UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended December 31, 2011

 

 

or

 

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

For the transition period from                to              

 

Commission File Number:

 

000-52983

 

VGTEL, INC.

 

(Exact name of Registrant as specified in its charter)

 

State of New York
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
400 Rella Blvd., Suite 174 Suffern, NY		01-0671426     10901
(Address of principal executive offices)		(Zip Code)

 

360-836-0368

 

Registrant’s telephone number, including area code:

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 S  No £

 

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

 

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 £		Accelerated filer £
Non-accelerated filer £		Smaller reporting company  S
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  S  £   No  

 

 VGTel, Inc. had 12,844,489 shares of common stock outstanding on February 8, 2012.

 

 

 

 

FORM 10-Q

 

QUARTERLY PERIOD ENDED DECEMBER 31, 2011

 

INDEX

 

PART I- FINANCIAL INFORMATION
Item 1	Unaudited Financial Statements	2-4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 3	Quantitative and Qualitative Disclosures about Market Risk	12
Item 4	Controls and Procedures	12
PART II - OTHER INFORMATION
Item 1	Legal Proceedings	13
Item 1A	Risk Factors	13
Item 2	Defaults Upon Senior Securities	13
Item 3	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 4	Reserved	13
Item 5	Other Information	13
Item 6	Exhibits	14
Signatures		15

 

 

 

 

PART I- FINANCIAL INFORMATION

VGTel Inc.

(a Development Stage Company)

Balance Sheets

(Unaudited)

 

		December 31,				March 31,
ASSETS		2011				2011
CURRENT ASSETS
Cash and cash equivalents		$	2,690			$	2,859
Total Current Assets		$	2,690				2,859
Total Assets		$	2,690			$	2,859
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable & Accrued Liabilities			206,978				35,920
Accrued Expenses - Professional Fees			554,300				-
Due to Shareholders			67,399				-
CEO Compensation- Accrued			5,833				-
Total Current Liabilities			834,510				35,920
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 &
outstanding 12,844,489 and 6,433,900			1,284				1,224
Subscriptions Receivable			(2,981	)			(2,981	)
Additional paid in capital			1,793,000				724,854
Deficit accumulated since re-entering the development stage on April 1, 2011			(1,700,260	)
Retained Deficit			(924,363	)			(756,158	)
Total Stockholders' Deficit			(833,320	)			(33,061	)
Total Liabilities and Stockholders' Deficit			2,690			$	2,859

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

 

 

 

VGTel Inc.

(a Development Stage Company)

Statements of Operations

 

																		Accumulated from
		Three Month Period Ending								Nine Month Period Ending								Inception April 1, 2011 to
		December 31, 2011				December 31, 2010				December 31, 2011				December 31, 2010				December 31, 2011
REVENUES-		$	-			$	3,000			$	-			$	9,000			$	0
OPERATING EXPENSES
General   and administrative			1,563				1,601				274,484				5,064				274,484
Research & Development			-				2,700				-				8,120				-
Inputed Officers' compensation & Rent			-				14,000				-				42,000				-
Officer's Compensation -CEO			-				-				5,833				-				5,833
Stock Based Compensation			-				-				900,000				-				900,000
Depreciation and amortization			-				1,450				-				4,350				-
Professional Services- Consulting			-				-				518,380				-				518,380
Total operating expenses			1,563				19,751				1,700,260				59,534				1,700,260
Inputed Interest Expense			-				335				0				1005				-
NET LOSS FROM CONTINUING OPERATIONS			(1,563	)			(17,186	)			(1,700,260	)			(51,539	)			(1,700,260	)
NET LOSS			(1,563	)			(17,086	)			(1,700,260	)			(51,539	)			(1,700,260	)
INCOME (LOSS) PER COMMON SHARE
Basic and Diluted		$	0.00			$	0.00			($	0.14	)		$	0.01
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING			12,844,589				6,433,900				12,512,953				6,433,900

 

 

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

 

 

VGTel Inc.

(a Development Stage Company)

Statements of Cash Flows

						Nine Month Ended				Accumulated from
										Inception April 1, 2011 to
		December 31, 2011				December 31, 2010				December 31, 2011
Cash flows from operating activities
Net Income (Loss)			(1,700,260	)		($	51,539	)		($	1,700,260	)
Adjustments to reconcile net loss to net
cash used by operating activities:
Inputed Officer's Compensation & Rent			-				42,000				-
Depreciation & Amortization			-				4,350				-
Inputed interest for due to Ron Kallus			-				1,005				-
Stock Compensation-			900,000				-				900,000
Changes in assets and liabilities:
Accounts receivable			-				(26	)			-
Accounts payable			170,557				-				170,557
Accounts payable-related parties			562,133				(4,645	)			562,133
Net cash (used) in operating activities			(67,568	)			(8,855	)			(67,568	)
Cash flows from financing activities
Advance from Shareholders			67,399				9,000				67,399
Net cash provided (used) by financing activities			67,399				9,000				67,399
Net increase (decrease ) in cash			(169	)			145				(169	)
Cash and cash equivalents, beginning of period			2,859				1,331				2,859
Cash and cash equivalents, end of period			2,690			$	1,476				2,690
Supplemental disclosures

 

 

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

 

  

 

VGTel Inc.

(a Development Stage Company)

Notes to Unaudited Financial Statements

 

 

NOTE 1 – Basis of Presentation

 

The unaudited interim financial statements of VGTel, Inc. (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 financial statements for the year ended March 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

 

The interim unaudited financial statements should be read in conjunction with those 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 December 31, 2011 are not necessarily indicative of the results that may be expected for the year ending March 31, 2012.

 

The Company spun off its prior telemarketing software business in January 2011 in contemplation of a merger with a private operating entity which did not materialize.  The Company re-entered the development stage for reporting purposes beginning April 1, 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 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 a loss from inception of $924,363 from discontinued operations, and a net loss for the six month period ended December 31, 2011 of $1,700,260.  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 – RELATED PARTY TRANSACTIONS

 

Bruce Minsky, a member of the Board, provided legal services to the Company is owed a total of $77,750 for the period ended December 31, 2011. A related party advanced $67,399 during this same period. The loans are non-interest bearing and due on demand. Total due to related parties at December 31, 2011 is $629,532.

 

NOTE 4 – STOCKHOLDERS’ EQUITY

 

600,000 shares were issued for services valued at $900,000 during the 9 months ended December 31, 2011.

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Forward Looking Statements

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Report and in our Annual Report on Form 10-K for the year ended March 31, 2011 (the “Annual Report).

 

The information in this Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than statements of historical or present facts, that address activities, events, outcomes, and other matters that the Company plans, expects, intends, assumes, believes, budgets, predicts, forecasts, projects, estimates, or anticipates (and other similar expressions) will, should, or may occur in the future. Generally, the words “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “could,” “should,” “future,” “potential,” “continue,” variations of such words, and similar expressions identify forward-looking statements. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. 

 

On December 30, 2010, after nearly five years of operating the business relating to the GMG assets with only minimal operations and continued losses, we determined to cease its business operations related to the GMG assets and seek to find a suitable business to enter into or to acquire a merger candidate. 

 

On December 30, 2010,  we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) by and among Joseph R. Indovina (the “Buyer” and/or “Indovina”),  Ron Kallus, Niva Kallus, Israel Hason and individual shareholders (the “Sellers”), and the Company, which closed on January 10, 2011.  Pursuant to the terms of the Purchase Agreement, Indovina acquired 3,332,823 shares, or approximately 27.14%, of the issued and outstanding shares of our common stock from the Sellers with the Sellers receiving, in the aggregate, two hundred sixty five thousand six hundred thirteen dollars ($265,613.00) from Indovina for the purchase. On January 10, 2011, in accordance with the Purchase Agreement, Ron Kallus, Niva Kallus, Israel Hason, our then current officers and directors, resigned and Indovina was named our President, Secretary and Director.  

 

 

 

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

 

1.	Canceling 1,246,000 of our common shares owned by Ron Kallus and Israel Hason.
2.	Transferring all of our accounts receivable and accounts payable to NYN International.
3.	Forgiveness of Officer’s Loan to the Company amounting to $31,323.
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.

 

On February 24, 2011, we executed an Agreement and Plan of Share Exchange (the “Exchange Agreement”) with Venture Industries, Inc. (“Venture”), a company organized under the laws of the State of Nevada, pursuant to which we would acquire 100% of the issued and outstanding shares of Venture, in exchange for the issuance of 17,698,571 shares of our common stock, par value $0.0001. The shares that we would issue to the shareholders of Venture would have constituted 65% of our issued and outstanding common stock on a fully-diluted basis, as of and immediately after, the consummation of the transactions contemplated by the Exchange Agreement and, after giving effect to the Cancellation Agreement, canceling a specific number of shares from our Sole Officer, who was resigning.    

  

On June 30, 2011, the Company received a letter dated July (sic) 29, 2011 from Lawrence Harris, as President of Venture, terminating the agreement with Venture. The letter alleged breaches of the agreement by us, including the removal of Lawrence Harris as our President on June 28, 2011.  Upon further investigation by our Board of Directors, we determined that issues and disputes existed as to whether the share exchange transaction had closed. We then determined, on July 19, 2011, to accept the termination of the agreement by Venture pursuant to the aforesaid letter.   

 

On August 30, 2011, the Board of Directors voted to change the name of the Company to 360 Entertainment & Productions, Inc.   The name change is subject to shareholder approval and approval from FINRA.  In the interim, we registered a Certificate of Assumed Name with the State of New York.  We will be conducting business under the name of VGTel, Inc., dba 360 Entertainment & Productions.

 

We are now a Shell Company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and will seek appropriate business opportunities.

 

Our principal business objective for the next 12 months, and beyond such time, will be to achieve long-term growth potential through starting up a new business or a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.

 

The analysis of new business opportunities has and will be undertaken by or under the supervision of our Officers and Directors. We do not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with money in our treasury.

 

During the next 12 months we anticipate incurring costs related to:

 

	(i)	Filing of Exchange Act reports, and
	(ii)	Initiating operations in the entertainment and production business.

 

 

 

 

None of our Officers or our Directors has had any preliminary contact or discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

 

We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital that we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

 

Peter Shafran was brought on as 360’s new Chief Executive Officer, at the end of August 2011. Mr. Shafran has been practicing law for over 25 years. Serving as the Executive Producer of River Spirit Music, he produced and promoted concerts in the Hudson Valley region. Peter received a Bachelor of Arts degree in Psychology from SUNY Binghamton, and his Juris Doctor from Hofstra University School of Law.

We would like to position ourselves as an active producer and partner in various entertainment vehicles and platforms, including the production of film, stage, music, and online content and the streaming of events live and online. Capitalizing on our connections to some of the most seasoned, talented and creative people throughout the entertainment and finance industries, we are fielding an array of potential offerings with plans to announce a full slate of production projects beginning in 2012.

 

We are developing a special purpose fund for investments in film, Broadway and other media and entertainment products and will work to raise up to $50,000,000 through a combination Bond Offering and Private Equity Capital infusion. The capital raised will also be utilized to fund film production tax credits, short-term secured debt in the form of bridge loans with bank guarantees attached. We are targeting a fund yielding double-digit returns over and above the cost of capital raised and administrative costs associated with the deployment of said capital. We will also begin to obtain expired film production tax credits from the various film commissions throughout the US and Canada.

 

Over the last quarter, we have investigated various potential investments and ventures with the goal of generating revenue including: investing in a completed independent film, investing in a film in development, involvement in live event production, and various other entertainment and media projects. While we did not enter into any contracts for any of these projects in the quarter, we are actively pursuing several of these projects for possible investment in the coming six months.

 

PLAN OF OPERATION

We are in the formative phase of development. Our plan is to develop a multi-platform entertainment and media company that will allow us to produce and invest in independent films and Broadway productions, live concerts and events and online streaming video content. We are developing a model to include several different companies to complement each other and provide vertical as well as horizontal reach across media platforms. We have also been working with a non-profit organization to serve as co-producer of the organization’s feature-length film and provide advice to help the organization grow. Our CEO, Peter Shafran, has been named to the organization’s Board of Directors.

Our plan was to start development of a website in November 2011. However, our plans were delayed because of lack of funding. We plan to retain the services of a website designer/developer to develop a unique visually appealing website to promote our company and our products in the coming quarter. The goal of this effort will be to create a presence on the Internet and attract potential investors, partners and customers to inquire about our services. A preliminary web site is now available at www.360entertainmentandproductions.com and we are working on a more robust web site. We have selected a company to host our website. Our goal is to launch the site before the end of March 2012.

Our goals for approximately the next twelve months (between January 1, 2012 and December 31, 2012) are to:

* DESIGN OF WEBSITE: The visual appeal of our website is very important to the success of our ability to attract investors, business partners and consumers. We will hire a website designer/developer to work with us on the layout of the web pages and to optimize how the web pages interact with the site visitor. We expect that this task will take approximately one month to complete.  
* DEVELOP WEBSITE: Our website will contain information to help the site visitor evaluate our company and the various products and projects we intend to offer. It will enable the site visitor to sign up for information and contact our team. The website will be search engine optimized. We anticipate that the development of our website will take approximately one month to complete. 
* IDENTIFY AND LAUNCH OR ACQUIRE BUSINESSES: Our goal is to continue discussions with the various entities we have targeted as potential business partners to help develop a multi-platform entertainment and media company.

* IDENTIFY AND ACQUIRE ASSETS: We are actively seeking to acquire story ideas, literary works and screenplays in an effort to build a “rights library”. This library will form the basis of an incubator unit to develop one or more projects until the time when each project is ready to be funded and produced.

 

 

MILESTONES

Below is a brief description of our planned activities over the next 12 months starting January 1, 2012.

MONTHS 1 TO 3

v

Retain website designer/developer;

v

Finalize corporate and marketing materials, such as logos, brochures, letterheads, business cards, email and letter templates, and the like;

v

Finalize the work on the feel and look of the website;

v

Work with the designer/developer on the development of the website;

v

Launch website;

v

Monitor the hits on our web site and arrange for follow up with contacts;

v

Continue to develop relationships with parties in the entertainment industry;

v

Identify two to four prospective businesses to acquire; and

v

Review targeted "milestones" and adjust workloads, if necessary.

MONTHS 4 TO 6

v

Correct any detected discovered defects in website;

v

Evaluate the identified prospective businesses to acquire;

v

Begin acquisition of the identified prospective businesses; and

v

Review targeted "milestones" timetable and adjust workload, if necessary;

MONTHS 7 TO 12

v

Interview and hire support staff to start work in month seven;

v

Identify two to four prospective businesses to acquire; and

v

Review targeted "milestones" timetable and adjust workload, if necessary.

 

 

 

Future Financings

 

We will require additional financing in order to enable us to startup a business.  We will seek to raise a minimum of $500,000 over the next 12 months to pay for our ongoing expenses while investigating opportunities. These expenses include legal, accounting and audit fees as well as general and administrative expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our liabilities. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.

 

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

 

Results of Operations: 

  

Total operating expenses for the three months ended December 31, 2011 was $1,563, as compared to $19,751 for the three month period that ended December 31, 2010.   During the three months ended December 31, 2011, we had $63 in administrative expenses, as compared to $1, 601 for the three month period that ended December 31, 2010.   

The Company reported a net loss for the three month period ended December 31, 2011 of $1,563, as compared to $17,086 for the three month period ended December 31, 2010. The loss of $1,563 during the three month period ended December 31, 2011 reflects $1,500 in professional services expenses, and $63 in admin expenses as compared to $0 for each of these items for the three month period ended December 31, 2010.  .

 

 

 

 

The Company incurred $0 in development expenses during the nine month period ended December 31, 2011, as compared to $2,700 in additional development expenses during the nine month period ending December 31, 2010, reflecting the discontinuation of GMG business during 2011.

  

Revenues during the nine month period ended December 31, 2011 was $0, as compared to $9,000 for the nine month period ended December 31, 2010, reflecting the discontinuation of the business related to the GMG assets during the nine month period ended December 31, 2011.

 

Total operating expenses for the nine month period ended December 31, 2011 was $1,700,260, as compared to $59,534 for the nine month period ended December 31, 2010.  During the nine month period ended December 31, 2011 we had $276,047 in administrative expenses, as compared to $5,064 for the nine month period ended December 31, 2010.   During the nine month period ended December 31, 2011 we had $518,380 in professional services expenses, as compared to $0 for the nine month period ended December 31, 2010.   Professional services expenses in 2011 consisted of legal and advisory services generated in connection with the discontinuation of the GMG assets, the failed transaction with Venture, and the restructuring of the Company.

 

We reported a net loss for the nine month period ended December 31, 2011 of $1,700,260, as compared to $51,539 for the nine month period ended December 31, 2010. The loss of $1,700,260 during the nine month period ended December 31, 2011, reflects $518,380 in professional services expenses, and $217,860 in legal fees, as compared to $0 for each of these items for the nine month period ended December 31, 2010.   Additionally, we issued 600,000 shares of common stock to certain directors valued at $900,000.

 

The Company incurred $0 in development expenses during the nine month period ended December 31, 2011, as compared to $8,120 in additional development expenses during the nine month period ending December 31, 2010, reflecting the discontinuation of GMG business during 2011.

  

As reflected in the accompanying financial statements, we had an accumulated deficit of $924,363 from discontinued operations and a net loss for the nine month period ended December 31, 2011 of $1,700,260 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, 2011, the Company had $2,690 in cash, compared to $1,476 as of December 31, 2010.

 

Net cash used in operating activities was $69,507 for the three month period ended December 31, 2011, compared to $7,498 for the period ended December 31, 2010.

 

The company received shareholder loans amounting to $67,399 during the nine month period ended December 31, 2011 as compared to $9,000 during the nine month period ended December 31, 2010.

 

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.   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.

 

We presently do not have any arrangements for additional financing, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

 

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.

 

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

 

ITEM 3.    Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

 

ITEM 4.    Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Under the supervision of our sole executive officer, who is also the principal financial officer, we have evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report (the “Evaluation Date”).

 

Based on that evaluation, our principal executive officer concluded that our disclosure controls and procedures were not effective because of certain deficiencies involving internal controls which constituted a material weakness as discussed below.

 

The material weakness relates to the monitoring and review of work performed by our limited accounting staff in the preparation of financial statements, footnotes and financial data provided to our independent registered public accounting firm in connection with the annual audit. More specifically, the material weakness in our internal control over financial reporting is due to the fact that:

 • The Company lacks proper segregation of duties. We believe that the lack of proper segregation of duties is due to our limited resources.

• The Company does not have a comprehensive and formalized accounting and procedures manual.

Management has concluded that until we have sufficient financial resources to supplement our accounting personnel, this material weakness will continue.

Notwithstanding our principal executive officer’s conclusion, the material weakness identified did not result in the restatement of any previously reported financial statements or any other related financial disclosures, nor does Management believe that the accuracy of our financial statements for the current reporting period were affected.

(b) Changes in Internal Controls.

There was no change in our internal controls over financial reporting that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting during the quarter covered by this Report.

 

 

PART II OTHER INFORMATION

 

Item 1 Legal Proceedings: 

None

 

Item 1A Risk Factors

As of the date of this filing, there have been no material changes from the risk factors previously disclosed in Item 1A to Part I of the Company’s Annual Report on Form 10-K for the year ended March 31, 2011. An investment in the Company’s common stock involves various risks. When considering an investment in the Company, you should carefully consider all of the risk factors described herein and in the Company’s Annual Report. These matters specifically identified are not the only risks and uncertainties facing the Company and there may be additional matters that are not known to the Company or that the Company currently considers immaterial. All of these risks and uncertainties could adversely affect the Company’s business, financial condition or future results and, thus, the value of an investment in the Company.

Item 2 Unregistered Sales of Equity Securities

On August 30, 2011, the Company granted 200,000 shares of its common stock to its former director, Joseph Indovina, and 100,000 shares to each of Bruce Minsky, director, Lori Dente, former director, Colin Mitchell, former officer, and Frank Queally, former director.  Shares vest in 90 days.   These shares have not been registered under the Securities Act of 1933 (the “Act”) and were issued and sold in reliance upon the exemption from registration contained in Section 4(2) of the Act.

Item 3 Default Upon Senior Securities

None 

Item 4 (Reserved)

None 

Item 5. Other Events

 

On July 27, 2011, VGTel, Inc. (the “Registrant” or the “Company”) dismissed EisnerAmper, LLP (“EisnerAmper”) as the Company’s independent registered public accounting firm, effective July 27, 2011.  The decision to dismiss EisnerAmper as the Company’s independent registered public accounting firm was approved by written consent of the Company’s Board of Directors on July 27, 2011.  EisnerAmper had been the Company’s independent registered public accounting firm since March 28, 2011.

  

EisnerAmper has not prepared any audited financial statements on behalf of the Company.  During the fiscal year ended March 31, 2011 and the subsequent interim period up through July 27, 2011, there were no (i) disagreements between the Company and EisnerAmper on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to its satisfaction, would have caused EisnerAmper to make reference to the subject matter of such disagreements in connection with its report, or (ii) “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K.

 

On July 27, 2011, the Company engaged the services of MaloneBailey, LLP (“MaloneBailey”), as the independent registered public accounting firm of the Company.  Malone Bailey was the auditor for the Company for the year ended March 31, 2010, and was dismissed on March 28, 2011.  As disclosed in the Company’s Form 8-K, filed on March 28, 2011, the Company reported that there were no disagreements between the Company and MaloneBailey prior to the dismissal.  During the fiscal year ended March 31, 2011 and through the July 27, 2011 engagement of Malone Bailey, as the Company’s independent registered public accounting firm, neither the Company nor anyone on its behalf consulted MaloneBailey, with respect to any accounting or auditing issues involving the Company.  There was no discussion between MaloneBailey and the Company regarding the application of accounting principles to a specified transaction, the type of audit opinion that might be rendered on the financial statements, or any matter that was either the subject of a disagreement, as described in Item 304 of Regulation S-K, with MaloneBailey, or a “reportable event” as described in Item 304(a)(1)(v) of Regulation S-K.

 

On August 26, 2011 Joseph Indovina resigned as Chairman of the Board and both Frank Queally and Lori Dente resigned as directors.  There were no disagreements between Mr. Indovina, or Mr. Queally or Ms. Dente and the Company regarding any matter relating to the Company’s operations, policies or practices.

 

On August 26, 2011, Joseph Indovina resigned as Executive Vice President, Neil Bardach resigned as Chief Operations Officer, Lori Dente resigned as Treasurer, and Colin Mitchell resigned as Secretary.

 

On August 26, 2011, the Board of Directors appointed Peter W. Shafran as Chief Executive Officer and Director, and Bruce Minsky, a director since June 28, 2011, assumed the position as interim Chairman of the Board.

 

Since 2010, Mr. Shafran has been the Executive Director of River Spirit Music, producing, promoting and presenting musical shows for venues in Westchester.  He is also a practicing attorney.  In 1990, he founded the Law Offices of Peter W. Shafran, LLC, where he has practiced law. The firm has offices in Connecticut, New York, New Jersey, Florida and Georgia.

 

Mr. Shafran will serve as director until his or her successor is elected. There are no arrangements or understandings between any prospective director and any other person pursuant to which he or she was selected as a prospective director.

 

On August 26, 2011, the Board of Directors executed an employment agreement with Peter Shafran.  The Agreement provides a one-year term, and an annual base salary of $60,000, of which the first three payments are deferred for ninety days. Mr. Shafran’s salary continues to accrue in full.

 

On August 30, 2011, the Board of Directors voted to change the name of the Company to 360 Entertainment & Productions, Inc.   The name change is subject to shareholder approval and approval from FINRA.  In the interim, the Company registered a Certificate of Assumed Name with the State of New York.  The Company will be conducting business under the name of VGTel, Inc., dba 360 Entertainment & Productions.

 

 

 

 

ITEM 6. EXHIBITS

 

EXHIBIT INDEX

 

 TO

QUARTERLY REPORT ON FORM 10-Q

Exhibit Number		Description		Incorporated by Reference to:		Filed Herewith
1		Articles of Incorporation		Exhibit 3.1 to the Company’s Registration Statement on Form SB-2, filed May 23, 2006
2		By Laws		Exhibit 3.3 to the Company’s Registration Statement on Form SB-2, filed May 23, 2006
3		Amended Articles of Incorporation		Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on January 3, 2011
4		Stock Purchase Agreement		Exhibit 10.1 to the Company’s Current Report on Form  8K/A, filed on February 11, 2011
5		2011 Equity Incentive Plan		Exhibit 10.2 to the Company’s Form 10-K for the period ending March 31, 2011, filed August 17, 2011
6		Amended Articles of Incorporation		Exhibit 3.4 to the Company’s Form 10-K for the period ending March 31, 2011, filed August 17, 2011
7		Letter from Venture to VGTel		Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed on July 29, 2011
8		Letter to Larry Harris from VGTel		Exhibit 99.2. to the Company’s Current Report on Form 8-K, filed on July 29, 2011
9		Certificate of Assumed Name dba		Exhibit 3.5 to the Form 8K filed September 1, 2011
10		Employment Agreement Peter Shafran		Exhibit 10.4 to the Form 8K filed September 1, 2011
31.1		Certification of Peter Shafran Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1		Certification of Peter Shafran Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 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.
Date:  February 14, 2012	By:	/s/ Peter Shafran
		Peter Shafran
		Chief Executive Officer , Principal Executive Officer

 
 

 
 

VGTel, Inc.
Date:  February 14, 2012	By:	/s/ Peter Shafran
		Peter Shafran
		Principal Financial Officer

 
  
 

VGTel, Inc.
Date:  February 14, 2012	By:	/s/ Peter Shafran
		Peter Shafran
		Principal Accounting Officer