UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission file number 333-148266
Utalk Communications, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0530295
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9121 Atlanta Ave #314
Huntington Beach, CA, 92646
(Address of principal executive offices)
(714) 475-3512
(Registrant's telephone number, including area code
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 [X] 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.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Small reporting company [X]
(Do not check if 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 [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,470,000 common shares issued and
outstanding as at May 15, 2009.
TABLE OF CONTENTS
Page
----
PART I. Financial Information:
Item 1. Financial Statements - Unaudited 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4T. Controls and Procedures 12
PART II. Other Information:
Item 1. Legal Proceedings 12
Item 1A. Risk Factors 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits 13
Signatures 14
2
PART I
ITEM 1. FINANCIAL STATEMENTS - UNAUDITED
Our financial statements are stated in United States dollars and are prepared in
accordance with United States Generally Accepted Accounting Principles.
Utalk Communications Inc.
(A Development Stage Company)
Financial Statements (Unaudited)
For the period ended March 31, 2009
3
Utalk Communications Inc.
(A Development Stage Company)
Balance Sheets
Unaudited
March 31, December 31,
2009 2008
-------- --------
ASSETS
Current:
Cash $ 3,525 $ 7,084
Prepaid expenses 4,800 7,300
-------- --------
Total Current Assets 8,325 14,384
Software development 12,000 12,000
-------- --------
Total Assets $ 20,325 $ 26,384
======== ========
LIABILITIES
Current:
Accounts payable and accrued liabilities $ 2,600 $ 4,200
Due to stockholder 5,500 5,500
-------- --------
Total Liabilities 8,100 9,700
-------- --------
STOCKHOLDERS` EQUITY (DEFICIT)
Common stock authorized -
50,000,000 common shares, par value $0.001,
4,470,000 shares issued and outstanding 4,470 4,470
Additional paid in capital 62,530 62,530
Deficit accumulated during the development stage (54,775) (50,316)
-------- --------
Total Stockholders' Equity 12,225 16,684
-------- --------
Total Liabilities and Stockholders' Equity $ 20,325 $ 26,384
======== ========
The accompanying notes are an integral part of these financial statements
4
Utalk Communications Inc.
(A Development Stage Company)
Statements of Expenses
Unaudited
Period from
Inception
Three Months Three Months (January 30, 2007)
Ended Ended to
March 31, March 31, March 31,
2009 2008 2009
----------- ----------- -----------
Operating expenses:
Accounting fees $ -- $ 2,250 $ 16,597
Legal fees -- -- 16,282
Website development fees 412 -- 3,912
General and administrative 4,047 2,189 17,984
----------- ----------- -----------
Net loss $ (4,459) $ (4,439) $ (54,775)
=========== =========== ===========
Basic and diluted loss per common share $ 0.00 $ 0.00
=========== ===========
Weighted average number of common
shares outstanding - Basic and Diluted 4,470,000 4,185,989
=========== ===========
The accompanying notes are an integral part of these financial statements
5
Utalk Communications Inc.
(A Development Stage Company)
Statements of Cash Flows
Unaudited
Period from
Inception
Three Months Three Months (January 30, 2007)
Ended Ended to
March 31, March 31, March 31,
2009 2008 2009
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (4,459) $ (4,439) $(54,775)
Changes in assets and liabilities:
Prepaid expenses 2,500 -- (4,800)
Accounts payable (1,600) (8,500) 2,600
-------- -------- --------
Net cash used in operating activities (3,559) (12,939) (56,975)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of software development costs -- (3,500) (12,000)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from stockholder -- 7,000 5,500
Sale of stock -- 47,000 67,000
-------- -------- --------
Net cash provided by financing activities -- 54,000 72,500
-------- -------- --------
Increase (Decrease) in cash (3,559) 37,561 3,525
Cash, beginning of period 7,084 7,552 --
-------- -------- --------
Cash, end of period $ 3,525 $ 45,113 $ 3,525
======== ======== ========
Supplemental disclosure of cash flow information:
Taxes paid $ -- $ -- $ --
-------- -------- --------
Interest paid $ -- $ -- $ --
-------- -------- --------
The accompanying notes are an integral part of these financial statements .
6
Utalk Communications Inc.
(A Development Stage Company)
Notes to Unaudited Financial Statements
March 31, 2009
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Utalk, have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial
statements and notes thereto contained in Utalk's Annual Report filed with the
SEC on Form 10-K. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim periods presented have
been reflected herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year. Notes to
the financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for fiscal 2008 as reported in the
form 10-K have been omitted.
NOTE 2 - GOING CONCERN
These financial statements have been prepared on a going concern basis. As of
March 31, 2009, Utalk has not generated any revenue since inception and has
accumulated losses of $54,775. The continuation of Utalk as a going concern is
dependent upon the continued financial support from its shareholders, the
ability to obtain necessary equity financing to continue operations, and the
attainment of profitable operations. These factors raise substantial doubt
regarding Utalk's ability to continue as a going concern.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements as that term is
defined in the Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. These statements relate to future events or our future
financial performance. In some cases, you can identify forward-looking
statements by terminology such as "may", "should", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential" or "continue" or
the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties and
other factors, including the risks in the section entitled "Risk Factors", that
may cause our or our industry's actual results, levels of activity, performance
or achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States dollars and are prepared in
accordance with United States Generally Accepted Accounting Principles. In this
quarterly report, unless otherwise specified, all dollar amounts are expressed
in United States dollars. All references to "common shares" refer to the common
shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our", and "Utalk" means
Utalk Communications, Inc., unless otherwise indicated.
GENERAL
We are in the process of developing our call-back services. We expect that we
will be able to offer service toward the end of 2009. We were incorporated in
the State of Nevada on January 30, 2007.
The address of our principal executive office is Seaford 9121 Atlanta Ave #314,
Huntington Beach, CA, 92646. Our telephone number is (714) 475-3512.
OUR CURRENT BUSINESS
We were incorporated in the State of Nevada on January 30, 2007, and are a
development stage company. From our inception to date, we have not generated any
revenues, and our operations have been limited to organizational, start-up, and
capital formation activities. We currently have no employees other than our sole
officer, who is also our sole director.
We are engaged in the development and marketing of call-back services using a
call-back platform. Generally, our anticipated call-back service will enable a
customer to call a designated telephone number and disconnect. The system will
automatically identify the caller as a customer, call the user back and provide
the customer with a dial-tone to place an outbound call. In doing so, our
service will enable our customers to realize cost savings when there is a
substantial differential between the cost of placing and receiving calls.
As an example of how our call-back services may be utilized, some cellular
providers allow their customers to receive many minutes for free (some offer
unlimited free incoming minutes) but allow only a limited number of outgoing
minutes for free and charge a substantial amount for minutes exceeding the
number of free minutes. If such customer also subscribes to our service, they
will be able to initiate a call from our system to their phone which will appear
as an incoming call rather than an outbound one, potentially providing the
customer with cost savings.
8
A sample call flow would occur as follows: A customer dials a telephone number
that is owned by us which automatically forwards the call to our call-back
switch. The customer hangs up after three rings. Our system does not answer the
call (so that the customer is not charged for a call by their phone company) but
rather detects the customer's phone number. The system automatically checks our
customer database and identifies whether the phone number belongs to a customer.
If the answer is no, then the system takes no action. If the caller is a
customer and has sufficient funds on balance with us, our system will place a
call to the customer (we intend that such call will be through a Voice over IP
company) and prompts the customer to enter the number they would like to call.
The customer enters the destination number and our system will send the call to
the VoIP carrier's network. Our system will then track the duration and cost of
the call and deduct the appropriate funds from the customer account. If the
balance reaches zero, customers will receive a voice prompt notifying them that
their funds are running low and the call will be terminated.
The callback system is a software program that resides on a computer server that
is connected to the public Internet. It will be connected with a VoIP provider
across the Internet (if our system is not located in the same facility as the
VoIP service provider) or directly to their equipment (if we are located in the
same facility). The VoIP company will provide us with phone numbers that
customers can call to initiate a call back. They will also provide us with the
ability to place calls in North America and internationally.
The callback system will also have a database of all of our customers and their
particular information such as name, email, address, phone numbers, account
balance and call history. The system will also have telephony software that is
able to receive calls, initiate calls, play prompts (messages) and connect to
outside parties during a call.
We have not yet developed our call-back system. As discussed below, our initial
focus will be to engage in the development of our call-back system. This is
described below in our "Products and Services" section. Management intends to
outsource the development of this product offshore to reduce costs. However, the
intellectual property rights over our software will be retained by the Company.
We except that this will be completed within approximately eight months
following the termination of this offering, after which we intend to begin
marketing our services. All our services will be based on a pre-paid model where
a customer must pre-pay for services. We will be marketing our services
primarily through a network of regional resellers and distributors in Canada. We
also plan to hire a sales/support assistant in approximately eleven months from
development of our service to help our executive officer provide support to our
end-users and resellers.
We have outsourced the development and deployment of our Call-back service to
Netfone Inc. We have paid Netfone Inc. USD $12,000 to perform these tasks. We
anticipate the delivery of the product in the second quarter of 2009. We may opt
to use Netfone Inc. to host and maintain the service on our behalf, we will pay
them USD $200 per month.
We have retained the services of Island Capital Management, LLC dba as Island
Stock Transfer to act as our transfer agent on April 25, 2008.
RESULTS OF OPERATIONS
From the date of our incorporation on January 30, 2007 to March 31 2009, we have
been a development stage company that has generated minimal revenues.
THREE MONTH PERIOD ENDED MARCH 31, 2009 COMPARED WITH THREE MONTH PERIOD ENDED
MARCH 31, 2008.
We experienced an operating loss of $4,459 for the three month period ended
March 31, 2009 compared to operating losses of $4,439 for the three month period
ended March 31, 2008 and operating losses of $54,775 since inception (January
30, 2007) to March 31, 2009. The principal component of the increase was due to
stock transfer agent fees that we incurred during the quarter ended March 31,
2009 relating to our efforts in becoming a public company.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
We are in the process of developing Call-back services. We expect that we will
be able to offer service toward the end of 2009. Principal capital resources
have been acquired through the issuance of common stock.
9
At March 31, 2009, we had working capital of $225.
At March 31, 2009, we had total assets of $20,325.
At March 31, 2009, our total liabilities were $8,100.
At March 31, 2009, we had cash on hand of $3,525.
PLAN OF OPERATION
From the date of our incorporation on January 30, 2007 to March 31, 2009, we
have been a start up company that has not generated revenues. We have not
generated any revenues since our inception.
We have retained a company for the development and deployment of call-back
services. A payment of $12,000 was made for the development of our product and
we expect that the product will be delivered in the second quarter of 2009.
During the next twelve months following the termination of our offering, we
intend to engage in the following activities:
APRIL THROUGH JUNE, 2009
During this period, we expect to achieve the following:
* Complete the development of the software
* Complete the formulation of a marketing and sales strategy
* Complete the development of our marketing collateral
* Purchase and configuration of computer servers to deploy our call-back
services
* Initiate sales activities
JULY THROUGH SEPTEMBER, 2009
During this period, we expect to achieve the following:
* Launch our advertising campaign to attract resellers
* Launch our service in Canada
OCTOBER THROUGH DECEMBER 2009
* Make our service available to resellers
* If we have enough funding, continue the development of our product
JANUARY 2010 AND THEREAFTER
During this period, we plan to focus on our marketing and sales effort.
10
PURCHASE OR SALE OF EQUIPMENT
We have not purchased or sold, and we do not expect over the next twelve months
to purchase or sell, any plants or significant equipment.
REVENUES
We had no revenues for the period from January 30, 2007 (date of inception)
through March 31, 2009. We believe that we will be able to commence the
marketing of our website immediately following the public launch of our
completed product, which will be done sometimes in the third quarter of 2009. We
expect to begin generating revenues approximately three months following the
public launch of our product.
EMPLOYEES
As of March 31, 2009, we have no employees.
PERSONNEL PLAN
We do not currently plan to add more personnel to our company until the public
launch of our product completed when we expect to hire a sales assistant.
CASH REQUIREMENTS
Presently, our revenues are not sufficient to meet our operating and capital
expenses. Management projects that we will require additional funding to expand
our current operations, although we anticipate that our current funds will
enable us to address our minimal current and ongoing expenses and continue with
the marketing and promotion activity connected with the development and
marketing of our call-back products and services throughout the period ending
March 31, 2010.
There is doubt about our ability to continue as a going concern as the
continuation of our business is dependent upon the successful and sufficient
market acceptance of new call-back products and services, the continuing
successful promotion of our call-back products and services, obtaining
additional financing, and finally, maintaining a break even or profitable level
of operations. The issuance of additional equity securities by us will result in
a dilution in the equity interests of our current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.
We have incurred operating losses since inception. As we had cash on hand of
$3,525 as at March 31, 2009, management projects that we may require an
additional $50,000 to fund our ongoing operating expenditures, offering expenses
and working capital requirements for the twelve month period ending March 31,
2010, broken down as follows:
Estimated Funding Required During the Twelve Month Period Ending March 31, 2010
Operating expenditures
Marketing & Sales $15,000
General and Administrative $20,000
Product development and deployment $ 7,000
Working capital $13,000
-------
Total (including Offering Costs) $50,000
=======
Due to the uncertainty of our ability to meet our current operating and capital
expenses, in their report on the annual financial statements for the period from
incorporation on January 30, 2007 to March 31, 2009, our independent auditors
11
included an explanatory paragraph regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure by our
independent auditors.
There are no assurances that we will be able to obtain further funds as may be
required for our continued operations. If required, we will pursue various
financing alternatives to meet our immediate and long-term financial
requirements, which we anticipate will consist of further private placements of
equity securities, advances from related parties or shareholder loans. We have
not entered into any definitive agreements with any shareholders or related
parties for the provision of loans or advances. There can be no assurance that
additional financing will be available to us when needed or, if available, that
it can be obtained on commercially reasonable terms. If we are not able to
obtain the additional financing on a timely basis, we will not be able to meet
our other obligations as they become due and we will be forced to scale down or
perhaps even cease our operations.
OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") as of the end of the period covered by this
quarterly report, being March 31, 2009, we have carried out an evaluation of the
effectiveness of the design and operation of our Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of our Company's management, including our Company's president
(principal executive officer) and chief financial officer (principal accounting
officer). Based upon that evaluation, our Company's president along with our
Company's chief financial officer concluded that our Company's disclosure
controls and procedures are effective as at the end of the period covered by
this report. There have been no changes in our Company's internal controls that
occurred during our most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect our internal controls subsequent to
the date we carried our evaluation.
Disclosure controls and procedures are procedures that are designed to ensure
that information required to be disclosed in our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported, within
the time period specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in
our reports filed under the Exchange Act is accumulated and communicated to
management, including our president and chief financial officer as appropriate,
to allow timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against our company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or
has a material interest adverse to our interest.
12
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We sold 470,000 shares at $0.10 per share since the inception of the company on
January 30, 2007.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit Description
------- -----------
3.1 Certificate of Incorporation of Registrant*
3.2 Bylaws of Registrant*
4.1 Specimen Common Stock Certificate*
10.1 HQ Agreement, dated July 16, 2007, between Utalk Communications,
Inc. and Regus Management Group, LLC*
10.2 Regus Agreement, dated December 12, 2007, between Utalk
Communications, Inc. and Regus Management Group, LLC*
10.3 Form of Subscription Agreement*
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, dated May 15, 2009.
32 Certification pursuant to 18 U.S.C. SECTION 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated
May 15, 2009.
----------
* Previously filed as an exhibit to the Registration Statement on Form SB-2
(File No. 333-148266) filed with the Securities and Exchange Commission on
December 21, 2007
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SIGNATURES
Pursuant to the requirements 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.
UTALK COMMUNICATIONS, INC.
By: /s/ "Mazen Hleiss"
----------------------------------------------------------
Mazen Hleiss, President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer
and Principal Accounting Officer)
Date: May 15, 2009
14