VGTel, Inc. - FORM 10-Q - August 11, 2010

Attached files

file	filename
EX-31.1 - VGTel, Inc.	exh31_1.htm
EX-32.1 - VGTel, Inc.	exh32_1.htm
EX-10.1 - VGTel, Inc.	exh_10-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010 (Mark One)


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

For the quarterly period ended June 30, 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 ¨

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 August 9, 2010 6,434,000 shares of common stock were outstanding.

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

VGTEL, INC.

FINANCIAL STATEMENTS

June 30, 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	9

Item: 1. Financial Statements

VGTel, Inc.

Balance Sheets

	June 30,			March 31,
ASSETS	2010			2010
	(Unaudited)

CURRENT ASSETS
Cash and cash equivalents	$	1,238		$	1,331
Accounts receivable		1,000			1,030

Total Current Assets		2,238			2,361

Intellectual property, net (Note 4)		2,900			4,350

Total Assets	$	5,138		$	6,711

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable & accrued liabilities	$	2,410		$	7,045
Due to shareholders/others (Note 8)		25,730			19,730
Due to shareholder/officer (Note 7)		31,323			31,323

Total Current Liabilities		59,463			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		382,388			368,053
Accumulated deficit		(437,356	)		(420,083	)

Total Stockholders' Deficit		(54,325	)		(51,387	)

Total Liabilities and Stockholders' Deficit	$	5,138		$	6,711

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

VGTel, Inc.

Statements of Operations

(Unaudited)


	Periods
	April 1, 2010			April 1, 2009
	June 30, 2010			June 30, 2009

REVENUES- Related Party	$	3,000		$	3,100


OPERATING EXPENSES
General and administrative		1,758			5,071
Research & Development		2,730			3,430
Inputted Officers' compensation & Rent		14,000			14,000
Depreciation and amortization		1,450			1,450
Professional Services- Consulting		-			-

Total operating expenses		19,938			23,951

Inputted Interest Expense		335			328
NET LOSS FROM CONTINUING OPERATIONS		(17,273	)		(21,179	)

DISCONTINUED OPERATIONS		-			-

NET LOSS		(17,273	)		(21,179	)

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

WEIGHTED AVERAGE NUMBER		6,434,000			6,434,000
OF SHARES OUTSTANDING

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

VGTel, Inc.

Statements of Cash Flows

(Unaudited)



	April 1, 2010			April 1, 2009-
	June 30, 2010			June 30, 2009

Cash flows from operating activities
Net Income (Loss)	$	(17,273	)	$	(21,179	)
Adjustments to reconcile net loss to net
cash used by operating activities:
Inputted Officer's Compensation & Rent		14,000			14,000
Intellecutal Property write down					-
Depreciation and amortization		1,450			1,450
Inputed interest for due to Ron Kallus		335			328
Issuance for common stock for services rendered		0			0
Changes in assets and liabilities:
Accounts receivable		30			(100	)
Accounts payable		(4,635	)		2,871
Due to Related Shareholders		0			0
Net cash ( used) in operating activities		(6,093	)		(2,630	)

Cash flows from investing activities
Purchase of fixed assets & Intellectual Properties		-			-
Net cash provided (used) in investing activities		-			-


Cash flows from financing activities
Sale of Units		0			0
Proceeds from Shareholder - Related Party		6,000			0
Officer Loan		0			0
Net cash provided (used) by financing activities		0			0

Net increase (decrease ) in cash		(93	)		(2,630	)

Cash and cash equivalents, beginning of period		1,331			3.063

Cash and cash equivalents, end of period	$	1,238		$	433



Supplemental disclosures

Noncash investing and financing activities:
Issuance of common stock in exchange for Intellectual property		0		$	0
Officer's compensation and Rent Credited to Additional Paid in Capital	$	14,000		$	14,000
Issuance of common stock for services rendered		0			26,850

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

VGTel, Inc.

Notes to Financial Statements

June 30, 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 three months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending March 31, 2010

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has no established source of revenue. This raises substantial doubt about the Company’s ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.

The Company’s activities to date have been supported by equity financing. It has sustained loss of $437,336 from inception July 27, 2004 to June 30, 2010. 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.

NOTE 4 – SUBSEQUENT EVENTS

On July 9, 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.

Item 2. Management Discussion & Analysis

We are currently testing a newly developed 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.

The GMG system is a cost effective alternative to the current traditional telemarketing campaign products that distinguishes itself in several ways, including, fixed equipment costs, per message usage costs, and personnel costs to drive the campaign. The current traditional telemarketing tools functions on actual special call-center equipment, with human agents behind each call, which sets the cost per call to a significantly higher level than the cost associated with the same call using the GMG product. The GMG product utilizes the internet instead of physical phone lines and several concurrent campaigns can be administered by a single user.

In order to send the Voice messages to the destinations over the internet, we use the Voice Over Internet Protocol (VOIP) technology, which allows us to stream the voice message on the internet, in a similar way it is done over the regular phone line. The main difference is that the voice is being converted from analog signal to digital, and compressed in order to use as little space as possible on the internet. We don’t provide VOIP services; we are using VOIP technology to transmit the voice messages on the internet network.

The GMG System's cost structure allows a User to initiate and control such a campaign from the Company's website at www.vgtel.com in which we charge the customer only for completed calls at a very attractive rate. As an example, we plan to charge for a US domestic call $0.03 this charge includes the dialing and delivering the message. We do not charge for line or equipment charges.

In June 2008 our website was upgraded to allow Multilanguage support, currently it support English and Hebrew, while Russian will be the next language to be supported.

Our only current customer is Platin Ltd. located in Israel. Platin is a Public Relations (PR) company which handles many clients, from various market segments mostly located in the State of Israel. Their largest clients that make use of our telemarketing services are supermarkets, Credit cards providers, Non-Profit Charity organizations, and Pets’ food suppliers. We provide our services to Platin, and although the campaigns are being conducted for Platin's clients, we only have a direct relationship with Platin who subcontracts our services for use by their clients. We do not have any relationship with their clients who are using our system. Therefore Platin is our only client to date and Platin and their clients are located in the State of 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. Mr. Hason has agreed to recuse himself from any corporate decision relating to Platin Ltd business relationship with VGTel, Inc.

The telemarketing activity generated from Platin's clients is administered by Platin on behalf of their clientele, consisting of providers of products and services and is used for the purpose of announcing, exposing, alerting and informing prospective consumers to their products and services including discounts, sales, promotions and special deals. Platin is also using our GMG system on behalf of their political clients to conduct campaigns for political candidates in the State of Israel.

We currently depend on Platin, Israel for our total revenues. We believe they will remain our only client until the GMG product is further developed and refined and ready to serve many clients. We started negotiating with other companies

The Company plans to raise additional funds in order to expand its business and fully execute its Plan of Operations. There is no assurance that the Company will be successful in raising sufficient funds to execute its expansion agenda. If additional capital is raised through the sale of additional equity or convertible securities, substantial dilution to our stockholders is likely to occur which may result in a partial or substantial loss to your investment in our common stock.

If we are successful in raising additional funds, we plan to hire and train key individuals for positions which include global management, marketing, and administrative. The number of employees hired will be dependent upon a variety of factors including our progress in implementing our business plan and available capital. By the first quarter of 2010, we expect to require approximately 5 employees and anticipate incurring $30,000 per month for payroll. The hiring of employees will be an ongoing process during the company’s existence. Additionally, the Company plans to utilize outside marketing and public relations firms to facilitate strategic alliances with potential franchisers and telemarketers. Depending on the availability of funds, the Company plans to spend $50,000 in advertising and marketing of its products and services during the second Phase of our operations.

Results of Operations:

Total operating expenses for the three months period ended June 30, 2010 was $20,273 as compared to $24,279 for the three month period ending June 30, 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 June 30, 2010 of $17,273 as compared to $21,179 for the three month period ending June 30, 2009.

The Company incurred $2,730 additional development expenses during the quarter ending June 30, 2010 as compared to $3,430 the corresponding period ended June 30, 2009.

Revenues during the three months ended June 30, 2010 was $3,000 compared to $3,100 for the corresponding period ending June 30, 2009

The increase in net loss is attributable to the decrease in revenues and increase in expenses. The company has not yet succeeded in increasing its revenues. The Company is currently focusing on finding additional clients for its GMG System, in hope of diversifying its clientele. As of June 30, 2010, the Company has not signed on any new clients for its services. The company is seeking to raise additional funds in order to engage in marketing of its product to a wider audience. With the current available funds the company is unable to initiate a marketing campaign which is necessary in order to become a viable business. There is no assurance that the company will be successful in raising funds. If the Company is unable to raise funds in the near future, it may be forced cease operations or seek an alternative.

As reflected in the accompanying audited financial statements, we had a negative cash flow and an accumulated net loss from inception of $4367,336. 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 June 30, 2010 the Company had $1,238 in cash, compared to $ 433 as of June 30, 2009.

Net cash used in operating activities was ($93) for the nine month ended June 30, 2010 compared to ($2,630) for the period ended June 30, 2009.

Net cash provided by financing activities for the three month period ended June 30, 2010 was $0 as compared to $0 for the corresponding period ending June 30, 2009

On January 2009 the Israeli Parliament passed an anti spam law which allows telemarketing campaign to call only customers who agreed to receive calls (OPT-IN), while assessing a high fine for any violation. This change affected the entire telemarketing activity and as a result, our services to Platin diminished. Together with Platin we are looking for ways to overcome this issue, but so far without any success. We are currently in need of immediate cash to continue our business. However, the current status of the global market leave us with less hope to obtain the required financial backup needed for executing our market plan and we will concentrate to use our limited resources to further strengthening the system features and improving its ruggedness.

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

The Company intends to meet its long-term liquidity needs through available cash and cash flow as well as through additional financing from outside sources. The Company anticipates raising additional funds from the possible exercise of Warrants or equity financing with private investors following effectiveness of the Registration Statement. As of the date of this Prospectus no agreements have been undertaken to obtain any funding. The Warrants are exercisable at an exercise price of $0.25 per share. The Company does not expect that warrants will be exercised if the prevailing price of the Common Stock at such time of exercise is below or at the exercise price.

Additional issuances of equity or convertible debt securities will result in dilution to the current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fully execute our Plan of Operations to expand our business, which could significantly and materially restrict our business operations. If additional capital is raised through the sale of additional equity or convertible securities, substantial dilution to our stockholders is likely to occur which may result in a partial or substantial loss to your investment in our common stock.

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

Material Commitments

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

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

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

Item 3. Controls & Procedures:

The Company’s Chief Executive Officer who is also the Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 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 June 30, 2010

Changes in Internal Control over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the quarter ended June 30, 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 June 30, 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: August 11, 2010	(principal executive officer)

	/s/ Ron Kallus Date: August 11, 2010
	RON KALLUS
	Title:	Chief Financial Officer
		(principal financial officer)

Attached files

VGTel, Inc. Reports

Also read