VGTel, Inc. - FORM 10-Q - February 16, 2011

Attached files

file	filename
EX-31.1 - VGTel, Inc.	exh31_1.htm
EX-32.1 - VGTel, Inc.	exh32_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2010 (Mark One)


þ		QUARTERLY REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2010 OR


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

New York	4814	01-0671426
State or Other Jurisdiction of Incorporation of Organization	Primary Standard Industrial Code	(I.R.S. Employer Identification No.)

(Name of Small Business Issuer in its Charter)

VGTel, Inc.

Ron Kallus, CEO

2 Ingrid Road

Setauket, NY 11733-2218

Tel: 631-458-1120

Address, including zip code, and telephone number, including area code, of registrant's principal executive office)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes x No Ё

Transitional Small Business Disclosure Format (check one): Yes ¨ No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes No x

As of February 15, 2011 9,530,000 shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one): Yes No x

VGTEL, INC.

FINANCIAL STATEMENTS

December 31, 2010

(unaudited)

TABLE OF CONTENTS

		PART I FINANCIAL INFORMATION
Item	1	Financial Statements	3
		Balance Sheets	3
		Statements of Operations	4
		Statement of Cash Flows	5
		Notes to Financial Statements	6
Item	2	Management Discussion & Analysis	7
Item	3	Financial Controls & Procedures	9

		PART II OTHER INFORMATION
Item	1	Legal Proceedings	9
Item	1A	Risks	9
Item	2	Changes in Securities	9
Item	3	Default Upon Senior Securities	9
Item	4	Submission of Matters to a Vote of Securities Holders	9
Item	5	Other Information	9
Item	6	Exhibits And Reports on Form 8K	10

VGTel, Inc.

Balance Sheets

(Unaudited)

	December 31,			March 31,
ASSETS	2010			2010

CURRENT ASSETS
Cash and cash equivalents	$	1,476		$	3,063
Accounts receivable		1,056			1,030

Total Current Assets		2,555			2,361

Intellectual property, net		0			4,350

Total Assets	$	2,532		$	6,711

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable & accrued liabilities	$	2,400		$	7.045
Due to shareholders/others		28,730			19,730
Due to shareholder/officer		31,323			31,323

Total Current Liabilities		62,453			58,098

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value,
authorized 10,000,000 shares; none issued		-			-
Common stock, $.0001 par value,
authorized 200,000,000 shares; issued and
outstanding 6,433,900 and 6,433,900, respectively		643			643
Additional paid in capital		411,058			368,053
Accumulated deficit		(471,622	)		(420,083	)

Total Stockholders' Deficit		(59,921	)		(51,387	)

Total Liabilities and Stockholders' Deficit	$	2,532		$	6,711

The accompanying notes are an integral part of these financial statements.

VGTel, Inc.

Statements of Operations

(unaudited)




		For the Three				For the Nine
		Month Period Ending				Month Period Ending
		December 31,				December 31,
		2010		2009		2010		2009

REVENUES	$	3,000	$	4,200	$	9,000	$	12,100

OPERATING EXPENSES
General and administrative		1,601		3,107		5,064		9,804
Research and development		2,700		3,840		8,120		11,380
Officers' compensation and Rent		14,000		14,000		42,000		42,000
Depreciation and amortization		1,450		1,450		4,350		4,350
Professional Services- Consulting		-		-		-		-

Total operating expenses		19,751		22,397		59,534		67,534

Interest expense		335		335		1,005		999

NET LOSS	$	(17,086)	$	(18,532)	$	(51,539)	$	(56,433)

INCOME (LOSS) PER COMMON SHARE-
Basic and Diluted	$	(0.00)	$	(0.00)	$	(0.01)	$	(0.01)

Weighted average number of shares outstanding		6,433,900		6,433,900		6,433,900		6,433,900

The accompanying notes are an integral part of these financial statements.

VGTel, Inc.

Statements of Cash Flows

(unaudited)





		Nine months ended		Nine months ended
		December 31, 2010		December 31, 2009

Cash flows from operating activities
Net Loss	$	(51,539)	$	(56,433)
Adjustments to reconcile net loss to net
cash used by operating activities:
Imputed Officer's Compensation & Rent		42,000		42,000
Depreciation and amortization		4,350		4,350
Imputed interest		1005		999
Changes in assets and liabilities:
Accounts receivable		(26)		(100)
Accounts payable		(4,645)		1,900
Net cash used by operating activities		(8,855)		(7,284)

Cash flows from financing activities
Proceeds from Shareholder - Related Party		9,000		5,500

Net increase (decrease ) in cash		145		(1,784)

Cash and cash equivalents, beginning of period		1,331		3,063

Cash and cash equivalents, end of period	$	1,476	$	1,279

Supplemental disclosures of cash flow information::

Noncash investing and financing activities:
Cash paid for interest	$	-	$	-
Cash paid for income taxes	$	-	$	-

The accompanying notes are an integral part of these financial statements

VGTel, Inc.

Notes to Financial Statements

DECEMBER 31, 2010

NOTE 1 – Basis of Presentation

The unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q of Article 10 of Regulations S-X in the United States of America and are presented in United States dollars. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended March 31, 2010 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The interim unaudited consolidated financial statements should be read in conjunction with those consolidated financial statements included in Form 10-K. In the opinion of Management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending March 31, 2011.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has recurring losses and a working capital deficit. This raises substantial doubt about the Company’s ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.

The Company’s activities to date have been supported by equity financing and loans from shareholders. Management plans to seek funding from its shareholders and other qualified investors to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders.

NOTE 3 – DUE TO SHAREHOLDERS/OTHERS

On April 13, 2010, the Hyett Group Ltd., a related shareholder loaned the Company $6,000. The loan is payable on demand

and can be extended by mutual consent of both parties. The loan is interest free.

On July 16, 2010, the Hyett Group Ltd., a related shareholder, loaned the Company $1,500. The loan is payable on demand

and can be extended by mutual consent of both parties. The loan is interest free.

On October 18, 2010, the Hyett Group Ltd., a related shareholder loaned the Company $1,500. The loan is payable on demand and can be extended by mutual consent of both parties. The loan is interest free.

NOTE 4 – SUBSEQUENT EVENTS

On January 11, an aggregate of 6,940,000 Series A,B,C,D warrants were repriced to $0.001 per share and all of the warrants were exercised. into 6,940,000 common shares.

On January 12, the Board of Directors and a majority of the shareholders authorized the Company’s 2011 Equity Incentive Plan under which 10,000,000 shares of common stock will be reserved for issuance. The purpose of the 2011 Long-Term Equity Plan (“Plan”) is to enable the Company to offer to its employees, officers, directors and consultants whose past, present and/or potential contributions to the Company and its Subsidiaries have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company.

On February 1, 2011 we issued an aggregate of 1,166,666 shares of common stock to various consultants and service providers in consideration for services rendered valued at $291,666.

Item 2. Management Discussion & Analysis

We developed a telemarketing campaign product called Global Messaging Gateway (GMG). This product is designed to enable a single User of the System to set up a telemarketing campaign to distribute messages to bulk lists of recipients in the medium of text, voice, Fax or multimedia. Messages can be delivered from one control center (one location) to thousands of clients anywhere in the world simultaneously using the internet instead of traditional telephone equipment.

We have been providing our services to one client to date, Platin, located in Israel. Consequently, we are currently only doing business in Israel.

Platin Ltd. is a related party. Israel Hason is the Chief Marketing Officer of our Company and a Director. Mr. Hason is also the managing partner and principal shareholder of Platin Ltd. Israel.

We depended on Platin, for our total revenues. Unfortunately, to date Platin has provided only minimal revenues and we are unable to attract additional clients for our services. The revenues we generated from Platin are not sufficient to cover our general and administrative expenses consequently we have relied on shareholders loans to meet our expenses.

As of December 31, 2010 we generated only minimum revenues from Platin which is insufficient to enable us to launch a broad marketing campaign to attract clients for our services in order to become a viable business. Furthermore, we failed in our attempts to raise capital to enable us to advertise and become a viable business. As of December 2010, we had $1,476 in cash available to us. We do not have sufficient funds to continue to operate and must either find an acquisition target or cease operations entirely.

During the month of September 2010, in an attempt to increase shareholder value, management has begun to initiate merger discussions with a potential merger candidate. On December 30, 2010, VGTel, Inc. (the “Company”) entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) by and among Joseph R. Indovina (the “Buyer”), Ron Kallus, Niva Kallus, Israel Hason and ten individual shareholders (the “Sellers”), which closed on January 10, 2011. Pursuant to the terms of the Purchase Agreement, on (the “Closing Date”), the Buyer acquired from the Seller 3,332,823 shares (the “Purchased Stock”), or approximately 27.4% %, of the issued and outstanding common stock of the Company. Pursuant to the terms of the Purchase Agreement, Ron Kallus, Niva Kallus, Israel Hason, the current officers and directors of the Company resigned on the Closing Date and Joseph R. Indovina was named President, Secretary and Director of the Company. As a result of the Buyer’s acquisition of the Purchased Stock, a change in voting control of the Company took place and the Buyer now controls the Company by reason of his ownership of approximately 27.4% of the issued and outstanding common stock of the Company and the appointment of Joseph R. Indovina as President, Secretary and Director of the Company.

Pursuant to the Stock Purchase Agreement at or prior to the Closing Date, the GMG intellectual properties, products, assets, the VGTel name, and business will be spun out from VGTel, Inc. to Ron Kallus and Israel Hason in exchange of the following:

1.	Cancelling 1,246,000 common shares of VGTel, Inc. owned by Ron Kallus and Israel Hason .
2.	Transferring all accounts receivable and accounts payable to NYN International.

3.	Forgiveness of Officer’s Loan to the Company amounting to $31,323 to the Company.
4.	Forgiveness of $6,250 in accrued expenses owed to Yoav Kallus for development.

5.	Forgiveness of $6,480 accrued expenses owed to NYN International, a company owned by Ron Kallus.

There are no arrangements or understandings among the Buyer and the Seller and their associates with respect to the election of directors or other matters.

Results of Operations:

Total operating expenses for the three months period ended December 31, 2010 was $19,751 as compared to $22,397 for the three month period ending December 31, 2009. Total operating expenses for the nine months period ended December 31, 2010 was $59,534 as compared to $67,534 for the nine month period ending December 31, 2009. Our only customer Platin, who is a related party has been experiencing a decrease in referable business. We have not been able to attract additional clients.

The Company reported a net loss for the three month period ending December 31, 2010 of $17,086 as compared to $18,532 for the three month period ending December 31, 2009. The Company reported a net loss for the nine month period ending December 31, 2010 of $51,539 as compared to $56,433 for the nine month period ending December 31, 2009.

The Company incurred $2,700 additional development expenses during the quarter ending December 31, 2010 as compared to $3,840 the corresponding period ended December 31, 2009. The Company incurred $8,120 additional development expenses during the nine month period ending December 31, 2010 as compared to $11,380 the corresponding period ended December 31, 2009.

Revenues during the three month ended December 31, 2010 was $3,000 compared to $4,200 for the corresponding period ending December 31, 2009. Revenues during the nine month ended December 31, 2010 was $9,000 compared to $12,100 for the corresponding period ending December 31, 2009. The increase in net loss is attributable to the decrease in revenues and increase in expenses.

As reflected in the accompanying financial statements, we had a negative cash flow from operations and recurring losses. This raises substantial doubt about our ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Liquidity and Capital Resources:

As of December 31, 2010 the Company had $1,476 cash, compared to $ 1,331 as of March 31, 2010.

Net cash used in operating activities was $8,885 for the nine month period ended December 31, 2010 compared to $7,284 for the period ended December 31, 2009.

Net cash provided by financing activities for the nine month period ended December 31, 2010 was $9,000 as compared to $5,500 for the corresponding period ending December 31, 2009

At the current level of revenues and expenses, in conjunction with the committed loan from our President, we anticipate we will not have sufficient funding to operate for the next 12 months. Additionally, we will need to raise substantial funds in order to launch a broad marketing campaign to attract clients for our product in order to become a viable business. We cannot offer assurances that any additional funds will be raised when we require them or that we will be able to raise funds on suitable terms. Failure to obtain such financing when needed could delay or prevent our planned development and our marketing effort which is necessary for our business to become viable.

If the Company fails to raise additional funds to execute its expansion plan, it is likely that the Company will not be able to operate as a viable entity and may be forced to go out of business.

Material Commitments

All of our contracts and agreements, (See Contracts, Agreements & Relationships) have termination clauses allowing us to terminate the agreements with advance written notice. We control the pace of the development activities. We have the ability to curtail these activities to reduce our expenses and preserve our cash as needed.

We have an ongoing commitment to pay the costs accounting and administration, and management believes it will have the capital resources to meet these expenses.

The Company does not plan any purchases of significant Equipment in the next 12 months.

Item 3. Controls & Procedures:

The Company’s Chief Executive Officer who is also the Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2010 covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Company’s Chief Executive Officer does not relate to reporting periods after December 31, 2010

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the quarter ended December 31, 2010, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1 Legal Proceedings.

The Company is currently not a party to any pending legal proceedings and no such action by, or to the best of its knowledge, against the Company has been threatened.

Item 1A: Risk Factors:

Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition, results of operations, and trading price of our common stock. Please refer to our annual report on Form 10-K for fiscal year 2010 for additional information concerning these and other uncertainties that could negatively impact the Company.

Item 2. Unregistered Sale of Securities

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted during the quarter ending December 31, 2010 covered by this report to a vote of the Company’s shareholders, through the solicitation of proxies or otherwise.

Item 5. Other Information.

None

Item 6. Exhibits and Reports of Form 8-K.

Exhibit 31.1 Sarbanes Oxley Certification

Exhibit 32.1 Sarbanes Oxley Certification

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	VGTEL, INC.


	/s/ Ron Kallus
	RON KALLUS
	Title:	Chairman, Chief Executive Officer
	Dated: February 15, 2011	(principal executive officer)

	/s/ Ron Kallus Date: February 15, 2011
	RON KALLUS
	Title:	Chief Financial Officer
		(principal financial officer)

VGTel, Inc. - FORM 10-Q - February 16, 2011

Attached files

VGTel, Inc. Reports