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TMCNet:  VGTEL, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

[February 14, 2013]

VGTEL, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

(Edgar Glimpses Via Acquire Media NewsEdge) Forward Looking Statements Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. You should carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.



Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

A. Corporate History and Background We were (formerly known as Tribeka Tek, Inc.)organized on February 5, 2002 under the laws of the State of New York as Tribeka Tek, Inc., and engaged in the business of providing Edgarizing services for publicly traded companies, including assisting filings through the Edgar system.

On January 18, 2006, we acquired all of the software and intellectual property assets pertaining to the "VGTel system", from NYN International, LLC, a technology development company which developed the 'GMG system'. These assets were designed to allow us to operate in the 'voice-over-internet-protocol' ("VOIP") sector of the telecommunications industry. Effective February 2006, we ceased to provide Edgarizing services and devoted our full attention to the VOIP services.

6 In January 2006, we changed our name to VGTel, Inc. 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 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, 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 21,238,285 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.

The closing of the transaction was scheduled to take place on March 30, 2011.

On June 30, 2011, the Company received a letter (the "Letter") dated July (sic) 29, 2011 from Lawrence Harris as President of Venture, terminating the Exchange Agreement. The Letter alleged breaches of the Exchange 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 Exchange Agreement by Venture pursuant to the Letter.

As a result of the termination prior to closing of the Exchange Agreement, by and among the Company and Venture, the disclosure in our filings with the Securities and Exchange Commission relating to Venture Industries, Inc. or our ongoing operations, share issuances, shell company status, share ownership or control are not applicable and should no longer be relied upon when analyzing our business, operations or financial condition. The affected information appears in our Form 8-K filed on April 5, 2011 and our Preliminary Information Statements filed on April 8, 2011, April 22, 2011 and May 13, 2011.

Consequently, as a result of the termination of the Exchange Agreement prior to closing, we remained a Shell Company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and had been seeking appropriate business opportunities.

7 Peter Shafran was brought on as our new Chief Executive Officer, at the end of August 2011.

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 have been conducting business under the name of VGTel, Inc., dba 360 Entertainment & Productions, Inc.

(b) Narrative Description of the Business Throughout this and the previous fiscal year, we have investigated various potential investments and ventures with the goal of generating revenue including investing in the internet sweepstakes and raffle industry. In March 2012, we purchased (from Western Capital Ventures, Inc.) a nationwide Distribution Agreement with Visual Entertainment Systems, LLC (VES), a manufacturer, for the distribution of its NetStar Internet Kiosks - arcade style sweepstake gaming systems, software and hardware units. Later that month, we also started purchasing, distributing and installing VES' Kiosks into designated locations.

The purchase and distribution of the Kiosks is expected to establish our entry into one of the hottest growth industries in the country and enhance our entertainment services line of business. As of the close of this quarter, the Company had not yet received revenues from this segment of the Company's business.

(c) Plan of Operation (i) Charitable Video Gaming On October 10, 2012, we executed a Letter of Intent ("LOI") with a company in the charitable video gaming industry with respect to a proposed acquisition in that company. The Ohio-based target company has complete manufacturing capabilities, software licensing for raffle games, distribution and maintenance components in place with staffing and warehousing in Ohio. It also currently enjoys a five-year contract to place charitable video raffle kiosks in participating veterans and fraternal organizations' locations in Ohio, which will enable the expansion of raffle units and locations to meet and exceed more than 5,000 units in 1500+ locations. Proceeds from these video raffles will benefit the locations and the charities they support. We anticipate closing the transaction within the next quarter.

(d) Financing We had been seeking to raise a minimum of $500,000 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 enable us to startup and maintain a business, 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.

On March 23, 2012, we entered into a funding agreement with a third party, which provides an advance of $500,000 in working capital to be paid in over in installments. The funding agreement is strictly a short-term arrangement to provide working capital while the Company continues to negotiate the funding of $5.0 million of additional capital. As of February 6, 2013, the third party has funded $206,000.

On May 22, 2012, we entered into an additional funding agreement with another third party, which provides an advance of $500,000 in working capital to be paid in over in installments.

These funding agreements are strictly short-term arrangements to provide working capital while the Company continues to negotiate the funding of $5.0 million of additional capital.

(e) Objectives We would like to position ourselves as a major player in the charitable video raffle and internet sweepstakes kiosk industries. Capitalizing on our connections to some of the most seasoned, talented and creative people throughout these industries, we are seeking acquisitions of companies and products to achieve our goals through the end of 2013.

8 Our principal business objective for the next 12 months and beyond will be to achieve long-term growth potential through starting up a new business or a combination with a business in addition to 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 have unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In our efforts to analyze potential acquisition targets, we will consider the following kinds of factors: · Potential for growth, indicated by new technology, anticipated market expansion or new products; · Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole; · Strength and diversity of management, either in place or scheduled for recruitment; · Capital requirements and anticipated availability of required funds, to be provided by us or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources; · The cost of participation by us as compared to the perceived tangible and intangible values and potentials; · The extent to which the business opportunity can be advanced; · The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and · Other relevant factors.

In applying the foregoing criteria, no one of which will be controlling, we will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities 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. Due to our limited capital available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired.

(f) Form of Acquisition The manner in which we participate in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of us and the promoters of the opportunity, and our relative negotiating strength with such promoters. It is likely that we will require its participation in a business opportunity through the issuance of our common stock or other securities. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an Acquisition is a so-called "tax free" reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Code, all prior stockholders would, in such circumstances, retain 20% or less of the total issued and outstanding shares. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were our stockholders prior to such reorganization.

Our present stockholders may not be left with control of a majority of our voting shares following the formation of a new business or a reorganization transaction. As part of such a transaction, all or a majority of our directors and officers may resign and new directors may be appointed without any vote by stockholders.

In the case of an acquisition, the transaction may be accomplished upon our sole determination without any vote or approval by stockholders. In the case of a statutory merger or consolidation directly involving us, it will likely be necessary to call a stockholders' meeting and obtain the approval of the holders of a majority of the outstanding shares. The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, we will seek to structure any such transaction so as not to require stockholder approval.

9 It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial time and attention and substantial cost for accountants, attorneys and others. If a decision were made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to us of the related costs incurred.

We presently have no employees apart from our management. We have several consultants who currently provide services to us. Some of them are compensated for their services through the issuance of our shares to them, which may result in further dilution to our stockholders. We may hire additional employees, consultants, and recruit senior executive members as officers and directors, which employees may be instrumental in forming a new business or we may acquire another business with a full management team already on board.

(g) Reports to Security Holders: We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission's website at http://www.sec.gov. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission'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 Securities and Exchange Commission at 1-800-732-0330. The SEC also maintains an Internet site that contains reports, proxy and formation statements, and other information regarding issuers that file electronically with the SEC, at http://www.sec.gov.

Other than as discussed above, 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.

(h) Available Information The Company's web site address is http://360entertainmentandproductions.com. The information contained on the Company's web site is not included as a part of, or incorporated by reference into, this Quarterly Report on Form 10-Q. The Company makes available, free of charge, on its web site its annual reports on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the Exchange Act) as soon as reasonably practicable after the Company has electronically filed such material with, or furnished it to, the United States Securities and Exchange Commission (the SEC).

10 Results of Operations: Total operating expenses for the three months ended December 31, 2012 was $32,971, as compared to $1,563 for the three-month period that ended December 31, 2011. During the three months ended December 31, 2012, we had $18,946 in administrative expenses, as compared to $1,563 for the three-month period that ended December 31, 2011. During the three-month period ended December 31, 2012 we had $3,265 in professional services expenses as compared to $0 for the three months ended December 31, 2011. Professional services 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.

The Company reported a net loss for the three-month period ended December 31, 2012 of $195,177, as compared to $1,563 for the three month period ended December 31, 2011. The loss of $1,982 during the three-month period ended December 31, 2012 reflects $3,265 in professional and legal fees as compared to $0 for the three-month period ended December 31, 2011.

The Company incurred $201,185 of interest expense during the three-month period ended December 31, 2012, as compared to $0 in interest expense during the three-month period ending December 31, 2011.

Total operating expenses for the nine-month period ended December 31, 2012 was $3,170,816, as compared to $1,700,260 for the nine month period ended December 31, 2011. During the nine-month period ended December 31, 2012 we had $54,994 in administrative expenses, as compared to $276,047 for the nine-month period ended December 31, 2011. During the nine-month period ended December 31, 2012 we had $13,684 in professional and legal fees, as compared to $276,047 for the nine-month period ended December 31, 2011.

We reported a net loss for the nine-month period ended December 31, 2012 of $3,372,001, as compared to $1,700,260 for the nine month period ended December 31, 2011. The Company incurred $201,185 of interest expense during the nine-month period ended December 31, 2012, as compared to $0 in interest expense during the nine-month period ending December 31, 2011.

The Company incurred $2,906,128 in settlement of accounts payable during the nine-month period ended December 31, 2012, as compared to $0 in settlement of accounts payable during the nine-month period ending December 31, 2011.

As reflected in the accompanying financial statements, we had an accumulated deficit of $924,363 from discontinued operations, a deficit accumulated since reentering the development stage on April 1, 2011 of $5,144,689 and a net loss for the nine-month period ended December 31, 2012 of $3,372,001, raising 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, 2012, the Company had $723 in cash, compared to $2,690 as of December 31, 2011.

Net cash used in operating activities was $100,290 for the nine month period ended December 31, 2012, compared to $67,568 for the period ended December 31, 2011.

Net cash used in investing activities was $2,500 for the nine month period ended December 31, 2012, compared to $0 for the period ended December 31, 2011.

11 The company received shareholder loans amounting to $102,800 during the nine-month period ended December 31, 2012 as compared to $67,399 during the six-month period ended December 31, 2011.

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 execute fully 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.

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