U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal quarter ended October 31, 2010
[ ] 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: 333-159607
ONLINE TELE-SOLUTIONS INC.
(Name of small business issuer as specified in its charter)
Nevada 98-0583175
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Block 225, 02-213, Tampines St. 23
Singapore 521225
(Address of principal executive offices, including zip code)
(702) 553-3026
(Registrant's telephone number, including area code)
Indicate by check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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 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 (ss.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 [ ]
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. (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 [ ]
The issuer had 2,200,000 shares of its common stock issued and outstanding as of
December 15, 2010.
AVAILABLE INFORMATION
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and all amendments to those reports that we file with the Securities
and Exchange Commission, or SEC, are available at the SEC's public reference
room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains
reports, proxy, and information statements and other information regarding
reporting companies.
2
TABLE OF CONTENTS
Page
----
PART I
ITEM 1. Financial Statements 5
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 16
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 23
ITEM 4. Controls and Procedures 24
PART II
ITEM 1. Legal Proceedings 24
ITEM 1A. Risk Factors 24
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
ITEM 3. Defaults upon Senior Securities 24
ITEM 4. (REMOVED AND RESERVED) 25
ITEM 5. Other Information 25
ITEM 6. Exhibits 25
3
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
USE OF NAMES
In this quarterly report, the terms "Online Tele," "Company," "we," or "our,"
unless the context otherwise requires, mean Online Tele-Solutions, Inc.".
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and other reports that we file with the SEC
contain statements that are considered forward-looking statements.
Forward-looking statements give the Company's current expectations, plans,
objectives, assumptions, or forecasts of future events. All statements other
than statements of current or historical fact contained in this Quarterly
Report, including statements regarding the Company's future financial position,
business strategy, budgets, projected costs and plans and objectives of
management for future operations, are forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as "anticipate,"
"estimate," "plans," "potential," "projects," "ongoing," "expects," "management
believes," "we believe," "we intend," and similar expressions. These statements
are based on the Company's current plans and are subject to risks and
uncertainties, and, as such, the Company's actual future activities and results
of operations may be materially different from those set forth in the
forward-looking statements. Any or all of the forward-looking statements in this
Quarterly Report may turn out to be inaccurate and, as such, you should not
place undue reliance on these forward-looking statements. The Company has based
these forward-looking statements largely on its current expectations and
projections about future events and financial trends that it believes may affect
its financial condition, results of operations, business strategy and financial
needs. The forward-looking statements can be affected by inaccurate assumptions
or by known or unknown risks, uncertainties, and assumptions due to a number of
factors.
These forward-looking statements speak only as of the date on which they are
made, and except to the extent required by federal securities laws, we undertake
no obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the impact of
each factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements contained in
this Quarterly Report.
4
PART I
ITEM 1. FINANCIAL STATEMENTS.
ONLINE TELE-SOLUTIONS INC.
(A Development Stage Company)
BALANCE SHEETS
October 31, January 31,
2010 2010
-------- --------
(Unaudited)
ASSETS
Current asset
Cash $ 285 $ 20,590
Prepaid expenses 3,200 --
-------- --------
Total Current Assets 3,485 20,590
Deposit 15,000 15,000
-------- --------
Total assets $ 18,485 $ 35,590
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,200 $ 7,000
Due to stockholder 500 500
-------- --------
Total liabilities 2,700 7,500
-------- --------
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 (34,215) (21,910)
-------- --------
Total stockholders' equity 15,785 28,090
-------- --------
Total liabilities and stockholders' equity $ 18,485 $ 35,590
======== ========
See accompanying notes to the financial statements.
5
ONLINE TELE-SOLUTIONS INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the
Period from
June 5, 2008
Three Months Three Months Nine Months Nine Months (Inception)
Ended Ended Ended Ended through
October 31, October 31, October 31, October 31, October 31,
2010 2009 2010 2009 2010
---------- ---------- ---------- ---------- ----------
REVENUE $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Professional fees 1,000 500 8,341 13,480 26,322
General and administrative 1,892 1,245 3,964 3,030 7,893
---------- ---------- ---------- ---------- ----------
Loss before income taxes (2,892) (1,745) (12,305) (16,510) (34,215)
Provision for income taxes -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net loss $ (2,892) $ (1,745) $ (12,305) $ (16,510) $ (34,215)
========== ========== ========== ========== ==========
Net loss per common share -
basic and diluted $ (0.00) $ (0.00) $ (0.00) $ (0.01)
========== ========== ========== ==========
Weighted Average Number of
Common Shares Outstanding -
basic and diluted 2,200,000 2,200,000 2,200,000 2,200,000
========== ========== ========== ==========
See accompanying notes to the financial statements.
6
ONLINE TELE-SOLUTIONS INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Deficit
Accumulated
Common Stock Additional During the Total
--------------------- Paid in Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Inception, June 5, 2008 -- $ -- $ -- $ -- $ --
Shares issued to founder for cash on
August 1, 2008 at $0.01 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
Net loss (12,305) (12,305)
--------- --------- --------- --------- ---------
Balance, October 31, 2010 2,200,000 $ 2,200 $ 47,800 $ (34,215) $ 15,785
========= ========= ========= ========= =========
See accompanying notes to the financial statements
7
ONLINE TELE-SOLUTIONS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the
Period from
June 5, 2008
Nine Months Nine Months (Inception)
Ended Ended through
October 31, October 31, October 31,
2010 2009 2010
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(12,305) $(16,510) $(34,215)
Adjustments to reconcile net loss to net
cash used in operating activities:
Prepaid expenses (3,200) -- (3,200)
Accrued liabilities (4,800) 3,244 2,200
-------- -------- --------
Net cash used in operating activities (20,305) (13,266) (35,215)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Deposit on software purchase -- (15,000) (15,000)
-------- -------- --------
Net cash used in investing activities -- (15,000) (15,000)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment from stockholder -- -- 500
Proceeds from issuance of common stock -- -- 50,000
-------- -------- --------
Cash flows from financing activities -- -- 50,500
-------- -------- --------
Net change in cash (20,305) (28,266) 285
Cash, beginning of the period 20,590 50,000 --
-------- -------- --------
Cash, end of the period $ 285 $ 21,734 $ 285
======== ======== ========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ -- $ --
======== ======== ========
Cash paid for interest $ -- $ -- $ --
======== ======== ========
See accompanying notes to the financial statements
8
ONLINE TELE-SOLUTIONS INC.
(A Development Stage Company)
October 31, 2010 and 2009
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
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 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") for interim financial information, and
with the rules and regulations of the United States Securities and Exchange
Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP
for complete financial statements. The unaudited interim financial statements
furnished reflect all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. Unaudited interim results are not
necessarily indicative of the results for the full fiscal year. These financial
statements should be read in conjunction with the financial statements of the
Company for the fiscal year ended January 31, 2010 and notes thereto contained
in the information filed as part of the Company's Registration Statement on Form
S-1, which was declared effective on June 10, 2010.
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 generally accepted
accounting principles of 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 and the reported amounts of revenues and expenses during the year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
FISCAL YEAR END
The Company elected January 31 as its fiscal year end.
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.
9
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:
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, prepaid expenses, and accounts payable, 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
October 31, 2010 or 2009, nor are gains or losses 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 interim periods ended October 31, 2010 or 2009.
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.
10
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 common 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 common 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 the period. There were no
potentially dilutive shares outstanding as of October 31, 2010 or 2009.
COMMITMENTS AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Liabilities for loss
contingencies arising from claims, assessments, litigation, fines and penalties
and other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment can be reasonably estimated.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
evaluate subsequent events through the date when the financial statements were
issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification,
the Company as an SEC filer considers its financial statements issued when they
are widely distributed to users, such as through filing them on EDGAR.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
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:
11
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.
In January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-06 "FAIR VALUE MEASUREMENTS AND DISCLOSURES (TOPIC 820) IMPROVING
DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS", which provides amendments to
Subtopic 820-10 that require new disclosures as follows:
1. Transfers in and out of Levels 1 and 2. A reporting entity should
disclose separately the amounts of significant transfers in and out of
Level 1 and Level 2 fair value measurements and describe the reasons
for the transfers.
2. Activity in Level 3 fair value measurements. In the reconciliation for
fair value measurements using significant unobservable inputs (Level
3), a reporting entity should present separately information about
purchases, sales, issuances, and settlements (that is, on a gross
basis rather than as one net number).
This Update provides amendments to Subtopic 820-10 that clarify existing
disclosures as follows:
1. Level of disaggregation. A reporting entity should provide fair value
measurement disclosures for each class of assets and liabilities. A
class is often a subset of assets or liabilities within a line item in
the statement of financial position. A reporting entity needs to use
judgment in determining the appropriate classes of assets and
liabilities.
2. Disclosures about inputs and valuation techniques. A reporting entity
should provide disclosures about the valuation techniques and inputs
used to measure fair value for both recurring and nonrecurring fair
value measurements. Those disclosures are required for fair value
measurements that fall in either Level 2 or Level 3.
This Update also includes conforming amendments to the guidance on employers'
disclosures about postretirement benefit plan assets (Subtopic 715-20). The
conforming amendments to Subtopic 715-20 change the terminology from MAJOR
CATEGORIES of assets to CLASSES of assets and provide a cross reference to the
guidance in Subtopic 820-10 on how to determine appropriate classes to present
fair value disclosures. The new disclosures and clarifications of existing
disclosures are effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level 3 fair value
measurements. Those disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years.
In February 2010, the FASB issued the FASB Accounting Standards Update No.
2010-09 "SUBSEQUENT EVENTS (TOPIC 855) AMENDMENTS TO CERTAIN RECOGNITION AND
DISCLOSURE REQUIREMENTS", which provides amendments to Subtopic 855-10 as
follows:
12
1. An entity that either (a) is an SEC filer or (b) is a conduit bond
obligor for conduit debt securities that are traded in a public market
(a domestic or foreign stock exchange or an over-the-counter market,
including local or regional markets) is required to evaluate
subsequent events through the date that the financial statements are
issued. If an entity meets neither of those criteria, then it should
evaluate subsequent events through the date the financial statements
are available to be issued.
2. An entity that is an SEC filer is not required to disclose the date
through which subsequent events have been evaluated. This change
alleviates potential conflicts between Subtopic 855-10 and the SEC's
requirements.
3. The scope of the reissuance disclosure requirements is refined to
include revised financial statements only. The term REVISED FINANCIAL
STATEMENTS is added to the glossary of Topic 855. Revised financial
statements include financial statements revised either as a result of
correction of an error or retrospective application of U.S. generally
accepted accounting principles.
All of the amendments in this Update are effective upon issuance of the final
Update, except for the use of the issued date for conduit debt obligors. That
amendment is effective for interim or annual periods ending after June 15, 2010.
In April 2010, the FASB issued the FASB Accounting Standards Update No. 2010-17
"REVENUE RECOGNITION -- MILESTONE METHOD (TOPIC 605) MILESTONE METHOD OF REVENUE
RECOGNITION", which provides guidance on the criteria that should be met for
determining whether the milestone method of revenue recognition is appropriate.
A vendor can recognize consideration that is contingent upon achievement of a
milestone in its entirety as revenue in the period in which the milestone is
achieved only if the milestone meets all criteria to be considered substantive.
Determining whether a milestone is substantive is a matter of judgment made at
the inception of the arrangement. The following criteria must be met for a
milestone to be considered substantive. The consideration earned by achieving
the milestone should:
1. Be commensurate with either of the following:
a. The vendor's performance to achieve the milestone
b. The enhancement of the value of the item delivered as a result of
a specific outcome resulting from the vendor's performance to
achieve the milestone
2. Relate solely to past performance
3. Be reasonable relative to all deliverables and payment terms in the
arrangement.
A milestone should be considered substantive in its entirety. An individual
milestone may not be bifurcated. An arrangement may include more than one
milestone, and each milestone should be evaluated separately to determine
whether the milestone is substantive. Accordingly, an arrangement may contain
both substantive and nonsubstantive milestones.
A vendor's decision to use the milestone method of revenue recognition for
transactions within the scope of the amendments in this Update is a policy
election. Other proportional revenue recognition methods also may be applied as
long as the application of those other methods does not result in the
recognition of consideration in its entirety in the period the milestone is
achieved.
A vendor that is affected by the amendments in this Update is required to
provide all of the following disclosures:
1. A description of the overall arrangement
2. A description of each milestone and related contingent consideration
3. A determination of whether each milestone is considered substantive
4. The factors that the entity considered in determining whether the
milestone or milestones are substantive
5. The amount of consideration recognized during the period for the
milestone or milestones.
13
The amendments in this Update are effective on a prospective basis for
milestones achieved in fiscal years, and interim periods within those years,
beginning on or after June 15, 2010. Early adoption is permitted. If a vendor
elects early adoption and the period of adoption is not the beginning of the
entity's fiscal year, the entity should apply the amendments retrospectively
from the beginning of the year of adoption. Additionally, a vendor electing
early adoption should disclose the following information at a minimum for all
previously reported interim periods in the fiscal year of adoption:
1. Revenue
2. Income before income taxes
3. Net income
4. Earnings per share
5. The effect of the change for the captions presented.
A vendor may elect, but is not required, to adopt the amendments in this Update
retrospectively for all prior periods.
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
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 $34,215 at October 31, 2010, a net loss from operations of
$12,305 and net cash used in operations activities of $20,035 for the interim
period then ended, respectively with no revenues earned since inception.
While the Company is attempting to generate sufficient revenues, the Company's
cash position may not be 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 sufficient revenues provide the
opportunity for the Company to continue as a going concern. While the Company
believes in the viability of its strategy to increase 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 sufficient
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 - DUE TO STOCKHOLDER
The amount due to stockholder is unsecured, non-interest bearing and is payable
on demand.
NOTE 5 - STOCKHOLDERS' EQUITY
COMMON STOCK
On August 1, 2008 the Company issued 1,500,000 of its common stock at $0.01 to
the Company's president and director for $15,000.
For the period from August 1, 2008 through October 27, 2008 the Company sold
700,000 shares of its common stock at $0.05 per share for $35,000 to 36
individuals.
14
NOTE 6 - SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date
through the date these financial statements were issued. The Management of the
Company determined that there were no reportable events that occurred during
that subsequent period to be disclosed or recorded.
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
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 this quarterly report.
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 October 31,
2010, we have incurred accumulated net losses of $35,214. As of October 31,
2010, we had total assets of $18,486, and total liabilities of $5,201,
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 intend to host our customers' calling data on our
servers, so that our customers can access the functionality of our software via
a web browser such as Internet Explorer. We expect 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 also have 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 in calendar year 2011.
During the 12-month period following the date of this quarterly report, we
intend to focus on product development and execution of the initial stage of our
marketing efforts. We do not expect to earn any sales revenue during this
initial 12-month period of operations. 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 12 to 24 months following the date of this quarterly
report.
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 and when such 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.
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PLAN OF OPERATION
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.
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 the ability 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
17
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. 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 market 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 the ability 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
18
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.
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, or 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
19
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.
PRODUCT DEVELOPMENT TIMELINE
EARLY STAGE DEVELOPMENT - We plan to launch an "INFORMATION ONLY" web site early
in calendar 2011. By doing so we hope we will 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 have
identified several prospective candidates through internet searches and through
our officer's and directors' personal contacts. We have selected a contractor to
complete the initial database design.
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 plan
to lease two development servers during 2011 and two production servers during
2011.
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:
- Availability of needed functionality in the software;
- The ability to customize and add functionality to software; and
- The ability to integrate the telephony software to the CRM software
We anticipate that the process of evaluating telephony and CRM software will
take approximately two months.
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SPECIFICATIONS AND HIGH-LEVEL DESIGN - We intend to develop, with the assistance
of our contractor, the detailed specifications for the product. This includes:
- The way the telephony and CRM software interact with each other;
- Adapting the CRM and VoIP softwares to work in a hosted environment;
and
- Developing the graphical interfaces for the user as well as the back
office administrative area
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.
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.
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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.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2010 AND 2009
REVENUES
We had no revenues for the period from June 5, 2008 (date of inception) through
October 31, 2010.
EXPENSES
Our expenses for the three months ended October 31, 2010 and 2009 were $2,892
and $1,745. Our expenses for the nine months ended October 31, 2010 and 2009
were $12,305 and $16,510. Our expenses since our inception were $36,715. These
expenses were comprised primarily of general and administrative, and legal and
accounting expenses.
22
NET INCOME (LOSS)
Our net loss for the three months ended October 31, 2010 and 2009 was $2,892 and
$1,745. Our net loss for the nine months ended October 31, 2010 and 2009 was
$12,305 and $16,510. During the period from June 5, 2008 (date of inception)
through October 31, 2010, we incurred a net loss of $36,715. This loss consisted
primarily of administrative expenses and professional fees. Since inception, we
have sold 2,200,000 shares of common stock.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of October 31, 2010, reflects assets of $18,485. Cash and
cash equivalents from inception to date have been insufficient to provide the
working capital necessary to operate to date.
We anticipate generating losses and, therefore, may be unable to continue
operations in the future. If we require additional capital, we would have to
issue debt or equity or enter into a strategic arrangement with a third party.
There can be no assurance that additional capital will be available to us. We
currently have no agreements, arrangements or understandings with any person to
obtain funds through bank loans, lines of credit or any other sources.
GOING CONCERN CONSIDERATION
The financial statements contained herein for the fiscal quarter ended October
31, 2010, have been prepared on a "going concern" basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. There is a significant risk that we will be unable to continue as a
going concern.
Management continues 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.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
None.
23
ITEM 4. CONTROLS AND PROCEDURES.
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (who is acting as our
principal executive officer, principal financial officer and principle
accounting officer) to allow for timely decisions regarding required disclosure.
As of October 31, 2010, the end of our quarter covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president (who is acting as our principal executive officer, principal
financial officer and principle accounting officer), of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on the
foregoing, our president (who is acting as our principal executive officer,
principal financial officer and principle accounting officer) concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this quarterly report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during our quarter ended July 31, 2010 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
There have been no material changes from the risk factors disclosed in our S-1
filed on October 29, 2009, as amended.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
24
ITEM 4. (REMOVED AND RESERVED)
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation. (Attached as an exhibit to our
Registration Statement on Form S-1 originally filed with the SEC
on October 29, 2009, and incorporated herein by reference.)
3.2 Bylaws. (Attached as an exhibit to our Registration Statement on
Form S-1 originally filed with the SEC on October 29, 2009, and
incorporated herein by reference.)
31 Certification of Mario Jakiri Tolentino, Chief Executive Officer
and Chief Financial Officer of the Company pursuant to Rule
13a-14(a).
32 Certification of Mario Jakiri Tolentino, Chief Executive Officer
and Chief Financial Officer of the Company pursuant to 18 U.S.C
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
25
Signatures
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ONLINE TELE-SOLUTIONS, INC.
By: /s/ Mario Jakiri Tolentino
-----------------------------------------
Mario Jakiri Tolentino,
President, Treasurer and Director
Principal Executive and Financial Officer
Dated December 15, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities indicated.
Signatures Title Date
---------- ----- ----
/s/ Mario Jakiri Tolentino President, Treasurer and Director December 15, 2010
--------------------------------
Mario Jakiri Tolentino
26