UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal period ended September 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
COMMISSION FILE NUMBER 333-62236
TELECOM COMMUNICATIONS, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Indiana 35-2089848
------- ----------
(State or other jurisdiction of (IRS Employer identification
incorporation or organization) No.)
827 S. Broadway, Los Angeles, CA 90014
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(Address of principal executive offices)
(213) 489-3486
--------------
(Issuer's telephone number)
Securities registered under Section 12(b) of the Securities Exchange Act of
1934:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None None
Securities registered under Section 12(g) of the Securities Exchange Act of
1934: None; report is filed pursuant to section 15D
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or an
amendment to this Form 10-KSB. []
State issuer's net revenues for its most recent fiscal year: $660,115
As of December 31, 2002, there were 10,050,000 common shares outstanding.
There is currently no market established for the Company's common stock.
Transitional Small Business Disclosure Format (check one): Yes [ ] No[X]
Number of shares of common stock outstanding as of December 31, 2002: 10,050,000
Number of shares of preferred stock outstanding as of December 31, 2002: None
ii
PART I
Item 1. Business
Business Development
Telecom Communications Inc. was incorporated on January 6, 1997 in the State of
Indiana under the corporate name MAS Acquisition XXI Corp. Prior to December 21,
2000, we were a blank check company seeking a business combination with an
unidentified business. On December 21, 2000, we acquired Telecom Communications
of America which was a sole proprietorship doing business in Los Angeles,
California since August 15, 1995 and changed our name to Telecom Communications
Inc. In connection with this acquisition, Aaron Tsai, our former sole officer
and director was replaced by Telecom Communications of America's owners and
associates. We issued 9,000,000 shares of our common stock or 90% of our total
outstanding common shares after giving effect to the acquisition. MAS Capital
Inc. returned 7,272,400 shares of common stock for cancellation without any
consideration.
Our principal executive offices are located at 827 S. Broadway, Los Angeles, CA
90014. Our telephone number is (213) 489-3486.
Overview
Our main business is to provide low cost telephone calls over the Internet to
individuals and businesses. Our services enable our customers to make low cost
telephone calls over the Internet using the traditional telephone. In September
1999, we introduced a service that enables international and domestic calls to
be made over the Internet using traditional telephones. Long distance calls made
using our services are often substantially less expensive than long distance
calls routed over traditional voice network. Following illustrate a typical cost
for our customers. In summary, our cost of 9.5 cents per minute compared with 17
cents per minute using traditional phones taking in considerations for the
monthly basic service charges for the traditional phone services.
Illustration: (based on telephone services in our area)
Our cost per minute = 9.5
Traditional phone services cost per minute = 7 cents (without basic fees)
Assumptions: Residential long distance charge for the month is $10.78
For 154 minutes (domestic call). Customer is using plans such as MCI 7
cents anytime residential plan.
Additional costs for Traditional long distance charges:
MCI 7 Cents anytime residential plan $ 6.95
12% Federal Excise Tax 1.32
40% State & Local Taxes 4.36
.004% Federal, State & Local Surcharges 0.04
25% Federal Universal Service Fee 2.61
.23% CA High cost Fund-B Surcharges 0.25
.005% CA Universal Life Tel Service Surcharges 0.05
.003% CA Relay Service and Communication Device Fund 0.03
.006% CA 911 Local 0.07
----------------- --------
TOTAL $15.68
To calculate traditional phone cost, we took the traditional long distance
charges for the month of $10.78 plus the monthly fees of $15.68 and divide the
result by 154 minutes which gives 17 cents per minute.
$10.78 + $15.68 = $26.46 divided by 154 minutes = 17 cents.
In this illustration, our customers would save 7.5 cents per minute using our
services. The basic fees may very for different areas and we do not have that
information at this time. For International calls, you have a higher savings due
to higher tariff on traditional phone calls.
We intend to expand our business through acquisitions. Currently, we have one
telephone call center with one server located in Los Angeles, California
A total of 71% of our revenue has been generated from the sale of Lotto Tickets,
Bus Tokens, Bus Passes, Check Cashing and Money Gram products and 29% for
telecommunications business.
Telecom Communications Inc. is intended for people of all ages and income levels
who are interested in high quality telephone service at low rates. Typically,
however, Latin immigrants who are interested in contacting their friends and
relatives in their countries outside of the United States are the primary target
audience.
1
Industry Background
The Internet is experiencing unprecedented growth as a global medium for
communications and commerce. Internet telephony has emerged as a low cost
alternative to traditional long distance calls. Internet telephone calls are
less expensive than traditional domestic and international long distance calls
primarily because these calls are carried over the Internet and therefore bypass
a significant portion of local and international long distance tariffs. The fees
and tariffs that are eliminated for our services can be itemized as follows:
* Calling Plans Charge
* Carrier Access Charge
* Federal Excise Tax
* State and local Tax
* Federal, State and local surcharge
* Federal Universal Service fee
* California High Cost Fund-B surcharge
* California Universal Lifeline Telephone Service surcharge
* California Relay Service and Common Device fund
* California 911 Local charge
The technology by which Internet phone calls are made is also more
cost-effective than the technology by which traditional long distance calls are
made. The growth of Internet telephony has been limited to date due to poor
sound quality attributable to technological issues such as delays in packet
transmission and network capacity limitations. However, recent improvements in
packet-switching technology, new software algorithms and improved hardware have
substantially reduced delays in packet transmissions.
Products and Services
Presently, we have one telephone calling center located in Los Angeles,
California. This center has 6 phone booths each with its own traditional
telephone set, table and chair. Phone calls made from these booths are routed
through our computer server and Internet connection to a third party servers
which provide the interconnection to their established network which enables
telecommunications over Internet Protocol (IP) data networks using their
software, hardware and related components. The third party providing this
service is Inter-Tel.net, Inc. with whom Telecom has a contractual agreement.
We do not rely solely on customers visiting our telephone calling center. We
also have 24 phone lines attached to our server which enables customers
accessing our services using telephones away form our location by calling into
our telephone calling center. The 24 phone lines attached to our server allow 24
customers to call in at a given time. When one completes a call the phone line
frees up for another caller. In addition, the following products and services
are also offered at our telephone calling center:
* Money wiring service
* Check cashing
* Sales of Lotto tickets
* Automatic Telling Machine (ATM) * Faxing services * Sales of telephone
cards
Business Strategies
We hope to grow rapidly through franchising our existing operations and through
acquisitions. We have not made any specific business plan for franchising our
existing operations and we have no prior experience in franchising. Currently,
we do not have prospective franchisees or acquisition targets that are targeted
for acquisitions.
Key elements of the company's business strategy are:
* Acquiring and consolidating geographically disparate and usually smaller
independent Internet Telephone Service Providers.
* Developing and offering additional value-added products and services to
customers. For example, offering long distance international calls over the
Internet using cellular phones.
* Selling franchises of our telephone calling center concept throughout the West
Coast and in other areas of high concentration of immigrants.
* Building customer loyalty and gaining market share through brand recognition.
* Expansion of our sales and marketing operation.
Marketing Strategy
We currently market our products in several areas. Our marketing efforts include
newspaper advertisements and advertisements in publications that potential
customers from Latin American countries are likely to see. Other advertising
such as flyers targeting a particular market segment are developed to compliment
and expand the impact of our marketing program.
Our marketing strategy for the future will consist of using medias designed to
reach mass audiences such as audio spot advertisements, video clips and banner
advertising on the Internet as well as advertising targeted toward specific
markets using radio, television and other publications.
2
Competition
We have nearly two years of experience building and fine tuning Internet based
telephone call services using traditional telephones at a calling center
environment. We believe we have the ability to deploy information technology at
a faster rate and with fewer errors than new entrants into this field. We have
basic billing capabilities to accommodate the more complex commercial
transactions in which we intend to engage in the future. We already have in
place network management tools and a secure web site capable of taking new
account orders in real-time. With our billing package, we can bill customers for
their telephone calls at any interval that they desire. We can send out bills on
a weekly, bi-weekly or monthly basis. Many Commercial transactions need to be
billed differently. We use an internal billing system that was designed for our
telephony system. The transactions that we intend to bill for are charges that
would normally appear on the telephone bill. We will be offering long distance
telephone service to our commercial as well as our retail customers. We can bill
or transactions by time of day, date, even charge a surcharge on holidays.
We believe our competitive strength is the ability to build a bridge for a
segment of the urban population to access Internet based telephone communication
services. We also believe we can move faster than larger telephone companies in
identifying and taking advantage of market opportunities as Internet based
telephone communication services continues to evolve at a rapid pace.
Long Distance Market
The long distance telephony market and, in particular, the Internet telephony
market, is highly competitive. There are several large and numerous small
competitors and we expect to face continuing competition based on price and
service offerings from existing competitors and new market entrants in the
future. The principal competitive factors in the market include price, quality
of service, breadth of geographic presence, customer service, reliability,
network capacity and the availability of enhanced communications services. Our
competitors include AT&T, MCI WorldCom, Sprint, Net2Phone and other
telecommunications carriers.
Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. As a result, certain of these competitors may be able to adopt more
aggressive pricing policies, which could hinder our ability to market our
Internet telephony services.
Web-Based Internet Telephony Services
As consumers and telecommunications companies have grown to understand the
benefits that may be obtained from transmitting voice over the Internet, a
substantial number of companies have emerged to provide voice over the Internet.
In addition, companies currently in related markets have begun to provide voice
over the Internet services or adapt their products to enable voice over the
Internet services. These related companies may potentially migrate into the
Internet telephony market as direct competitors or could become competitors if
we move towards their current markets through our stated intention to grow by
acquisition.
Internet Telephony Service Providers
During the past several years, a number of companies have introduced services
that make Internet telephony services available to businesses and consumers.
AT&T Jens (a Japanese affiliate of AT&T), deltathree.com (a subsidiary of RSL
Communications), I-Link, iBasis (formerly known as VIP Calling), ICG
Communications, IPVoice.com, ITXC and OzEmail (which was acquired by MCI
WorldCom) provide a range of voice over the Internet services. These companies
offer PC-to-phone or phone-to-phone services, which could be adapted to provide
a similar service to the services we offer. Some, such as AT&T Jens and OzEmail,
offer these services within limited geographic areas.
Intellectual Property
We do not currently own or hold any patents, trademarks, licenses, franchises
concessions, royalty agreements or labor contracts.
3
Government Regulation
Regulation of Internet Access Service
We provide Internet access, in part, by using telecommunications services
provided by carriers. Terms, conditions and prices for telecommunications
service are subject to economic regulation by State and Federal agencies. We, as
an Internet Access Provider, are not currently subject to direct economic
regulation by the Federal Communications Commission (FCC) or any State
regulatory body other than the type and scope of regulation that is applicable
to businesses generally. We do not provide Internet access to Internet content.
We use the Internet to provide telecommunications services.
In April 1998 the FCC reaffirmed that Internet Access Providers should be
classified as unregulated "Information Service Providers" rather than regulated
"Telecommunication Providers" under the terms of the Federal Telecommunication
Act of 1996. As a result, we are not subject to Federal regulations that apply
to telephone companies and similar carriers simply because we provide our
services using telecommunications service provided by a third party carrier. To
date, no State has attempted to exercise economic regulations over Internet
Access Providers.
Governmental regulatory approaches and policies to Internet Access Providers and
others that use the Internet to facilitate Data and Communication Transmissions
are continuing to develop and in the future we could be exposed to regulation by
the FCC or other Federal agencies or by State regulatory agencies or bodies.
For example, the FCC has expressed an intention to consider whether to regulate
providers of voice and fax service that employ the Internet or Internet Packet
Switching as "Telecommunications Providers" even though Internet access itself
would not be regulated. The FCC is also considering whether providers of
Internet based telephone services should be required to contribute towards the
Universal Service Fund, which subsidizes telephone service for rural and
low-income consumers, or should pay carrier access charges on the same basis as
applicable to regulated telecommunications providers. Our business employs the
Internet Packet Switching to provide voice services. Phone calls are made
through our computer server and Internet connection to a third party server
which provides the interconnection to their established network which enables
telecommunications over Internet Protocol (IP) data networks using their
software, hardware, and related components.
Regulation of Internet Content
Due to the increase in popularity and use of the Internet by broad segments of
the population it is possible that laws and regulations may be adopted with
respect to web site content, privacy pricing, encryption standards, consumer
protection, electronic commerce, taxation, copyright infringement and other
intellectual property issues. We cannot predict the effect, if any, that any
future regulatory changes or developments may have on the demand for our access
to enhanced business service.
Employees
We believe that the success of our business will depend, in part, on our ability
to attract, retain and motivate highly qualified sales, technical and management
personnel, and upon the continued service of our senior management personnel. As
of the date of this registration statement, we have two full-time and three
part-time employees. Two full-time employees are responsible for management and
marketing; one part-time employee is responsible for book keeping and sales, two
other part-time employees are responsible for sales and other day-to-day
operations. The three part-time employees are sons and daughter of Mr. Tak
Hiromoto and Mrs. Elizabeth Hiromoto. We consider our employee relations to be
good and we have never experienced any work stoppages. We cannot assure you that
we will be able to successfully attract, retain and motivate a sufficient number
of qualified personnel to conduct our business in the future.
Item 2. Properties
Our present telephone calling center consists of an approximately 900 square
feet facility located on the first floor at 827 South Broadway, Los Angeles,
California. This facility not only hosts the telephone booths but also all
computer equipment, support staff and management employed by the company. The
initial lease was signed in August 1995 for six months with a rent of $1,200.00
per month. This lease has been subsequently extended and is due to expire
February 28, 2004 with the following rent payment schedule.
March 1, 2000 to February 28, 2001 $1,700.00 per month
March 1, 2001 to February 28, 2002 $1,800.00 per month
March 1, 2002 to February 28, 2003 $1,900.00 per month
March 1, 2003 to February 28, 2004 $2,000.00 per month
4
Item 3. Legal Proceedings
Mas Financial Corp and Aaron Tsai filed a claim against us in August, 2002 in
the Vanderburgh Circuit Court, County of Vanderburgh, State of Indiana alleging
breach of contract. The Company and its counsel believe that the claim is
without merit and immaterial, and are vigorously defending against this claim.
The company executed the Consulting Agreement in reliance upon the fraudulent
misrepresentations made by Mas Financial Corp. and its parties. The company is
seeking relief to rescind the Consulting Agreement and to have restored to us of
all sum paid by us to Mas parties as consideration under the Consulting
Agreement. We filed a counterclaim against Aaron Tsai for fraud and breach of
contract.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote during the year.
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
Market Information
Our common stock is currently traded on a limited basis on the Over-the Counter
Bulletin Board under the symbol "TCOM". The quotation of our common stock on the
OTCBB does not assure that a meaningful, consistent and liquid trading market
currently exists. We cannot predict whether a more active market for our common
stock will develop in the future. In the absence of an active trading market:
- Investors may have difficulty buying and selling or obtaining market
quotations;
- Market visibility for our common stock may be limited; and
- A lack of visibility of our common stock may have a depressive effect
on the market Price for our common stock.
As of the date of this report, the number of holders of our common stock was
approximately 153.
Dividends
There are no present material restrictions that limit the ability of the Company
to pay dividends on common stock or that are likely to do so in the future. The
Company has not paid any dividends with respect to its common stock, and does
not intend to pay dividends in the foreseeable future.
Recent Sales of Unregistered Securities
Not Applicable.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This periodic report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the financial condition, results of operations, business strategies, operating
efficiencies or synergies, competitive positions, growth opportunities for
existing products, plans and objectives of management. Statements in this
periodic report that are not historical facts are hereby identified as "forward-
looking statements" for the purpose of the safe harbor provided by Section 21E
of the Exchange Act and Section 27A of the Securities Act.
Item 6. Management's Discussion and Analysis
Selected Financial Data
For the years ended September 30, 2002 and 2001.
2001 2002
---- ----
Revenues $660,115 558,002
Net income 54,655 12,560
Net income per common share .01 .01
Weighted average common
shares outstanding 10,000,000 10,050,000
At September 30, 2002 and 2001.
2001 2002
---- ----
Total assets $29,920 $37,905
Working capital (deficit) 8,894 33,873
Shareholders' equity (deficit) 29,920 37,905
No dividends have been declared or paid during the periods presented.
5
Results of Operations
For the Years Ended September 30, 2002 and 2001.
Sales
Revenues for the year ended September 30, 2002 were $558,002 versus $660,115 in
revenues for the year ended September 30, 2001, a decrease of $102,113 or 15%.
The company's focus on brand name recognition tends to have particularly heavy
customer service requirements. Because we anticipate growth in our subscriber
base, we provide discount to new subscribers and referral bonuses to existing
subscribers for their loyalty for referring new subscribers to the company. We
expect a reduction in revenue to be short term. We believe that establishing and
maintaining a brand and name recognition is critical for attracting and
expanding our targeted client base and that importance of reputation and name
recognition will increase as competition in the internet telephone market
increases. From time to time we have promotional prices to attract clients
through marketing which lead to a reduction in revenue. We expect our future
revenue from our VIOP will increase while other products will remain constant.
We plan to accelerate growth of sales in fiscal 2003 by increasing expenditures
on marketing, establishing more strategic relationships and growing public
awareness of our products and services.
Presently, the percentage of customers using our calling center versus using
services from their resident is approximately 45% versus 55%. We anticipate that
eventually 99% of calls will be made from our customers' residence due to the
convenience factor. The other 1% will be customers who have no phone in their
home. We sell prepaid cards to call from their residence.
The percentage of revenues will vary from day to day, month to month, year to
year. One month we may have a large jackpot in Lotto, the amount of Lotto
players will increase dramatically. Money wiring depends on economic conditions.
In good times, people send more often. In bad times, people send less often.
This is also true of check cashing, money order, and telecom, etc.
Income/Loss
Net income for the year ended September 30, 2002 was $12,560 as compared to a
net income of $54,655 in the comparable period in 2001, a decrease of $42,095 or
77 %. The decrease was primary attributable to an increase in general and
administrative expenses.
The Company expects to continue to remain profitable and increase its net income
over the next year. However, there can be no assurance that the Company's
profitability or revenue growth can be sustained in the future.
Expenses
Total expenses for the year ended September 30, 2002 were $98,916 versus $65,730
in the comparable year in 2001, an increase of $33,186 or 33%. This was
primarily attributable to an increase in general and administrative expenses for
the year. Printing and engraving expenses, legal fees and expenses, Auditors'
fees and expenses and Transfer Agent and registrar fees.
We anticipate incurring approximately the same amount of these expenses during
fiscal 2003.
We expect increases in certain expenses such as advertising through fiscal
2003 as the Company moves toward increasing development and marketing of our
products and services.
Cost of Sales
One of the largest factors in the variations in the cost of sales as a
percentage of net sales is the cost of products and services.
Cost of sales for the year ended September 30, 2002 was $442,492 versus $518,704
in the comparable period in 2001, a decrease of $76,212 or 14%. The decrease was
primarily attributable to a decreased in sales during the year of $558,002.
6
Impact of Inflation
We believe that inflation has had a negligible effect on operations during the
period. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.
Trends, Events, and Uncertainties
Demand for the Company's products will be dependent on, among other things,
market acceptance of the Company's concept, the quality of its products and
general economic conditions, which are cyclical in nature. Inasmuch as a major
portion of the Company's activities is the receipt of revenues from the sales of
its products, the Company's business operations may be adversely affected by the
company's competitors and prolonged recessionary periods.
Liquidity and Capital Resources
For the Year Ended September 30, 2002 and 2001.
Cash flows provided by operations were $(4,434) for the year ended September 30,
2002 versus $75,681 in the comparable period in 2001. Cash flows from operating
activities were primarily attributable to the net income from operations and an
increase in accounts payable.
We have funded our cash needs from inception through September 30, 2000 with the
assistance of family members.
Management believes that we do not need any additional capital to continue our
current operations for the next 12 months. Our current business model should be
able to sustain itself as it has in the past two years if the current revenue
and cost structure remain at the similar level.
We will substantially rely on the existence of revenue from the product sales
and from the projected revenues for our services. We project that we will have
enough capital to fund our operations over the next 12 months.
On a long-term basis, liquidity is dependent on continuation and expansion of
operations, receipt of revenues, additional infusions of capital and debt
financing. We are considering launching a wide scale marketing and advertising
campaign. Our current available capital and revenues are not sufficient to fund
such a campaign. If we choose to launch such a campaign it well require
substantially more capital. If necessary, we plan to raise this capital through
an additional follow-on stock offering. The funds raised from this offering will
be used to develop and execute the marketing and advertising strategy, which may
include the use of television, radio, print and Internet advertising. However,
there can be no assurance that we will be able to obtain additional equity or
debt financing in the future, if at all. If we are unable to raise additional
capital, our growth potential will be adversely affected. Additionally, we will
have to significantly modify our plans. There are no lines of credit and capital
expenditures at this time.
Seven years after Congress passes a landmark law restructuring the phone
business, hope for the beleaguered telecommunications industry may lie less in
federal regulation than in two fast-growing technologies: wireless computer
network and Internet Telephony. Expert says wireless data network and Internet
Telephony could carry as much as 30% of domestic voice traffic and more than 50%
of international traffic within three to seven years.
Internet Telephony accounts for more than 10% of international voice traffic
with about 18 billion minutes at the end of 2001, according to research firm
Telegeography. These technologies don't require that a company have billions of
dollars in order to compete. With voice over IP, we only need to have one
hosting center for the entire U.S. We project that revenue for the Company's
VOIP will at least triple within two years after successful fund raising.
7
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report ...........................................F-2
Balance Sheet at September 30, 2001 & 2002 .............................F-3
Income Statement for the Year Ended September 30, 2001 & 2002 ..........F-4
Statements of Cash Flows for the Year Ended September
30, 2001 & 2002 .......................................................F-5
Statement of changes in Shareholders' Equity for the
Year Ended September 30, 2001 & 2002 ...................................F-6
Notes to The Financial Statements for the Year
Ended September 30, 2001 & 2002 ....................................... F-7
F-1
Item 7. Financial Statements
ROBERT G. ERCEK, CPA
1756 West Ave. J-12 #107
Lancaster, CA 93534 (661) 726-9448
INDEPENDENT AUDITORS' REPORT
November 6, 2002
Telecom Communications, Inc.
827 South Broadway
Los Angeles, CA 90014-3201
I have audited the Balance Sheet of Telecom Communications Inc as of
September 30, 2001 and 2002 and the related statements of income, cash flows,
and changes in equity for the respective twelve months then ended. These
financial statements are the responsibility of the management of the company. My
responsibility is to express an opinion on them based on my audit.
I conducted the audit in accordance with Generally Accepted Auditing Standards
as set forth by the American Institute of Certified Public Accountants. Those
standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as, evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
Based on the results of my audit, I believe the financial statements referred to
above presents fairly in all material respects, the financial position of
Telecom Communications, Inc. as of September 30, 2001 and 2002, the results of
its operations, cash flows, and changes in equity for the respective twelve
months then ended in conformity with generally accepted accounting principles.
Very truly yours,
Robert G. Ercek, CPA
F-2
TELECOM COMMUNICATIONS, INC.
BALANCE SHEET
SEPTEMBER 30, 2001 & 2002
ASSETS. . . . . . . . . . . . . . 2001 2002
----------------------------------
CURRENT ASSETS
Cash in Banks (Note 4). . . . . $ 25,920 $ 33,905
Inventory (Note 5). . . . . . . 4,000 4,000
---------- ----------
TOTAL CURRENT ASSETS. . . . . . . 29,920 $ 37,905
PROPERTY & EQUIPMENT
Equipment (Note 7). . . . . . . 7,450 7,450
Less: Accumulated Depreciation. (7,450) (7,450)
---------- ----------
NET PROPERTY & EQUIPMENT. . . . . 0 0
OTHER ASSETS. . . . . . . . . . . 0 0
---------- ----------
TOTAL OTHER ASSETS. . . . . . . . 0 0
TOTAL ASSETS. . . . . . . . . . . $ 29,920 $ 37,905
---------- ----------
LIABILITIES AND CAPITAL
----------------------------------
CURRENT LIABILITIES
Inc. Tax Payable (Note 14) . . $ 21,026 $ 4,032
---------- ----------
TOTAL CURRENT LIABILITIES . . . . 21,026 4,032
LONG TERM LIABILITIES . . . . . . 1,000 1,000
OFFICER'S LOAN ---------- ---------
TOTAL LONG TERM LIABILITIES. . 1,000 1,000
---------- ----------
x TOTAL LIABILITIES. . . . . . . 22,026 5,032
---------- ----------
CAPITAL STOCK
10M Shares Issued Par .001 . . 10,000 10,000
50,000 Shrs Issued @.50 . . 25,000
Additional Paid in Capital . . (55,761) (68,352)
Retained Earnings. . . . . . . 53,665 66,225
---------- ----------
TOTAL CAPITAL/EQUITY. . . . . . . 7,894 32,873
TOTAL LIAB. & CAPITAL/EQU.. . . $ 29,920 $37,905
---------- ----------
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-3
TELECOM COMMUNICATIONS, INC.
INCOME STATEMENTS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 & 2002
INCOME (Note 2). . . . . . . . . . . 2001 2002
------------------------------------ -------------------- ----------------
Phone Calls. . . . . . . . . . . . $ $151,836 23.0% 163,867 29.3%
Lotto Tickets (Net). . . . . . . . 5,713 1.0 5,299 1.0
Bus Tokens Sold. . . . . . . . . . 441,297 66.9 367,520 66.0
Bus Passes Sold. . . . . . . . . . 43,018 6.5 6,488 1.1
Checks Cashed (Net). . . . . . . . 9,346 1.4 8,805 1.5
Money Grams (Net). . . . . . . . . 8,905 1.2 6,023 1.1
------------- -------
TOTAL INCOME. . . . . . . . . . . 660,115 100.0 558,002 100.0
------------- -------
COST OF GOODS SOLD
Phone Call Costs . . . . . . . . . 70,423 10.7 87,224 15.6
Bus Token Costs. . . . . . . . . . 406,965 61.7 349,053 62.6
Bus Pass Costs . . . . . . . . . . 41,316 6.3 6,215 1.1
------------- -------
TOTAL COST OF SALES. . . . . . . . 518,704 78.7 442,492 79.3
------------- -------
GROSS PROFIT . . . . . . . . . . . 141,411 21.3 115,510 20.7
------------- -------
EXPENSES
Gen. & Admin. Expenses. . . . . . 66,730 9.9 98,916 17.7
------------- -------
TOTAL G. & A. EXPEN. 66,730 9.9 98,916 17.7
------------------------------------ ------------- -------
OTHER INCOME (EXPENSES). . . . . . . 0 0
PRE-TAX INCOME . . . . . . . . . . 74,681 11.4 16,594 3.0
------------- -------
INCOME TAX PROVISION
Fed. Inc. Tax Provision. . . . . . 13,988 2.1 2,490 0.4
St. Inc. Tax Provision . . . . . . 7,038 1.1 1,544 0.3
------------- -------
TOTAL INC. TAX PROV. . . . . . . . 21,026 3.2 4,034 0.7
------------- -------
NET INCOME . . . . . . . . . . . . . $ $ 53,655 8.2% 12,560 2.3%
------------- -------
EPS (10,050,000 SHRS). . . . . . . . $ .01 $ .01
------------- -------
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-4
TELECOM COMMUNICATIONS, INC.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 & 2002
2001 2002
---------- ---------
NET INCOME (LOSS). . . . . . . . . . . . . . $ 53,655 $12,560
Adjustment to Reconcile Net Income
To net cash used in Operating Activities:
Depreciation:. . . . . . . . . . . . . . . 0 0
Increase in Other Current Assets . . . . . 0 0
Increase in Other Assets . . . . . . . . . 0 0
Increase in Accounts Receivable. . . . . . 0 0
Increase in Accounts Payable . . . . . . . 22,026 (16,994)
---------- ---------
NET CASH FROM OPERATIONS . . . . . . . . . . 75,681 (4,434)
Cash Flows from Investing Activities . . . . 0 0
Changes in Capital Contributed . . . . . . . (52,204) (12,581)
Increase From Stock Issued
50,000 shrs @.50 per shr. 0 25,000
Cash Flows from Financing Activities:. . . . 0 0
---------- ---------
NET INCREASE (DECREASE) IN CASH. . . . . . . 23,477 7,985
BEGINNING CASH BALANCES 10/01/00 & 01. . . . 2,443 25,920
---------- ---------
CASH AT SEPTEMBER 30, 2001 & 2002. . . . . . $ 25,920 $ 33,905
---------- ---------
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-5
TELECOM COMMUNICATIONS, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS'S EQUITY
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 & 2002
2001 2002
------ -------------
Beginning Balance N/A 8,894
Income (Loss) For The Period . . . . . . . . . . . 54,655 12,560
Less: Capital Reductions . . . . . . . . . . . . . (52,204) (12,581)
Issuance of Capital Stock. . . . . . . . . . . . . 10,000 25,000
Adjustments for Stock Issuance . . . . . . . . . . (3,557) 0
------------ ----------
Balance at Year End. . . . . . . . . . . . . . . . $ 8,894 $ 33,873
============ ==========
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-6
NOTES TO THE FINANCIAL STATEMENTS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 and 2002
NOTE 1: ABOUT THE COMPANY
Telecom Communications of America was founded as a sole proprietorship in 1995
by Michelle Hiromoto with the assistance and management of her father Tak
Hiromoto. The purpose of the company was to provide low cost access to long
distance carriers for individuals needing to call Latin and South America. The
company operates on the Internet as opposed to using conventional long distance
carriers to facilitate lower costs that are passed on to the customers. Many of
the extra fees that are found in conventional long distance systems are avoided
this way. In addition the company also provides various services such as check
cashing, money wiring, the sale of bus tokens and passes, and tickets from
California Lottery known as Lotto.
NOTE 2. REVENUE RECOGNITION
SAB 101 identifies basic criteria that must be met for revenue recognition.
There must be the following items:
A. Persuasive evidence of an arrangement exists;
B. Delivery has occurred or service has been rendered.
C. The seller's price to the buyer is fixed or determinable;
D. Collectability is reasonably assured.
Except for check cashing, all transactions are done on a cash basis with fixed
prices made clear to the buyer prior to the transaction. All products are paid
for immediately upon receipt or completion of phone calls. All monies received
are not refundable. EITF 99-19 requires that sales recognized on a gross basis
be for an item or service where the merchant takes total risk for the product or
service as opposed to an agent relationship wherein earnings are simply a
commission received as a representative who bears no risk. Phone calls, Bus
Passes, and Tokens, are reported at gross while Lotto Tickets, Money Grams and
Check Cashing are reported at net. Checks cashed are limited to local
individuals known by the owners as local employees with two types of I.D.
required. On one occasion $5,000 worth of checks did bounce which were later
determined to be counterfeit.
This incident was isolated and has not been repeated because of the controls
being used. For this reason bad checks are minimal. All cashed checks are
deposited the same evening and clear the next day so there are no material
receivables. There is a fee of 1.7% of the amount cashed.
NOTE 3. ACCOUNTING METHOD
The company uses the accrual method of accounting.
NOTE 4. BANKING POLICY
Funds are kept in two banks so no more than $100,000 is in any one account.
NOTE 5. INVENTORY VALUATION
The average inventories on any given day are as follows:
Bus Passes $ 500
Bus Tokens 2,000
Lotto Scratcher 1,500
---------
Total $ 4,000
=========
NOTE 6. RECEIVABLES
There are no receivables as all business is done for cash. See Note 2.
NOTE 7. ASSETS
All capitalized assets are fully depreciated while new ones are currently being
leased.
NOTE 8. LIABILITIES
There are no loans outstanding and no material payables other than income taxes
accrued and $1,000 paid by Tak Hiromoto for services rendered by Herman alexis &
Co. See Note 14 and 15 &16 respectively.
F-7
NOTE 9. LOANS AND LEASES
Although no loans are outstanding, the Company does have a computer lease
requiring a monthly payment of $911.00. This lease is good thru July 1, 2003.
Although there is a purchase option at the end of the lease for $3,600 this is
not small enough to be considered a bargain purchase option, which would require
lease capitalization Statement No. 13 that requires capitalization and
depreciation of certain leases. No capitalization of the lease will be done. The
Company is also leasing its occupancy thru December 31, 2003. Both obligations
are broken down as follows:
Computer Lease
Balance on 07/01/2001 thru 09/30/2001 $ 2,733
Balance on 10/01/2001 thru 09/30/2002 10,932
Balance on 10/01/2002 thru 07/01/2003 8,199
-----------
Total $ 21,864
===========
Occupancy Lease
Balance on 07/01/2001 thru 09/30/2001 $ 5,400
Balance on 10/01/2001 thru 09/30/2002 22,300
Balance on 10/01/2002 thru 09/30/2003 23,500
Balance on 10/01/2003 thru 12/31/2003 6,000
-----------
Total $ 57,200
===========
NOTE 10. RELATED PARTY TRANSACTIONS
There have been no related party transactions.
NOTE 11. LITIGATION
Mas Financial Corp. and Aaron Tsai filed a lawsuit against the Company in
August, 2002 in the Vanderburgh County alleging breach of contract. The Comany
and its counsel believe that the suit is without merit and immaterial. The suit
is being strongly contested and counterclaim was filed on October 15, 2002
against Aaron Tsai alleging fraud and breach of contract.
NOTE 12. PRE-PAID ITEMS AND DEPOSITS
There are no large deposits on any assets or prepaid insurance.
NOTE 13. PAYROLL
Prior to incorporation there were no payrolls as ownership took draws as any
sole proprietorship does. After incorporation the officers will be paid as
professional, independent contractors. Therefore, there are no payroll tax
issues to be concerned about at this time.
NOTE 14. INCOME TAX PROVISION
Provision for income taxes is based on corporate rates for both state and
federal taxes. Corporate rates are used for the statements prior to
incorporation for consistency. The rates are calculated as follows:
Federal rates:
The first $50,000 @ 15% percent.
The next $25,000 @ 25% percent.
The balance @ 35% percent.
State rates:
California rate of 9.3%.
F-8
NOTE 15. INCORPORATION
On December 21, 2000, the Company was acquired by MAS Acquisition XXI Corp.
Following APB No. 16, this type of acquisition is commonly called a "reverse
merger" wherein the smaller private operating company, Telecom Communications of
America, merges into a non-operating shell corporation, MAS Acquisition XXI
Corp., which had no assets, resulting in the owner's/manager's, Tak Hiromoto
continuing to have effective operating control of the new combined company,
Telecom Communications, Inc. The shareholders of the former shell only continue
as passive investors. The accounting was accomplished by adjusting the balance
sheet into a corporate style as opposed to a sole proprietorship with simple
recognition of the assets and liabilities as they were in the former financial
statements of the sole proprietorship. The equity section is adjusted by taking
all owner's capital and reclassifying it as Additional Paid in Capital. The
Common Stock issued is recognized at its par value of .001 as per the offering
Ten million shares were issued totaling $10,000 but no cash was received. The
offsetting entry is to reduce Additional Paid in Capital by the $10,000. The
financial statements presented here represent the activities of the smaller
operating company.
As mentioned, ten million shares have been issued at a par value of .001. A
total of 100 million shares are authorized with 80 million as common shares and
20 million as preferred. The preferred stock will not be convertible so once
issued no dilution of Earnings Per Share will be needed. The company intends to
raise additional capital through the issuance of stock to enable it to expand.
Management estimates that $50,000 is needed to move forward the first year. Of
the ten million shares issued, nine million were issued to Tak Hiromoto. He then
transferred one million shares to Herman Alexis & Co., Inc. for assisting the
company. The remaining one million shares is broken down with 977,500 owned by
MAS Capital, Inc. and the remaining 22,400 owned by a large number of small
investors.
NOTE 16. INTRODUCTION TO MERGER
The joining of the companies was accomplished by an introduction to MAS
Acquisition XXI Corp. by Herman Alexis & Co., Inc. to the Hiromotos.
Neither party knew each other before this introduction.
NOTE 17. EARNINGS PER SHARE
The company calculates net income or Earnings per Share as required by SFAS No.
128. Earnings per share are calculated by dividing net income by the average
number of outstanding shares. No shares are convertible so dilution is not an
issue.
NOTE 18. DEFERRED TAXES
According to SFAS 109, the objectives of accounting for income taxes are to
recognize (a) the amount of taxes payable or refundable for a current year and
(b) deferred tax liabilities and assets for the future tax consequences of
events that have been recognized in an enterprise's financial statements or tax
returns. A deferred tax liability or asset is recognized for the estimated
future tax effects attributable to temporary differences and carry forwards.
Measurements of current and deferred tax liabilities and assets are based on
provisions of the enacted tax law. The effects of future changes in tax laws or
rates are not anticipated. If a tax deferral occurs, the measurement of deferred
tax assets is reduced, if necessary, by the amount of any tax benefits that,
based on available evidence, are not expected to be realized. At this time,
there are no such deferrals. See Note 14 for calculations of current tax year
liabilities based on existing rates.
NOTE 19. SEGMENT REPORTING
Currently the company reports only one segment on the financial statements, as
there is only one central location of business and not multiple locations or
departments. SFAS 131 defines an operating segment, in part, as a component of
an enterprise whose operating results are regularly reviewed by the chief
operating decision maker to make decisions about resources to be allocated to
the segment and assess its performance. The chief operating decision maker is
not necessarily a single person, but is a function that may be performed by
several persons.
NOTE 20. CONSULTING AGREEMENT WITH GREETREE FINANCIAL GROUP, INC.
Michael J. Bongiovanni: Mr. Bongiovanni is to receive a payment equal to $29,500
Payable in free-trading shares of the Company immediately filed under Form S-8
for his services associated with Telecom Communications Inc.'s SEC compliance,
beginning January 9, 2002 and ending June 30, 2002.
F-9
Item 8. Changes with and Disagreements with Accountants on Accounting and
Financial Disclosure
NONE.
Item 9. Directors and Executive Officers of the Registrant
Identification of Directors and Executive Officers
--------------------------------------------------
The board of directors shall consist of not less than one member nor more than
five members. Each Director elected shall hold office until his successor is
elected and qualified at annual meeting of the shareholders. The following
persons are the Directors and Executive Officers of our Company.
Name Age Position(s)
----- --- -----------
Tak Hiromoto 62 President, CEO and Director
Elizabeth Hiromoto 52 Secretary, Treasurer and Director
Mervyn M. Dymally 75 Director
Mr. Tak Hiromoto has served as our President, Chief Executive Officer and
Director since December 2000 and has been a manager of Telecom Communications of
America from September 1995 to present. From March 1990 to December 1995, Mr.
Hiromoto served as President of Apro Inc., a Real Estate Management Company.
>From 1982 to Present, Mr. Hiromoto served as Director of Alternative Energy
Resource Inc.
Mrs. Elizabeth Hiromoto has served as our Secretary, Treasurer and Director
since December 2000 and has been a manager of Telecom Communications of America
since from September 1995 to present. From March 1990 to December 1995, Mrs.
Hiromoto served as Secretary, Treasurer and Director of Apro Inc., a Real Estate
Management Company. Mrs. Hiromoto is a licensed Real Estate Broker. Mrs.
Hiromoto is the wife of Mr. Tak Hiromoto.
Mr. Mervyn M. Dymally has served as our Director since December 2000. Mr.
Dymally retired as a U.S. Congressman in 1992. He was an Assemblyman, Senator,
and Lieutenant Governor of the state of California. From 1992 to present, Mr.
Dymally is the President of Dymally International Group, Inc., a consulting and
financial advisory firm in the United States. Mr. Dynally has skills in the
areas of dispute resolutions and has successfully negotiated many peace
agreements. He serves as a honorary consul for the Republic of Benin in
California and is International Lobbyist for a number of countries including
many African states.
Term of Office
---------------
The term of office of the current directors shall continue until new directors
are elected or appointed.
Employment Agreements
----------------------
The Company has entered into employment agreements with part-time employees. The
compensation of the employment will be determined at the later date. The
part-time employees have been working for no pay since January 2001, and will be
paid in free-trading common stock of the Company for their services filed under
Form S-8.
Family Relationships
--------------------
Mrs. Hiromoto is the wife of Mr. Tak Hiromoto.
8
Involvement in Certain Legal Proceedings
----------------------------------------
Except as indicated below and to the knowledge of management, during the past
five years, no present or former director, person nominated to become a
director, executive officer, promoter or control person of the Company:
(1) Was a general partner or executive officer of any business by or against
which any bankruptcy petition was filed, whether at the time of such filing or
two years prior thereto;
(2) Was convicted in a criminal proceeding or named the subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; and
(4) Was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal or state authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activity;
(5) Was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Compliance with Section 16(a) of the Exchange Act
--------------------------------------------------
Number of Shares
Name and Address Beneficially Percent of
of Beneficial Owner Owned Class
-------------------------- -------------------- --------------
Tak Hiromoto (1) 8,000,000 80.00%
President, CEO and
Director
Mark H. Rhynes (2) 1,000,000 10.00%
(1) The address for Tak Hiromoto is c/o Telecom Communications Inc., 827 S.
Broadway, Los Angeles, CA 90014.
(2) The shares are held by Herman, Alexis & Co., Inc. Herman, Alexis & Co., Inc.
is controlled by Mark H. Rhynes. The address for Herman, Alexis & Co., Inc. and
Mark H. Rhynes is 555 West 5th Street, Floor 31, Los Angeles, CA 90013. Herman,
Alexis & Co., Inc. verbally agreed to lock-up its shares for a period of one
year from the date of this report.
9
Item 10. Executive Compensation
The following table sets forth in summary form the compensation received during
each of the Company's last three completed fiscal years by the President and
Secretary/ Treasurer of the Company.
Summary Compensation Table
Other
Other Fiscal
Name and Annual LTIP Stock
Position Year Salary Bonuses Compensation Awards Options Bonuses
----------- ---- ------ ------- ------------ ------ ------- -------
Tak 2002 $ 5,000
Hiromoto, . 2001 $ 5,000 -0- -0- -0- -0-
President & 2000 N/A -0- -0- -0- -0-
Director. . 1999 N/A -0- -0- -0- -0-
----------- ---- ------ ------- ------------ ------ ------- -------
Elizabeth 2002 $ 20,000
Hiromoto, . 2001 $ 20,000 -0- -0- -0- -0-
Secretary,. 2000 N/A -0- -0- -0- -0-
Treas., Dir 1999 N/A -0- -0- -0- -0-
----------- ---- ------ ------- ------------ ------ ------- -------
Compensation of Directors
-------------------------
On January 3, 2001, the Board of Directors has instructed to issue Tak Hiromoto
and Elizabeth Hiromoto with restricted stock for their services.
Termination of Employment and Change of Control Arrangement
-----------------------------------------------------------
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named in the Summary
Compensation Table set out above which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of such person's employment with the Company or its subsidiaries, or
any change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
Indemnification of Officers and Directors
---------------------------------------------
We indemnify to the fullest extent permitted by, and in the manner permissible
under the laws of the State of Indiana, any person made, or threatened to be
made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he/she is or was a
director or officer of our Company, or served any other enterprise as director,
officer or employee at our request. Our board of directors, in its discretion,
shall have the power on behalf of the Company to indemnify any person, other
than a director or officer, made a party to any action, suit or proceeding by
reason of the fact that he/she is or was our employee.
10
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
The following Table sets forth the shares held by those persons who own more
than ten percent of Telecom Communication's common stock as of February 5, 2002,
based upon 10,000,000 shares outstanding.
Name and address of
Title of Class beneficial owner Number of shares Percent of class
-------------- ----------------- ---------------- ----------------
Common Tak Hiromoto 8,000,000 80%
827 S. Broadway
Los Angeles, CA 90014
Common Mark H. Rhynes 1,000,000(2) 10%
555 W. 5th Street, Floor 31
Los Angeles, CA 90013
(2) The shares are held by Herman, Alexis & Co., Inc. Herman, Alexis & Co.,
Inc. is controlled by Mark H. Rhynes. Herman, Alexis & Co., Inc. verbally agreed
to lock-up its shares for a period of one year from the date of this report.
(b) Security Ownership of Management
The following table sets forth the shares held by Telecom Communications, Inc.'s
directors and officers as of February 5, 2002.
Common Tak Hiromoto 8,000,000(1) 80%
827 S. Broadway
Los Angeles, CA 90014
Ownership of shares by directors and officers of Telecom Communications as a
group: 80%
(c) Changes in Control
We know of no contractual arrangements which may at a subsequent date result in
a change of control in the Company.
11
Item 12. Certain relationships and Related Transactions
Not Applicable.
Item 13. Exhibits and Reports on Form 8-K
(a) Financial Statements
1. The following financial statements of Telecom Communications are included in
Part II, Item 7:
- Independent Auditor's Report
- Balance Sheet - September 30, 2002
- Statements of Income - Years Ended September 30, 2002and 2001
- Statements of Cash Flows - Years Ended September 30, 2002and 2001
- Statements of Stockholders' Equity - Years Ended September 30, 2002and 2001
- Notes to Financial Statements
2. Exhibits
Exhibit Description of Exhibit
------- ------------------------
3.1 Articles of Incorporation as amended and bylaws are incorporated by
reference to Exhibit No. 3 of Form SB-2 as amended filed November 28,
2001.
10.1 Consulting Agreement between Telecom Communications Inc. and GreenTree
Financial Group ,Inc.
10.2 Inter-Tel.net Agreement
23.1 Consent of Auditors
(b) Reports on Form 8-K
No Form 8-K was filed during the fourth quarter.
SIGNATURE PAGE FOLLOWS
----------------------
12
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
TELECOM COMMUNICATIONS, INC.
Date: November 12, 2002 By: /s/ Tak Hiromoto
--------------------
Tak Hiromoto
CEO, President and Director
Date: November 12, 2002 By: /s/ Elizabeth Hiromoto
--------------------------
Elizabeth Hiromoto
Secretary , Treasurer and Director
13
FORM OF OFFICER'S CERTIFICATE
PURSUANT TO SECTION 302
-----------------------
The undersigned Chief Executive Officer of Telecom Communications, Inc.
hereby certifies that:
1. he has reviewed the report;
2. based on his knowledge, the report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by the
report;
3. based on his knowledge, the financial statements, and other
financial information included in the report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
issuer as of, and for, the periods presented in the report;
4. he and the other certifying officers:
a. are responsible for establishing and maintaining "disclosure
controls and procedures" (a newly-defined term reflecting the concept of
controls and procedures related to disclosure embodied in Section 302(a)(4) of
the Act) for the issuer;
b. have designed such disclosure controls and procedures to
ensure that material information is made known to them, particularly during the
period in which the periodic report is being prepared;
c. have evaluated the effectiveness of the issuer's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
the report; and
d. have presented in the report their conclusions about the
effectiveness of the disclosure controls and procedures based on the required
evaluation as of that date;
5. he and the other certifying officers have disclosed to the issuer's
auditors and to the audit committee of the board of directors (or persons
fulfilling the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls (a pre-existing term relating to internal controls regarding
financial reporting) which could adversely affect the issuer's ability to
record, process, summarize and report financial data and have identified for the
issuer's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the issuer's internal
controls; and
6. he and the other certifying officers have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
/S/ Tak Hiromoto January 31, 2003
------------------------------------
Tak Hiromoto, Chief Executive Officer and
Principle Accounting Officer
14