or nonprofit
activity for a noncontrolling interest in an entity (including an equity
method investee or joint venture).
|
The
amendments in this Update also clarify that the decrease in ownership guidance
in Subtopic 810-10 does not apply to the following transactions even if they
involve businesses:
|
1.
|
Sales
of in substance real estate. Entities should apply the sale of
real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment)
and 976-605 (Retail/Land) to such
transactions.
|
|
2.
|
Conveyances
of oil and gas mineral rights. Entities should apply the
mineral property conveyance and related transactions guidance in Subtopic
932-360 (Oil and Gas-Property, Plant, and Equipment) to such
transactions.
|
35
If a
decrease in ownership occurs in a subsidiary that is not a business or nonprofit
activity, an entity first needs to consider whether the substance of the
transaction causing the decrease in ownership is addressed in other U.S. GAAP,
such as transfers of financial assets, revenue recognition, exchanges of
nonmonetary assets, sales of in substance real estate, or conveyances of oil and
gas mineral rights, and apply that guidance as applicable. If no other guidance
exists, an entity should apply the guidance in Subtopic 810-10.
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying consolidated financial statements.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
WHERE
YOU CAN GET MORE INFORMATION
In
accordance with the Securities Act of 1933, we are filing with the SEC a
registration statement on Form S-1, of which this prospectus is a part, covering
the securities being offering by the selling stockholders. As permitted by rules
and regulations of the SEC, this prospectus does not contain all of the
information set forth in the registration statement. For further information
regarding both our Company and our common stock, we refer you to the
registration statement, including all exhibits and schedules, which you may
inspect without charge at the public reference facilities of the SEC’s
Washington, D.C. office, 100 F Street, N.E., Washington, D.C. 20549, on official
business days during the hours of 10 A.M. and 3 P.M., and on the SEC Internet
site at www.sec.gov . Information regarding the operation of the public
reference rooms may be obtained by calling the SEC at
1-800-SEC-0330.
We are
not currently a reporting company, but upon effectiveness of the registration
statement of which this prospectus forms a part, we will be required to file
reports with the SEC pursuant to the Exchange Act. These reports include annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K. You may obtain copies of these reports from the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549, on official business days during
the hours of 10 A.M. to 3 P.M. or on the SEC’s website, at www.sec.gov. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330.
We will
also make these reports available on our website once our website is completed
and launched.
36
FINANCIAL
STATEMENTS
ONLINE
TELE-SOLUTIONS INC.
(A
Development Stage Company)
INDEX
TO FINANCIAL STATEMENTS
January
31, 2010 and 2009
Report
of Independent Registered Accounting Firm
|
F–2
|
|
Balance
Sheets at January 31, 2010 and 2009
|
F–3
|
|
Statements
of Operations for the fiscal year ended January 31, 2010, for the period
from June 5, 2008 (inception) through January 31, 2009, and for the period
from June 5, 2008 (inception) through January 31, 2010
|
F–4
|
|
Statement
of Stockholders’ Equity for the period from June 5, 2008 (inception)
through January 31, 2010
|
F–5
|
|
Statements
of Cash Flows for the fiscal year ended January 31, 2010, for the period
from June 5, 2008 (inception) through January 31, 2009, and for the period
from June 5, 2008 (inception) through January 31, 2010
|
F–6
|
|
Notes
to the Financial Statements
|
F–7
|
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Online
Tele-solutions, Inc.
(A
development stage company)
Singapore
We have
audited the accompanying balance sheets of Online Tele-solutions, Inc. (a
development stage company) as of January 31, 2010 and 2009 and the related
statements of operations, stockholders’ equity and cash flows for the fiscal
year ended January 31, 2010, for the period from June 5, 2008 (inception)
through January 31, 2009 and for the period from June 5, 2008 (inception)
through January 31, 2010. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Online Tele-solutions, Inc. as of
January 31, 2010 and 2009 and the results of its operations and its cash flows
for the fiscal year ended January 31, 2010. for the period from June 5, 2008
(inception) through January 31, 2009, and for the period from June 5, 2008
(inception) through January 31, 2010 in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that Online
Tele-solutions, Inc. will continue as a going concern. As discussed in
Note 3 to the financial statements, the Company has a deficit accumulated during
the development stage at January 31, 2010 and had a net loss and cash used in
operations for the period from June 5, 2008 (inception) through January 31,
2010, with no revenues during the period. These factors raise
substantial doubt about the Company’s ability to continue as a going concern.
Management's plans in regards to these matters are also described in Note 3.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/
Li & Company, PC
|
|
Li
& Company, PC
|
|
Skillman,
New Jersey
|
|
March
16, 2010
|
F-2
ONLINE
TELE-SOLUTIONS INC.
(A
Development Stage Company)
BALANCE
SHEETS
January 31,
2010
|
January 31,
2009
|
|||||||
ASSETS
|
||||||||
Current
asset
|
||||||||
Cash
|
$
|
20,590
|
$
|
50,000
|
||||
Total
current assets
|
20,590
|
50,000
|
||||||
Deposit
|
15,000
|
-
|
||||||
Total
assets
|
$
|
35,590
|
$
|
50,000
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$
|
7,000
|
$
|
4,000
|
||||
Due
to stockholder
|
500
|
500
|
||||||
Total
liabilities
|
7,500
|
4,500
|
||||||
Stockholders’
equity
|
||||||||
Common
stock: $0.001 par value; 50,000,000 shares authorized; 2,200,000 shares
issued and outstanding
|
2,200
|
2,200
|
||||||
Additional
paid-in capital
|
47,800
|
47,800
|
||||||
Deficit
accumulated during the development stage
|
(21,910
|
)
|
(4,500
|
)
|
||||
Total
stockholders’ equity
|
28,090
|
45,500
|
||||||
Total
liabilities and stockholders' equity
|
$
|
35,590
|
$
|
50,000
|
See
accompanying notes to financial statements.
F-3
ONLINE
TELE-SOLUTIONS INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
Year-ended
January 31,
2010
|
For the Period
from
June 5, 2008
(inception)
through
January 31,
2009
|
For the Period
from
June 5, 2008
(inception)
through
January 31,
2010
|
||||||||||
REVENUE
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
OPERATING
EXPENSES
|
||||||||||||
Professional
fees
|
13,981
|
4,000
|
17,981
|
|||||||||
General
and administrative
|
3,429
|
500
|
3,929
|
|||||||||
Loss
before income taxes
|
(17,410
|
)
|
(4,500
|
)
|
(21,910
|
)
|
||||||
Provision
for income taxes
|
-
|
-
|
-
|
|||||||||
Net
loss
|
$
|
(17,410
|
)
|
$
|
(4,500
|
)
|
$
|
(21,910
|
)
|
|||
Net
loss per common share - basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
|||
Weighted
average number of common shares outstanding
|
2,200,000
|
1,511,962
|
1,949,477
|
See
accompanying notes to financial statements.
F-4
ONLINE
TELE-SOLUTIONS INC.
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS' EQUITY
Common Stock
|
Additional
|
Deficit
Accumulated
During the
|
Total
|
|||||||||||||||||
Shares
|
Amount
|
Paid in
Capital
|
Development
Stage
|
Stockholders'
Equity
|
||||||||||||||||
Inception,
June 5, 2008
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
Shares
issued to founder for cash on August 1, 2008 at $0.0125 per
share
|
1,500,000
|
1,500
|
13,500
|
15,000
|
||||||||||||||||
Shares
issued from August 1, 2008 through October 27, 2008 for cash at $0.05 per
share
|
700,000
|
700
|
34,300
|
-
|
35,000
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
(3,500
|
)
|
( 3,500
|
)
|
|||||||||||||
Balance,
January 31, 2009
|
2,200,000
|
2,200
|
47,800
|
(4,500
|
)
|
45,500
|
||||||||||||||
Net
loss
|
(17,410
|
)
|
(17,410
|
)
|
||||||||||||||||
Balance,
January 31, 2010
|
2,200,000
|
$
|
2,200
|
$
|
47,800
|
$
|
(21,910
|
)
|
$
|
28,090
|
See
accompanying notes to financial statements.
F-5
ONLINE
TELE-SOLUTIONS INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
Year
Ended
January 31,
2010
|
For the
Period from
June 5, 2008
(inception)
through
January 31,
2009
|
For the Period
from
June 5, 2008
(inception)
through
January 31,
2010
|
||||||||||
CASH
FLOWS USED IN OPERATING ACTIVITIES
|
||||||||||||
Net
loss
|
$ | (17,410 | ) | $ | (4,500 | ) | $ | (21,910 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Increase
in accrued liabilities
|
3,000 | 4,000 | 7,000 | |||||||||
Net
cash used in operating activities
|
(14,410 | ) | (500 | ) | (14,910 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Software
|
(15,000 | ) | - | (15,000 | ) | |||||||
Net
cash used in investing activities
|
(15,000 | ) | - | (15,000 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Increase
in due to stockholder
|
- | 500 | 500 | |||||||||
Proceeds
from issuance of common stock
|
- | 50,000 | 50,000 | |||||||||
Cash
from financing activities
|
- | 50,500 | 50,500 | |||||||||
Net
change in cash
|
(29,410 | ) | 50,000 | 20,590 | ||||||||
Cash,
beginning of the period
|
50,000 | - | - | |||||||||
Cash,
end of the period
|
$ | 20,590 | $ | 50,000 | $ | 20,590 | ||||||
Supplemental
disclosure with respect to cash flows:
|
||||||||||||
Cash
paid for income taxes
|
$ | - | $ | - | $ | - | ||||||
Cash
paid for interest
|
$ | - | $ | - | $ | - |
See
accompanying notes to financial statements.
F-6
ONLINE
TELE-SOLUTIONS INC.
(A
Development Stage Company)
January
31, 2009
NOTES TO
THE FINANCIAL STATEMENTS
Note
1 – Nature of Operations
Online
Tele-Solutions, Inc. (a development stage company) (“Online Tele-Solutions” or
the “Company”) was incorporated under the laws of the State of Nevada on June 5,
2008. Initial operations have included organization and
incorporation, target market identification, marketing plans, and capital
formation. A substantial portion of the Company’s activities has involved
developing a business plan and establishing contacts and visibility in the
marketplace. The Company has generated no revenues since inception.
Note
2 – Significant Accounting Policies
Basis
of presentation
The
Company's financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America.
Development stage
company
The
Company is a development stage company as defined by section 810-10-20 of the
FASB Accounting Standards Codification. The Company is still devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since
inception have been considered as part of the Company’s exploration stage
activities.
Use
of estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 as well as the reported amount of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Due to
the limited level of operations, the Company has not had to make material
assumptions or estimates other than the assumption that the Company is a going
concern.
Fiscal
year end
The
Company elected January 31 as its fiscal year ending date.
Cash
equivalents
The
Company considers all highly liquid investments with maturities of three months
or less at the time of purchase to be cash equivalents.
Fair
value of financial instruments
The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph
820-10-35-37”) to measure the fair value of its financial
instruments. Paragraph 820-10-35-37 establishes a framework for
measuring fair value in accounting principles generally accepted in the United
States of America (U.S. GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair
value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three (3) broad levels. The fair value
hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to
unobservable inputs. The three (3) levels of fair value hierarchy
defined by Paragraph 820-10-35-37 are described below:
F-7
Level
1
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting
date.
|
Level
2
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
Level
3
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
The
carrying amounts of the Company’s financial assets and liabilities, such as
cash, accounts payable, and due to stockholder, approximate their fair values
because of the short maturity of these instruments.
The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
January 31, 2010 or 2009, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the periods ended January 31, 2010 or 2009.
Revenue
recognition
The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue
when it is realized or realizable and earned. The Company considers
revenue realized or realizable and earned when all of the following criteria are
met: (i) persuasive evidence of an arrangement exists, (ii) the product has been
shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably
assured.
Income
taxes
The
Company follows Section 740-10-30 of the FASB Accounting Standards Codification,
which requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to
the extent management concludes it is more likely than not that the assets will
not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the Statements of Operations in the period
that includes the enactment date.
The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification
(“Section 740-10-25”). Section 740-10-25.addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements. Under Section 740-10-25, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax
benefits recognized in the financial statements from such a position should be
measured based on the largest benefit that has a greater than fifty percent
(50%) likelihood of being realized upon ultimate settlement. Section 740-10-25
also provides guidance on de-recognition, classification, interest and penalties
on income taxes, accounting in interim periods and requires increased
disclosures. The Company had no material adjustments to its liabilities for
unrecognized income tax benefits according to the provisions of Section
740-10-25.
Net
loss per common share
Net loss
per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification. Basic net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock and potentially outstanding shares of common stock during each
period. There were no potentially dilutive shares outstanding as of
January 31, 2010 or 2009.
F-8
Recently
issued accounting standards
In June
2003, the SEC adopted final rules under Section 404 of the Sarbanes-Oxley Act of
2002 (“Section 404”), as amended by SEC Release No. 33-9072 on October 13, 2009.
Commencing with the Company’s Annual Report for the fiscal year ended January
31, 2011, the Company is required to include a report of management on the
Company’s internal control over financial reporting. The internal control report
must include a statement of management’s responsibility for establishing and
maintaining adequate internal control over financial reporting for the Company;
of management’s assessment of the effectiveness of the Company’s internal
control over financial reporting as of year end; of the framework used by
management to evaluate the effectiveness of the Company’s internal control over
financial reporting; and that the Company’s independent accounting firm has
issued an attestation report on management’s assessment of the Company’s
internal control over financial reporting, which report is also required to be
filed as part of the Annual Report on Form 10-K.
In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP which was launched on July 1, 2009. The Codification does
not change current U.S. GAAP, but is 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 existing accounting standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15,
2009.
In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section
480-10-S99” which represents an update to section 480-10-S99,
distinguishing liabilities from equity, per EITF Topic D-98, Classification and
Measurement of Redeemable Securities . The Company does not
expect the adoption of this update to have a material impact on its consolidated
financial position, results of operations or cash flows.
In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value” , which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities. This update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset, and b. Quoted
prices for similar liabilities or similar liabilities when traded as assets. 2.
Another valuation technique that is consistent with the principles of topic 820;
two examples would be an income approach, such as a present value technique, or
a market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements. The Company does
not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash
flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per Share –
Amendments to Section 260-10-S99”, which represents technical corrections
to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings
Per Share for a Period that includes a Redemption or an Induced Conversion of a
Portion of a Class of Preferred Stock and EITF Topic
D-42, The Effect of
the Calculation of Earnings per Share for the Redemption or Induced Conversion
of Preferred Stock . The Company does not expect the adoption of this
update to have a material impact on its consolidated financial position, results
of operations or cash flows.
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees” . This update represents a
correction to Section 323-10-S99-4, Accounting by an
Investor for Stock-Based Compensation Granted to Employees of an Equity Method
Investee . Additionally, it adds observer comment Accounting Recognition
for Certain Transactions Involving Equity Instruments Granted to Other Than
Employees to the Codification. The Company does not expect the
adoption to have a material impact on its consolidated financial position,
results of operations or cash flows.
F-9
In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)” , which
provides amendments to Subtopic 820-10, Fair Value Measurements and
Disclosures-Overall, for the fair value measurement of investments in certain
entities that calculate net asset value per share (or its equivalent). The
amendments in this update permit, as a practical expedient, a reporting entity
to measure the fair value of an investment that is within the scope of the
amendments in this update on the basis of the net asset value per share of the
investment (or its equivalent) if the net asset value of the investment (or its
equivalent) is calculated in a manner consistent with the measurement principles
of Topic 946 as of the reporting entity’s measurement date, including
measurement of all or substantially all of the underlying investments of the
investee in accordance with Topic 820. The amendments in this update also
require disclosures by major category of investment about the attributes of
investments within the scope of the amendments in this update, such as the
nature of any restrictions on the investor’s ability to redeem its investments a
the measurement date, any unfunded commitments (for example, a contractual
commitment by the investor to invest a specified amount of additional capital at
a future date to fund investments that will be make by the investee), and the
investment strategies of the investees. The major category of investment is
required to be determined on the basis of the nature and risks of the investment
in a manner consistent with the guidance for major security types in U.S. GAAP
on investments in debt and equity securities in paragraph 320-10-50-1B. The
disclosures are required for all investments within the scope of the amendments
in this update regardless of whether the fair value of the investment is
measured using the practical expedient. The Company does not expect the adoption
to have a material impact on its consolidated financial position, results of
operations or cash flows.
In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-01 “Equity Topic 505 –
Accounting for Distributions to Shareholders with Components of Stock and
Cash” , which clarify that the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a potential
limitation on the total amount of cash that all shareholders can elect to
receive in the aggregate is considered a share issuance that is reflected in EPS
prospectively and is not a stock dividend for purposes of applying Topics 505
and 260 (Equity and Earnings Per Share (“EPS”)). Those distributions
should be accounted for and included in EPS calculations in accordance with
paragraphs 480-10-25- 14 and 260-10-45-45 through 45-47 of the FASB Accounting
Standards codification. The amendments in this Update also provide a
technical correction to the Accounting Standards Codification. The
correction moves guidance that was previously included in the Overview and
Background Section to the definition of a stock dividend in the Master
Glossary. That guidance indicates that a stock dividend takes nothing
from the property of the corporation and adds nothing to the interests of the
stockholders. It also indicates that the proportional interest of
each shareholder remains the same, and is a key factor to consider in
determining whether a distribution is a stock dividend.
In
January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-02 “Consolidation Topic
810 – Accounting and Reporting for Decreases in Ownership of a Subsidiary – a
Scope Clarification” , which provides amendments to Subtopic 810-10 and
related guidance within U.S. GAAP to clarify that the scope of the decrease in
ownership provisions of the Subtopic and related guidance applies to the
following:
|
1.
|
A
subsidiary or group of assets that is a business or nonprofit
activity
|
|
2.
|
A
subsidiary that is a business or nonprofit activity that is transferred to
an equity method investee or joint
venture
|
|
3.
|
An
exchange of a group of assets that constitutes a business or nonprofit
activity for a noncontrolling interest in an entity (including an equity
method investee or joint venture).
|
The
amendments in this Update also clarify that the decrease in ownership guidance
in Subtopic 810-10 does not apply to the following transactions even if they
involve businesses:
|
1.
|
Sales
of in substance real estate. Entities should apply the sale of
real estate guidance in Subtopics 360-20 (Property, Plant, and Equipment)
and 976-605 (Retail/Land) to such
transactions.
|
|
2.
|
Conveyances
of oil and gas mineral rights. Entities should apply the
mineral property conveyance and related transactions guidance in Subtopic
932-360 (Oil and Gas-Property, Plant, and Equipment) to such
transactions.
|
If a
decrease in ownership occurs in a subsidiary that is not a business or nonprofit
activity, an entity first needs to consider whether the substance of the
transaction causing the decrease in ownership is addressed in other U.S. GAAP,
such as transfers of financial assets, revenue recognition, exchanges of
nonmonetary assets, sales of in substance real estate, or conveyances of oil and
gas mineral rights, and apply that guidance as applicable. If no other guidance
exists, an entity should apply the guidance in Subtopic 810-10. Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying consolidated financial statements.
F-10
Note
3 – Going Concern
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As reflected in the accompanying
financial statements, the Company had a deficit accumulated during the
development stage of $21,910 at January 31, 2010, a net loss from operations of
$17,410 and net cash used in operations of $14,410 for the fiscal year ended
January 31, 2010, respectively, with no revenues earned since
inception.
While the
Company is attempting to commence operations and generate revenues, the
Company’s cash position may not be sufficient enough to support the Company’s
daily operations. Management intends to raise additional funds by way
of a public or private offering. Management believes that the actions
presently being taken to further implement its business plan and generate
revenues provide the opportunity for the Company to continue as a going
concern. While the Company believes in the viability of its strategy
to generate revenues and in its ability to raise additional funds, there can be
no assurances to that effect. The ability of the Company to continue
as a going concern is dependent upon the Company’s ability to further implement
its business plan and generate revenues.
The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
Note
4 – Deposit
The
Company follows section 350-50-25 of the FASB Accounting Standards
Codification, Website
Development Costs, which specifies the appropriate accounting for costs
incurred in connection with the development and maintenance of websites. Under
350-50-25, costs related to certain website development activities are expensed
as incurred (such as planning and operating stage activities). Costs relating to
certain website application and infrastructure development are generally
capitalized, and are amortized over its estimated useful life of two (2) years.
Currently the Company made a deposit of $15,000 for work which is not yet
completed.
Note
5 – Due to Stockholder
The
amount owing to stockholder is unsecured, non-interest bearing and has no
specific terms of repayment.
Note
6 – Stockholders’ Equity
Sale
of common stock
On August
1, 2008 the Company issued 1,500,000 of its common stock at $0.05 to the
company’s president for $15,000.
For the
period from August 1, 2008 to October 27, 2008 the Company sold 700,000 shares
of its common stock at $0.05 per share for $35,000.
Note
7 – Related Party Transactions
Compensation
of officer
The
financial statements do not include compensation charges for services with a
fair value of $50 per hour or $26,000 on an annual basis, donated by the sole
officer of the Company.
Free
office space
The
Company has been provided office space by its Chief Executive Officer at no
cost. The management determined that such cost is nominal and did not
recognize the rent expense in its financial statements.
Note
8 – Income Taxes
At
January 31, 2010, the Company had net operating loss (“NOL”) carry–forwards for
Federal income tax purposes of $21,910 that may be offset against future taxable
income through 2030. No tax benefit has been reported with respect to
these net operating loss carry-forwards in the accompanying financial statements
because the Company believes that the realization of the Company’s net deferred
tax assets of approximately $7,450, calculated at an effective tax rate of 34%,
was not considered more likely than not and accordingly, the potential tax
benefits of the net loss carry-forwards are fully offset by a valuation
allowance of $7,450.
Deferred
tax assets consist primarily of the tax effect of NOL
carry-forwards. The Company has provided a full valuation allowance
on the deferred tax assets because of the uncertainty regarding its
realizability. The valuation allowance increased approximately $5,919
for the period ended January 31, 2010.
Note
9 – Subsequent Events
Management
performed an evaluation of the Company’s activity that occurred after the
balance sheet date of January 31, 2010 through March 16, 2010, the date when the
financial statements were issued to determine if they must be reported. The
Management of the Company determined that there are no reportable subsequent
events to be disclosed.
F-11
Until
________, 2010 [90 days from date of prospectus], all dealers effecting
transactions in these securities, whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to the dealer’s
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
You
should rely only on the information contained in this prospectus. We have not
authorized any dealer, salesperson or other person to give you different
information. This prospectus does not constitute an offer to sell nor are they
seeking an offer to buy the securities referred to in this prospectus in any
jurisdiction where the offer or sale is not permitted. The information contained
in this prospectus and the documents incorporated by reference are correct only
as of the date shown on the cover page of these documents, regardless of the
time of the delivery of these documents or any sale of the securities referred
to in this prospectus.
ONLINE
TELE-SOLUTIONS INC.
700,000
Shares
of
Common
Stock
PROSPECTUS
_________,
2010
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13. Other Expenses of Issuance and Distribution
The
following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby. All such expenses will
be borne by the registrant.
Name of Expense
|
Amount
|
|||
Securities
and Exchange Commission registration fee
|
$
|
3.91
|
||
Legal,
accounting fees and expenses (1)
|
$
|
17,000.00
|
||
Edgar
filing, printing and engraving fees (1)
|
$
|
2,000.00
|
||
Total
(1)
|
$
|
19,003.91
|
(1)
Estimated.
ITEM
14. Indemnification of Directors and Officers
Our
officers and directors are indemnified as provided by the Nevada Revised
Statutes and by our Bylaws.
Under the
Nevada Revised Statutes, director indemnification from liability to a company or
its stockholders for monetary liabilities applies automatically unless it is
specifically limited by a company’s Articles of Incorporation. Our Articles of
Incorporation do not specifically limit our directors’ indemnification. Excepted
from that indemnification are: (a) a willful failure to deal fairly with the
company or its stockholders in connection with a matter in which the director
has a material conflict of interest; (b) a violation of criminal law, unless the
director had reasonable cause to believe that his or her conduct was lawful or
no reasonable cause to believe that his or her conduct was unlawful; (c) a
transaction from which the director derived an improper personal profit; and (d)
willful misconduct.
Our
Bylaws provide that we will indemnify our directors and officers to the extent
permitted by Nevada law. However, based on current case law passed by
Nevada courts, we may modify the extent of such indemnification by individual
contracts with our directors and officers; and, provided, further, that we shall
not be required to indemnify any director or officer in connection with any
proceeding, or part thereof, initiated by such person unless such
indemnification: (a) is expressly required to be made by law, (b) the proceeding
was authorized by our Board of Directors, (c) is provided by us, in our sole
discretion, pursuant to the powers vested in us under Nevada law or (d) is
required to be made pursuant to the Bylaws.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and control persons pursuant to the
foregoing provisions or otherwise, we have been advised that, in the opinion of
the SEC, such indemnification is against public policy, and is, therefore,
unenforceable.
ITEM
15. Recent Sales of Unregistered Securities
1. On
June 5, 2008, we issued 750,000 shares of our common stock to each of Geronimo
Ferrer Abelanes, our former officer and director, and Mario Jakiri Tolentino,
our current sole officer, for a purchase price of $0.01 per share, or aggregate
proceeds of $15,000.
II-1
The
shares were issued in a transaction not registered under the Securities Act in
reliance upon the exemption provided under Section 4(2) of the Securities Act
and/or Regulation D promulgated by the SEC. We believed that the
exemption was available because the offer and sale of the securities did not
involve a public offering and because of the limited number of recipients, and
the purchasers’ access to information concerning our Company.
2. Between
August 1, 2008 and October 27, 2008, we issued an aggregate of 700,000 shares of
common stock to 35 individuals at a price of $0.05 per share, in one offering
for total proceeds of $35,000.
We
believe that the issuances of the securities set forth above were exempt from
registration as an offering completed under Regulation S of the Securities
Act and the regulations promulgated thereunder. We believe that this exemption
from registration was available for because each purchaser represented to us,
among other things, that he, she or it was a non-U.S. person as defined in
Regulation S, was not acquiring the shares for the account or benefit of,
directly or indirectly, any U.S. person, had the intention to acquire the
securities for investment purposes only and not with a view to or for sales in
connection with any distribution thereof, and that such purchaser was
sophisticated and was able to bear the risk of loss of the entire
investment. Further, we did not otherwise engage in distribution of
these shares in the U.S.
ITEM
16. Exhibits and Financial Statement Schedules
(a)
Exhibits:
The
following exhibits are filed as part of this registration
statement:
Exhibit
|
Description
|
|
3.1
|
Articles
of Incorporation of Registrant.*
|
|
3.2
|
Bylaws
of Registrant.*
|
|
4.1
|
Specimen
Common Stock Certificate.*
|
|
5.1
|
Legal
Opinion of Gersten Savage LLP.*
|
|
10.1
|
Subscription
Agreement dated June 5, 2008 between the Registrant and Geronimo
Abelanes.*
|
|
10.2
|
Subscription
Agreement dated June 5, 2008 between the Registrant and Mario Jakiri
Tolentino.*
|
|
10.3
|
Form
of Subscription Agreement related to the Regulation S private
placement.*
|
|
23.1
|
Consent
of Li & Company, PC.
|
|
23.2
|
Consent
of Gersten Savage LLP (incorporated in Exhibit
5.1).*
|
*
|
Previously
filed.
|
II-2
Undertakings
The
undersigned Registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the “Act”);
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most-recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) Insofar
as indemnification for liabilities arising under the Act may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(5) That,
for the purpose of determining liability under the Act to any purchaser, each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
II-3
Signatures
Pursuant
to the requirements of the Securities Act of 1933, the Registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Singapore, on June 4,
2010.
ONLINE
TELE-SOLUTIONS INC.
|
||
By:
|
/s/ Mario Jakiri Tolentino
|
|
Name:
|
Mario
Jakiri Tolentino
|
|
Title:
|
President,
Treasurer and Director
|
|
(principal
executive officer, principal
|
||
financial
officer and principal accounting
|
||
officer)
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE
|
CAPACITY IN WHICH SIGNED
|
DATE
|
||
/s/ Mario Jakiri
Tolentino
|
President,
Treasurer and Director
|
June
4, 2010
|
||
Mario
Jakiri Tolentino
|
(principal
executive officer, principal financial
officer
and principal accounting officer)
|
|||
/s/ Owen A. Orendain
|
Director
|
June
4, 2010
|
||
Owen
A. Orendain
|
II-4
INDEX
TO EXHIBITS
Exhibit
|
Description
|
|
3.1
|
Articles
of Incorporation of Registrant.*
|
|
3.2
|
Bylaws
of Registrant.*
|
|
4.1
|
Specimen
Common Stock Certificate.*
|
|
5.1
|
Legal
Opinion of Gersten Savage LLP.*
|
|
10.1
|
Subscription
Agreement dated June 5, 2008 between the Registrant and Geronimo
Abelanes.*
|
|
10.2
|
Subscription
Agreement dated June 5, 2008 between the Registrant and Mario Jakiri
Tolentino.*
|
|
10.3
|
Form
of Subscription Agreement related to the Regulation S private
placement.*
|
|
23.1
|
Consent
of Li & Company, PC.
|
|
23.2
|
Consent
of Gersten Savage LLP (incorporated in Exhibit
5.1).*
|
*
|
Previously
filed.
|
II-5