WIN GATE EQUITY GROUP INC
10KSB40, 2000-08-25
BLANK CHECKS
Previous: WIN GATE EQUITY GROUP INC, 8-K, 2000-08-25
Next: WIN GATE EQUITY GROUP INC, 10KSB40, EX-10.6, 2000-08-25




                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                               ------------------
                                   FORM 10-KSB
                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF

                       THE SECURITIES EXCHANGE ACT OF 1934

                    For the Fiscal Year Ended March 31, 2000
                           Commission File No. 0-23199

                           Win-Gate Equity Group, Inc.
                 (Name of Small Business Issuer in Its Charter)

               Florida                                    65-0669842
   (State or Other Jurisdiction of                    (I.R.S. Employer
     Incorporation or Organization)                 Identification Number)

  45 Broadway, 17th Floor, New York, NY                     10006
 (Address of principal executive offices)                 (Zip Code)

                                 (212) 509-0982
                (Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act : Common
Stock, $.001 Per Share

Check whether the issuer: (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  |_|                      No  |X|

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, 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 any amendment to
this Form 10-KSB. |X|

State the issuer's revenues for its most recent fiscal year: $949,514

State the aggregate market value of the issuer's voting stock held by
non-affiliates of the issuer as of August 18, 2000: $65,453,616

State the number of shares outstanding as of the issuer's classes of common
stock as of August 18, 2000:


<PAGE>


 Common Stock, $.001 par value: 18,136,702

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format:   Yes__       No   X
                                                                ---


<PAGE>


                                                 TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               Page
<S>               <C>                                                                                           <C>

                                                      Part I

Item 1.           Description of Business.......................................................................___

Item 2.           Description of Property.......................................................................___

Item 3.           Legal Proceedings.............................................................................___

Item 4.           Submission of Matters to a Vote of Security Holders...........................................___

                                                      Part II

Item 5.           Market for Common Equity and Related

                  Stockholder Matters...........................................................................___

Item 6.           Management's Plan of Operation................................................................___

Item 7.           Financial Statements..........................................................................___

Item 8.           Changes in and Disagreements with Accountants on Accounting and
                  Financial Disclosure..........................................................................___

                                                     Part III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance with Section 16(a) of the Exchange Act.............................................___

Item 10.          Executive Compensation........................................................................___

Item 11.          Security Ownership of Certain Beneficial Owners and Management................................___

Item 12.          Certain Relationships and Related Transactions................................................___

Item 13.          Exhibits and Reports of Form 8-K..............................................................___

                  Signatures....................................................................................___
</TABLE>


                                               --------------------


                                        2


<PAGE>


                                     PART I

Certain statements in this Form 10-KSB are "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), Section 21E of the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), and the Private Securities Litigation Reform Act
of 1995 and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially
different from the results, performance or achievements expressed or implied by
the forward-looking statements. Forward-looking statements, which involve
assumptions and describe our future plans, strategies and expectations, are
generally identifiable by use of the words "may," "will," "should," "expect,"
"anticipate," "estimate," "believe," "intend," or "project" or the negative of
these words or other variations on these words or comparable terminology. This
report contains forward-looking statements that address, among other things, our
financing plans, regulatory environments in which we operate or plan to operate,
trends affecting our financial condition or results of operations, the impact of
competition, the start-up of certain operations and acquisition opportunities.
These statements may be found under "Description of Business" and "Management's
Plan of Operation," as well as in this Form 10-KSB generally. Factors, risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements herein include (the "Cautionary Statements"),
without limitation: the Company's ability to raise capital; the Company's
ability to execute its business strategy in a very competitive environment; the
Company's degree of financial leverage; risks associated with acquisitions and
the integration thereof; risks associated with rapidly developing technology and
providing services over the Internet; regulatory considerations and risks
related to international economies; risks related to market acceptance of and
demand for the Company's products and services; continued relations with and
pricing dependence on third party suppliers; the impact of competitive services
and pricing; and other risks referenced from time to time in the Company's
filings with the Securities and Exchange Commission. All subsequent written and
oral forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by the Cautionary
Statements. The Company does not undertake any obligations to release publicly
any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Item 1.  Description of Business

Background

         Win-Gate Equity Group, Inc. (the "Company") is a Florida corporation,
organized on May 17, 1996, to initially locate and effect business combinations
with existing businesses. On January 21, 2000, the Company entered into and
consummated a stock purchase agreement ("Stock Purchase Agreement") with all of
the shareholders of Globaltron Communications Corporation, a Delaware
corporation ("Globaltron"). Pursuant to the Stock Purchase Agreement, the
Company acquired 100% of the issued and outstanding shares of Globaltron. As a
result, Globaltron became a wholly-owned subsidiary of the Company. Unless
otherwise provided herein, references to the "Company" shall mean the Company
and its subsidiaries.

         The Company's principal executive office is located at 45 Broadway,
17th Floor, New York, New York 10006 and its telephone number is (212) 509-0982.

                                        1


<PAGE>


Business

         The Company is a development stage multinational facilities-based
provider of integrated communications services in emerging markets to U.S. based
local and long distance communications operators. On behalf of such U.S. based
operators, we transport voice, data and broadband services to our foreign
networks. We currently have eight foreign networks located primarily in South
America. In addition, we have operating agreements that enable us to deliver
similar services in many other countries throughout the world using the networks
of others. The Company's strategy is to build competitive local exchange carrier
(CLEC) operations in select newly liberalized Latin American markets that are
characterized by high growth potential, a lack of telecommunications
infrastructure and significant existing unmet demand. The Company's current and
planned services include voice telephony, Internet access and international and
domestic long distance services. To date, the Company has primarily been engaged
in network engineering, product development, vendor selection, initiating market
entry by means of securing strategic agreements for the development of its
international carrier business. Currently, the Company is constructing an
international carrier grade convergent Internet Protocol (IP) network to deliver
reliable, low cost connectivity to customers in its target markets. The Company
has invested in certain infrastructure for net-to-phone, unified messaging and
interactive e-commerce service, which it expects to market within the next
twelve months. The Company has an Asynchronous Transfer Mode/Voice Over Internet
Protocol (ATM/VOIP) switching network operating in the United States and
extending to eight countries, and currently has offices in Miami, Florida, New
Jersey and New York City.

Strategy

         The Company's long-term business plan includes substantial network
investment combined with value added service enablers intended to support the
convergence of telephony and Internet services. The Company is focusing its
emerging market CLEC strategy on Latin America and intends to concentrate its
initial efforts on the Andean region countries of Colombia, Peru, Venezuela,
Ecuador and Bolivia. Privatization and deregulation in these countries have been
the catalyst for change and have created an environment for new
telecommunications service providers, such as the Company, to undertake
operations. The Company is focused on the Andean region because of its strong
potential for growth, favorable regulatory environment and the demand for and
the supply of telecommunications services. Although demand for basic telephony
and value-added services has increased dramatically in recent years primarily as
a result of continuing economic development in the region, it is substantially
beneath the acceptance levels for such services in the United States or Europe.

         The Company's initial Andean region CLEC market is Colombia, where the
Company has signed an agreement to acquire control of a Colombian corporation,
Interloop S.A. Nacional de Telecomunicaciones E.S.C. ("Interloop"). The
acquisition of equity control of Interloop, which has a broad license to provide
telecommunications service in the Republic of Colombia, is subject to
finalization of regulatory preconditions of the Colombian Ministry of
Communications (the "Ministry"). This acquisition will provide the Company with
a "first mover" advantage in Colombia, as Interloop holds the only package of
licenses assigned by the Ministry to provide fixed wireless (or wireless local
loop) telephony in Colombia's ten largest cities. Subject to the closing of the
transaction, the Company plans to deploy its network for such services within
the next twelve months.

Services

VOICE SERVICES

                                        2


<PAGE>


SWITCHED VOICE SERVICES.

         As of July 31, 2000, the Company had installed 12 voice switches to
provide facilities-based international exchange service in 8 markets in the
Carribean and Latin America.

         The Company's switched voice services include telephone exchange
service, including optional enhanced services such as call waiting, caller ID
and three-way conference calling; switching traffic between the Company's switch
and a business customer's PBX and routing local, intraLATA and interLATA phone
calls according to the customers' specific requirements; providing local dial
tone services with functionality such as free internal communications, call
forwarding, call transfer, conference call and speed dialing; Integrated
Services Digital Network (ISDN) data services; and origination and termination
of long distance traffic between a customer premises and interexchange carrier
via shared trunks utilizing the Company's local switch.

DEDICATED SERVICES. The Company's dedicated services provide high capacity
non-switched interconnections: (i) between Points of Presence (POPs) of the same
Inter Exchange Carriers (IXC); (ii) between POPs of different IXCs; (iii)
between large business and government end-users and their selected IXCs; (iv)
between an IXC POP and an Incumbent Local Exchange Carrier (ILEC) central office
or between two ILEC central offices; and (v) between different locations of
business or government end- users.

DATA/INTERNET SERVICES

HIGH SPEED INTERNET AND DATA SERVICES

         The Company intends to deliver high-speed data communications services,
including computer network connections and related infrastructure services, that
provide both commercial and residential customers access to the Internet through
their personal computers and the use of a modem.

         The Company intends to offer the following services over leased
broadband data communications networks:

-        INTERNET ACCESS SERVICE. The data and Internet backbone is connected to
         the Global Internet via public and private peering arrangements with
         Tier I-Internet backbone providers at strategic Network Access Points
         (NAPs) across the United States. This enables the Company to provide
         high-quality dedicated and dial-up Internet connectivity and IP
         transport for the business and reseller community. The service is
         targeted to consumers, local and regional ISPs and corporate Internet
         users requiring dedicated access. The service operates at dedicated
         speeds ranging from 56 kbps to 45 Mbps and at industry-standard dial-up
         speeds.

-        DEDICATED SERVERS. The Company intends to provide customers,
         particularly those in a shared hosting environment, a cost-effective
         way to enhance their Web site capacity. Dedicated servers are an
         innovative option for businesses with limited reinvestment capital to
         quickly upgrade their server disk space and bandwidth without incurring
         considerable overhead costs or additional debt. This provides a
         foundation for managed services and application hosting without
         incurring overhead costs that typically amount to many thousands of
         dollars.

                                        3


<PAGE>


-        ATM SERVICE. This service provides a solution to local, regional and
         national businesses with high-bandwidth, delay-sensitive data
         communications applications. With the Company's ATM service, the
         performance needs of complex, media-rich applications such as CAD/CAM,
         remote super-computing, medical imaging, video conferencing, and voice
         calls are easily met. This service is also ideal for higher-volume
         users of applications such as PC-to-server and file transfer. The
         service supports both Constant Bit Rate and Variable Bit Rate service
         levels over Permanent Virtual Circuits with user port speeds ranging
         from 2 Mbps to 45 Mbps.

Sales, Marketing and Service Delivery

         The Company's sales and marketing approach is to build long-term
business relationships with its customers, with the intent of becoming the
single source provider of their telecommunications services. The Company's sales
force includes specialized professionals who focus on sales to retail, wholesale
and alternate channel (agents and value-added resellers) consumers of the
Company's telecommunications services. The Company's sales staff works to gain a
better understanding of the customer's operations in order to develop
innovative, application-specific solutions to each customer's needs. Sales
personnel locate potential business customers by several methods, including
customer referral, market research, cold calling and networking alliances.

         Enhanced data services, like all other Company services, are sold
through the Company's existing sales force and supported by engineers and other
sales channels such as agents and value-added resellers, including independent
providers of communications hardware to customers. This approach enables the
Company to (i) emphasize the applications solutions aspects of enhanced data
services and (ii) utilize the expertise and resources of other vendors. The
Company intends to continue expanding its sales and engineering support staff
and other technical specialists in order to meet the growing demand for enhanced
data services.

Industry Overview

         The international long distance industry, which principally consists of
the transmission of voice and data between countries, is undergoing a period of
fundamental change that has resulted, and is expected to continue to result, in
significant growth in usage of international telecommunications services.
According to industry sources, in 1996, the international long distance
telecommunications industry accounted for approximately $61.3 billion in
revenues and 70.0 billion minutes of use, an increase from approximately $23.9
billion in revenues and 19.1 billion minutes of use in 1987. Industry sources
have estimated that by 2000 this market may approach $85.7 billion in revenues
and 122.4 billion minutes of use, representing compound annual growth rates from
1996 of 8.7% and 15.0%, respectively.

         The Company believes that growth in international long distance
services is being driven by (i) the globalization of the world's economies and
the worldwide trend toward deregulation of the telecommunications sector; (ii)
declining prices arising from increased competition generated by privatization
and deregulation; (iii) increased worldwide telephone density and accessibility
arising from technological advances and greater investment in telecommunications
infrastructure, including the deployment of wireless networks; (iv) a wider
selection of products and services; and (v) the growth in the transmission of
data traffic via internal company networks and the Internet. The Company
believes that growth of traffic originated in markets outside the U.S. will be
higher than growth in traffic originated within the U.S. due to recent
deregulation in many foreign markets, relative economic growth rates and
increasing access to telecommunications facilities in emerging markets.


                                        4


<PAGE>


         Regulatory And Competitive Environment

         Consumer demand and competitive initiatives have acted as catalysts for
government deregulation, especially in developed countries. Deregulation
accelerated in the U.S. in 1984 with the divestiture by AT&T of the regional
Bell operating companies ("RBOCs"). Today, there are over 500 U.S. long distance
companies, most of which are small or medium-sized companies. In order to be
successful, these small and medium-sized companies typically offer their
customers a full range of services, including international long distance.
However, most of these carriers do not have the critical mass of customers to
receive volume discounts on international traffic from the larger
facilities-based carriers such as AT&T, MCI, Sprint and WorldCom. In addition,
these companies have only a limited ability to invest in international
facilities. Alternative international carriers, such as the Company, have
capitalized on this demand for less expensive international transmission
facilities. These alternative international carriers are able to take advantage
of larger traffic volumes in order to obtain volume discounts on international
routes (resale traffic) and/or invest in facilities when the volume of
particular routes justifies such investments. As these emerging international
carriers have become established, they have also begun to carry overflow traffic
from the larger long distance providers that own overseas transmission
facilities.

         Deregulation in the U.K. began in 1981 when Mercury, a subsidiary of
Cable & Wireless PLC, was granted a license to operate a facilities-based
network and compete with British Telecommunications PLC. Deregulation spread to
other European countries with the adoption of the "Directive on Competition in
the Markets for Telecommunication Services" in 1990. A series of subsequent EU
directives, reports and actions have resulted in substantial deregulation of the
telecommunications industries in most EU member states. Further deregulation of
the EU telecommunications market will occur in 2000 upon the implementation of
the EU's Amending Directive to the Interconnection Directive, which mandates the
introduction of equal access and carrier pre-selection by 2000. A similar
movement toward deregulation has already taken place in Australia and New
Zealand, and is also taking place in Japan, Mexico, Hong Kong and other markets.
Other governments have begun to allow competition for value-added and other
selected telecommunications services and features, including data and facsimile
services and certain restricted voice services. Deregulation and privatization
have also allowed new long distance providers to emerge in other foreign
markets. In many countries, however, the rate of change and emergence of
competition remains slow, and the timing and extent of future deregulation is
uncertain.

         On February 15, 1997, the U.S. and 68 other countries signed the WTO
Agreement and agreed to open their telecommunications markets to competition and
foreign ownership starting in January 1998. These 69 countries represent
approximately 95% of worldwide telecommunications traffic. The Company believes
that the WTO Agreement will provide Globaltron with significant opportunities to
compete in markets where it would not previously have had access, and to provide
end-to-end facilities-based services to and from these countries. The FCC
recently released an order that significantly changes U.S. regulation of
international services in order to implement the U.S. open market commitments
under the WTO Agreement. This order is expected to increase opportunities for
foreign carriers to compete in the U.S. communications market, while increasing
opportunities for U.S. carriers to enter foreign markets and to develop
alternative termination arrangements with non-dominant carriers in other
countries.

         Deregulation has encouraged competition, which in turn has prompted
carriers to offer a wider selection of products and services at lower prices.
The Company believes that the lower price environment resulting from increased
competition has been more than offset by cost decreases and increases in
telecommunications usage. For example, based on FCC data for the period 1989
through 1995, per-minute

                                        5


<PAGE>


settlement payments by U.S.-based carriers to foreign ("PTTs") fell 31.4%, from
$0.70 per minute to $0.48 per minute. Over this same period, however, per-minute
international billed revenues fell only 13.7%, from $1.02 in 1989 to $0.88 in
1995. The Company believes that as settlement rates and capacity costs continue
to decline, international long distance will continue to provide opportunities
to generate relatively high revenues and per-minute gross profits.

         International Switched Long Distance Services

         International switched long distance services are provided through
switching and transmission facilities that automatically route calls to circuits
based upon a predetermined set of routing criteria. In the U.S., an
international long distance call typically originates on a LEC's network and is
switched to the caller's domestic long distance carrier. The domestic long
distance provider then carries the call to its own or to another carrier's
international gateway switch. From there it is carried to a corresponding
gateway switch operated in the country of destination by the ("ITO") of that
country and then is routed to the party being called though that country's
domestic telephone network.

         International long distance providers can generally be categorized by
the extent, if any, of their ownership and use of their own switches and
transmission facilities. The largest U.S. carriers, AT&T, MCI, Sprint and
WorldCom primarily utilize owned U.S. transmission facilities and have operating
agreements with, and own transmission facilities that carry traffic to, the
countries to which they provide service. A significantly larger group of long
distance providers own and operate their own switches and generally carry the
overflow traffic of other long distance providers. These carriers either rely
solely on resale agreements with other long distance carriers to terminate
traffic or use a combination of resale agreements and leased or owned facilities
in order to terminate their traffic, as discussed below.

         Operating Agreements

         Operating agreements provide for the termination of traffic in, and
return traffic from, the international long distance providers that have rights
in facilities in different countries at a negotiated "accounting rate". Under a
traditional operating agreement, the international long distance provider that
originates more traffic compensates the other long distance provider by paying
an amount determined by multiplying the net traffic imbalance by the latter's
share of the accounting rate. Under a typical operating agreement, each carrier
has a right in its portion of the transmission facilities between two countries.
A carrier gains ownership rights in a fiber optic cable by purchasing direct
ownership in a particular cable (usually prior to the time that the cable is
placed in service), by acquiring an Indefeasible Right of Use (IRU) in a
previously installed cable, or by leasing or obtaining capacity from another
long distance provider that either has direct ownership or IRU rights in the
cable. In situations where a long distance provider has sufficiently high
traffic volume, routing calls across leased or IRU cable capacity is generally
more cost-effective on a per-call basis than the use of resale arrangements with
other long distance providers. However, leased capacity and acquisition of IRU
rights require a substantial initial capital investment based on the amount of
capacity acquired.

         Transit Arrangements

         In addition to utilizing an operating agreement to terminate traffic
delivered from one country directly to another, an international long distance
provider may enter into transit arrangements pursuant to which a long distance
provider in an intermediate country carries the traffic to the country of
destination.


                                        6


<PAGE>


         Switched Resale Arrangements

         A switched resale arrangement typically involves the wholesale purchase
of termination services on a variable, per-minute basis by one long distance
provider from another. A single international call may pass through the
facilities of multiple long distance resellers before it reaches the foreign
facilities-based carrier that ultimately terminates the call. Such resale, first
permitted with the deregulation of the U.S. market, enabled the emergence of
alternative international providers that relied, at least in part, on
transmission services acquired on a wholesale basis from other long distance
providers. Resale arrangements set per-minute prices for different routes, that
may be guaranteed for a set time period or subject to fluctuation following
notice. The resale market for international transmission is constantly changing,
as new long distance resellers emerge, and as existing providers respond to
fluctuating costs and competitive pressures. In order to effectively manage
costs when utilizing resale arrangements, long distance providers need timely
access to changing market data and must quickly react to changes in costs
through pricing adjustments or routing decisions.

         Alternative Transit/Termination Arrangements

         As the international long distance market began to deregulate, long
distance providers developed alternative transit/termination arrangements in an
effort to decrease their costs of terminating international traffic. Some of the
more significant of these arrangements include refiling, ISR and ownership of
switching facilities in foreign countries.

         Refiling and transiting of traffic, which take advantage of disparities
in settlement rates between different countries, allow traffic to a destination
country to be treated as if it originated in another country that benefits from
lower settlement rates with the destination country, thereby resulting in a
lower overall termination cost. The difference between transit and refiling is
that, with respect to transit, the long distance provider in the destination
country has a direct relationship with the originating long distance provider
and is aware of the arrangement, while with refiling, it is likely that the long
distance provider in the destination country is not aware of the country in
which the traffic originated or of the originating carrier. To date, the FCC has
made no pronouncement as to whether refiling complies with either U.S. or ITU
regulations.

         Under ISR, a long distance provider completely bypasses the Accounting
Rate system by connecting an international leased private line (i) to the
("PSTN") of two countries or (ii) directly to the premises of a customer or
partner in one country and the PSTN in the other country. While ISR currently is
only sanctioned by applicable regulatory authorities on a limited number of
routes, it is increasing in use and is expected to expand significantly as
deregulation of the international telecommunications market continues. In
addition, deregulation has made it possible for U.S.-based long distance
providers to establish their own switching facilities in certain foreign
countries, enabling them to terminate traffic directly.

         Competitive Opportunities and Advances in Telecommunications Technology

         The combination of a continually expanding global telecommunications
market, consumer demand for lower prices with improved quality and service, and
ongoing deregulation has created competitive opportunities in many countries.
Similarly, new technologies, including fiber optic cable and improvements in
digital compression, have improved quality and increased transmission capacities
and speed, with transmission costs decreasing as a result. In addition, the
growth of the Internet as a communications


                                        7


<PAGE>


medium, and advances in packet switching technology and Internet telephony are
expected to have an increasing impact on the international telecommunications
market.

         Advances in technology have created a variety of ways for
telecommunications carriers to provide customer access to their networks and
services. These include customer-paid local access, international and domestic
toll-free access, direct digital access through a dedicated line, equal access
through automated routing from the PSTN, call reorigination and Internet
telephony. The type of access offered depends on the proximity of switching
facilities to the customer, the needs of the customer, and the regulatory
environment in which the carrier competes. Overall, these changes have resulted
in a trend towards bypassing traditional international long distance operating
agreements as international long distance companies seek to operate more
efficiently.

         In a deregulated country such as the U.S., carriers can establish
switching facilities, own or lease fiber optic cable, enter into operating
agreements with foreign carriers and, accordingly, provide direct access
service. In markets that have not deregulated or are slow in implementing
deregulation, international long distance carriers have used advances in
technology to develop innovative alternative access methods, such as call
reorigination. In other countries, such as Japan and most EU member states,
where deregulation has commenced but has not been completed, carriers are
permitted to offer facilities-based data and facsimile services, as well as
limited voice services including those to ("CUGs"), but are not yet permitted to
offer full voice telephony. As countries deregulate, the demand for alternative
access methods typically decreases because carriers are permitted to offer a
wider range of facilities-based services on a transparent basis.

         Prepaid Calling Cards

         The prepaid calling card industry is currently a $14 billion industry
worldwide. Introduced in the U.S. by the major telephony companies in 1992, the
prepaid calling card market achieved approximately $10 million in sales in its
initial year. By 1998 sales in the U.S. had swelled to $3 billion. Over the next
three years the industry is expected to experience its greatest growth, reaching
over $6 billion in sales in the U.S. alone by 2002.

         The fundamental appeal of prepaid cards to consumers is international
long distance savings and ease in budgeting their long distance spending. The
appeal of calling cards to ("CMCs") is an efficient means of originating
international long distance traffic and forward integrating into direct
relationships with end users. Prepaid calling cards are an effective way for
providers to deliver 10-50% savings versus the rates of larger carriers on
targeted routes.

         Consumers can use prepaid calling cards at any touch tone telephone by
dialing an access number, followed by a personal identification number (a "PIN")
assigned to each prepaid card. Once the customer dials the number he/she wants
to reach, the call is completed without operator assistance. Calling card
providers typically support their operations with their own switch facilities
and a "debit card platform" that automatically deducts usage from the prepaid
balance for each individual card and PIN. Calling card customers have
traditionally dialed 1-800 numbers, but recently less expensive local area
calling cards ("LAC cards"), which require only a local phone call, have been
gaining popularity with both providers and consumers.

         In addition to being an effective mechanism for the generation of
international retail traffic, prepaid calling cards offer attractive market
dynamics as follows:

                                        8


<PAGE>


         Cards deliver targeted savings. Calling cards can be targeted to
deliver competitive rates to specific countries, thereby generating a high
volume of international long distance to countries where the provider has
favorable termination costs. Since the product itself can be tailored to the
needs of a very specific group of consumers, operators can avoid the
inefficiency of marketing to the mass market. Existing calling card products
generally offer savings of 10-50% against prevailing rates of major long
distance carriers. Cards are typically branded for a specific country or ethnic
group.

         Readily accepted by consumers in ethnic communities. Recent immigrants
are heavy users of international long distance so they can remain "connected" to
their respective countries or origins while primarily residing in another.

         Minimal bad debt or billing expenses: The consumer prepays for usage
when the card is originally purchased so operators' bad debt and billing
expenses are minimal. Operators do occasionally extend limited credit to their
distributors but exposure to distributor credit is easily managed. Savings from
lower operating costs can be divided between lower rates for consumers and
operators' margins.

         Marketing Database Generation. Calling card operators that control
their own debit card platforms can build marketing databases by extracting
information from calling card activity. Data extraction from debit card
platforms enables the operator to identify its customers for the marketing of
other services, including dial around and presubscription.

Competition

         The markets in which the Company operates and plans to operate are
extremely competitive and can be significantly influenced by the marketing and
pricing decisions of larger industry participants. There are limited barriers to
entry in many of the telecommunications and Internet markets in which the
Company competes and plans to compete. The Company expects competition in these
markets to intensify in the future.

         The Company competes or intends to compete with (i) IXCs and other long
distance resellers and providers, including large carriers, such as AT&T, MCI,
Sprint, and WorldCom; (ii) foreign PTTs; (iii) other providers of international
long distance services such as STAR Telecommunications, Inc., Pacific Gateway
Exchange, Inc., RSL Communications Ltd. and Telegroup, Inc.; (iv) alliances that
provide wholesale carrier services, such as "Global One" (Sprint, Deutsche
Telekom AG and France Telecom S.A.) (v) new entrants to the domestic long
distance market such as Regional Bell operating companies ("RBOCs") in the U.S.,
(vi) small long distance resellers. Moreover, some of the Company's competitors
have announced business plans similar to the Company's regarding the expansion
of telecommunications networks into Europe, Latin America and the Caribbean.
Many of the Company's competitors are significantly larger and have
substantially greater market presence as well as greater financial, technical,
operational, marketing and other resources and experience than the Company.

         The Company competes for customers in the telecommunications markets
primarily based on price and, to a lesser extent, on the type and quality of
service offered. Increased competition could force the Company to reduce its
prices and profit margins if its competitors are able to procure rates or enter
into service agreements that are comparable to or better than those the Company
obtains, or if they are able to offer other incentives to existing and potential
customers. The Company could also face significant pricing pressure if it
experiences a decrease in the volume of minutes that it carries on its network,
as the Company's ability to obtain favorable rates from its carrier suppliers
depends, to a significant extent, on

                                        9


<PAGE>


the Company's total volume of international long distance call traffic. There is
no guarantee that the Company will be able to maintain the volume of
international long distance traffic necessary to obtain favorable rates.
Although the Company has no reason to believe that its competitors will adopt
aggressive pricing policies that could adversely affect the Company, there can
be no assurance that such price competition will not occur or that the Company
will be able to compete successfully in the future.

         Prices for international long distance calls are determined in part by
international settlement rates, which are the rates that a carrier (often a PTT)
charges to terminate an international call in its home country. Because these
rates were set by national monopolies, they were traditionally set at arbitrary,
artificially high levels that enabled many carriers to enjoy high gross margins
on international calls. With the introduction of competition in many countries,
international settlement rates have been declining for the last several years.
Additionally, an increasing number of calls are being placed outside the
international settlement rate system, resulting in drastically lower prices.
Moreover, practices such as "refile" (where traffic originating from a
particular country is rerouted through another country with a lower settlement
rate), off settlement rate terminations (where a local carrier agrees to
terminate an international call at rates below the settlement rates) and transit
(where a carrier agrees to terminate another carrier's traffic to a particular
country at a negotiated price other than the settlement rate) are becoming
increasingly common. Industry observers believe that the combined effects of
deregulation, excess transmission capacity, advances in technology and the
negligible marginal cost to a carrier that owns its own switches and
transmission facilities of carrying an international call, are gradually causing
the collapse of the international settlement rate system. Settlement rates also
are being reduced as a result of regulatory initiatives. Lower settlement rates
are scheduled to be in effect for substantially all countries over the next
several years. Lower settlement rates will reduce per minute revenue, which
could have a material adverse effect on the Company's business. Prices for
international calls may be further driven down as a result of the FCC's recent
decision to lift its International Settlements Policy (the "IS Policy") on
competitive routes.

         The prepaid calling card industry is extremely competitive, and the
Company expects competition to increase in the future. The Company estimates
that there are more than 100 companies that offer prepaid calling cards in the
U.S. Several of these companies have greater financial and operating resources
than the Company. The failure of the Company to capture a significant share of
the prepaid calling card market may have an adverse effect on its business,
financial condition or results of operations.

         The market for Internet telephony services is expected to be extremely
competitive. There can be no assurance that the Company will be able to
successfully compete in the developing Internet telephony market, or that other
large companies will not enter the market as suppliers of Internet telephony
services.

Employees

         As of July 31, 2000, the Company employed a total of 35 individuals
full time. The Company believes that its future success will depend on its
continued ability to attract and retain highly skilled and qualified employees.
None of the Company's employees are subject to a collective bargaining
agreement. The Company believes that its relations with its employees are good.

         The Company previously filed a Form 10-KSB for the fiscal year ended
December 31, 1999. However, as part of the transaction with Globaltron on
January 21, 2000, Globaltron (which had a March 31, fiscal year end) was deemed
the surviving entity and, accordingly, the Company's fiscal year changed from
December 31 to March 31.

                                       10


<PAGE>


Item 2.  Properties

         The Company's network operations center is located at 100 North
Biscayne Blvd., Miami, Florida, where it occupies approximately 10,492 square
feet under a lease that expires in November 2009. During year one of the lease,
the annual rental is $115,000. During year two of the lease, the annual rental
is $251,808. During year three of the lease, the annual rental is $261,880.
During year four of the lease, the annual rental is $272,372. During year five
of the lease, the annual rental is $283,284. During year six of the lease, the
annual rental is $294,615. During year seven of the lease, the annual rental is
$306,366. During year eight of the lease, the annual rental is $318,642. During
year nine of the lease, the annual rental is $331,337. During year ten of the
lease, the annual rental is $344,662. The Company also pays certain pass-through
expenses.

         The Company has additional space in the same building in Miami, under a
separate lease for its switch site and operations office, where it occupies
approximately 2,488 square feet under a lease that expires in May, 2003. During
year one of the lease, the annual rental is $80,837. During year two of the
lease, the annual rental is $84,070. During year three of the lease, the annual
rental is $87,433. During year four of the lease, the annual rental is $90,931.
The Company also pays certain pass-through expenses.

         The Company pays $1,390 per month for an apartment that is used by its
out-of-state employees while they are working in the Miami Network Operation
Center. The lease expires in December 2000.

         Additionally, the Company leases approximately 3,750 square feet of
space in Parsippany, New Jersey for its global carrier services business and a
sales office, pursuant to a lease that expires in December, 2004. The Company
pays an annual rental of $77,813 (and also pays pass-through expenses).

         The Company's corporate headquarters and principal executive offices
are located in New York, New York, where it occupies approximately 4,749 square
feet under a lease that expires in July, 2010. During year one of the lease, the
annual rental is $161,455. During year two of the lease, the annual rental is
$166,299. During year three of the lease, the annual rental is $171,288. During
year four of the lease, the annual rental is $176,426. During year five of the
lease, the annual rental is $181,719. During year six of the lease, the annual
rental is $196,673. During year seven of the lease, the annual rental is
$202,574. During year eight of the lease, the annual rental is $208,651. During
year nine of the lease, the annual rental is $214,910. During year ten of the
lease, the annual rental is $221,357.

         The Company also leases co-location space for its telephonic switching
equipment in New York and Los Angeles. Such co-location space typically leases
on a short-term basis at approximately $600 per equipment rack. Currently, the
lease cost incurred by the Company for such space in New York City is $9,500 per
month and the lease cost in Los Angeles is $2,400 per month.

Item 3.  Legal Proceedings

         There are no pending legal proceedings against the Company or any of
its subsidiaries.

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

         None.

                                       11


<PAGE>


                                     PART II

Item 5.  Market for Company's Common Equity and Related Stockholder Matters.
         ------------------------------------------------------------------

         The Company's common stock, par value $.001 per share ("Common Stock"),
has been traded on the OTC Bulletin Board ("OTCBB") under the symbol WGEG.OB
since January 24, 2000. Prior to then, there was no public trading market for
the Common Stock. Set forth below is the range of the high and low closing bid
quotations of the Common Stock for the first and second quarter of calendar year
2000 as reported on the OTCBB system. The quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.

                                            High                       Low
                                           ------                      ---
First Calendar Quarter of 2000             13.625                       8
Second Calendar Quarter of 2000                --                       --

         At August 18, 2000, there were approximately 240 shareholders of record
of the Company's Common Stock. The Company has never declared dividends on its
Common Stock since inception and has no present intention of declaring or paying
any dividends in the foreseeable future. The Company intends to retain any
earnings which it may realize in the foreseeable future to finance its
operations. The terms of the GNB Loan Agreement restrict the payment of
dividends or distributions.

Item 6.  Management's Plan of Operation

         The following discussion and analysis should be read in conjunction
with, and is qualified in its entirety by, the Financial Statements included
elsewhere herein. Historical results are not necessarily indicative of trends in
operating results for any future period.

General

         The Company was initially organized under the laws of the State of
Florida on May 17, 1996 in order to seek and effect a merger, acquire the assets
or the capital stock of existing businesses or other similar business
combinations. Prior to its transaction with the Globaltron stockholders where
Globaltron became a wholly-owned subsidiary of Win-Gate in exchange for Win-Gate
shares, the Company had not been engaged in active operations since its
organization.

Going Concern

         The accompanying consolidated financial statements and financial
information have been prepared assuming that the Company will continue as a
going concern. The Company's continuation as a going concern is dependent upon
its ability to (a) generate sufficient cash flow to meet its obligations on a
timely basis, (b) obtain significant additional financing, and (c) ultimately
sustain profitability.

                                       12


<PAGE>


Plan of Operation

         As a result of the Globaltron transaction, the Company entered into the
international facilities-based telecommunications business. The Company intends
to build a facilities-based international grade network outside the traditional
settlement process to offer its customers low cost, highly reliable
connectivity. The Company has initially focused on carrier wholesale termination
by leveraging off of its current strategic agreements, U.S. carrier contracts,
and network build-out. As the Company's foreign operations become established,
higher margin foreign traffic call origination is anticipated to increase.
Additionally, the Company intends to introduce a complete package of enhanced
virtual services, prepaid calling card programs, international private lines,
and Internet telephony during the calendar year 2000.

         For the calendar year 2000, the Company's operational and strategic
objectives include the following:

         ->       Enter select deregulating international markets
         ->       Acquire or joint venture with other telecommunications related
                  providers
         ->       Aggregate carrier traffic to forge strategic operating
                  agreements
         ->       Focus on foreign market traffic origination
         ->       Build a portfolio of value added services
         ->       Establish a reliable, fully redundant, technologically
                  advanced network
         ->       Invest in network infrastructure

         For the 12 months ending March 31, 2001, the Company intends to begin
or expand operations in various locations in Europe, Central and South America,
and the Caribbean. The Company has signed definitive agreements to enter the
Competitive Local Exchange Carrier (CLEC) business in a 5-country area of South
America. Initial operations are anticipated to begin in Peru and Colombia in the
last quarter of calendar year 2000, and continue with build-out over the
following 3 years.

         The development of the Company's business and the construction,
acquisition and expansion of its networks require significant capital
expenditures, a substantial portion of which are incurred before realization of
revenues. These expenditures, together with the associated early operating
expenses, result in negative cash flow until an adequate customer base is
established. However, as the Company's customer base grows, the Company expects
that incremental revenues can be generated with decreasing incremental operating
expenses. The Company has made specific strategic decisions to build high
capacity networks with broad market coverage, which initially increases its
level of capital expenditures and operating losses. However, the Company
believes that over the long term this strategy will enhance the Company's
financial performance by increasing the traffic flow over its network.

         There can be no assurance that the Company will be able to identify,
attract, finance or consummate its operational and strategic objectives (all of
which are heavily dependent upon, among other things, the Company's ability to
obtain additional financing).

         The Company intends in the future to capitalize on the expanding and
rapidly evolving telecommunications and Internet services environment in Latin
America. As such, the Company's goal is to become a leading facilities-based
provider of integrated communications services to both businesses and
residential customers in Latin America. The Company's strategy is to:

         o        Deploy Flexible Networks. For the provision of local access
                  services in Latin America the Company intends to deploy a
                  range of network access systems using primarily wireless


                                       13


<PAGE>


                  local loop (WLL) technology. Wireless local loop systems
                  provide several competitive advantages over conventional
                  wireline technologies, because they utilize radio spectrum to
                  provide last-mile access to subscribers. The WLL technology
                  reduces network costs, deployment time, and operating
                  expenses, in addition to providing flexibility to the operator
                  in addressing changes in demand. The Company believes its WLL
                  network strategy will enable it to cost effectively match its
                  service offerings with the requirements of its customers. The
                  Company has selected its vendors for the WLL technology for
                  the Andean Region.

         o        Enter Select Deregulating Latin American Markets. The Company
                  is focused on newly liberalized Latin American markets in
                  which it can secure favorable, market-operating agreements and
                  licenses that allow the Company to establish a local market
                  presence through the acquisition of LMDS/WLL spectrum and
                  broadband wireless access. In certain markets on the verge of
                  local market deregulation the Company has pursued strategic
                  relationships with licensed foreign carriers to establish
                  market position and a competitive cost advantage. At the time
                  of market liberalization the Company believes it will be
                  better positioned to leverage its established strategic
                  relationships to secure opportunities for local market entry.

         o        Aggressively Build Market Share in Target Markets. The Company
                  plans to aggressively build market share in its target
                  markets. In Colombia, this strategy will be fostered by the
                  Company's unique "first mover" positioning for the provision
                  of fixed wireless services. The Company intends to focus on
                  the underserved small and medium sized businesses and high
                  usage residential customers and offer higher-quality services
                  at competitive prices. The Company intends to work to build
                  brand recognition in the Andean Region through a broad-based
                  mass marketing and advertising campaign. The Company
                  anticipates to achieve additional market positioning due to
                  customer dissatisfaction with the incumbent communications
                  providers. The Company believes that its fixed wireless
                  infrastructure will provide higher quality service offerings
                  not available over the incumbent's wireline networks.

         o        Invest in US Backbone and International Transport Network for
                  Lowest Cost Competitive Positioning. The Company has allocated
                  the majority of its network infrastructure investment to date
                  to building out its IP/ATM backbone to ensure low cost
                  international transport positioning. By establishing a US
                  backbone with direct routes to the Company's target CLEC
                  markets, the Company believes that it will realize significant
                  cost advantages for international transport and termination.
                  In addition, established direct routes allow the Company to
                  further capitalize on the prevailing traffic patterns between
                  the US and Latin America by providing international
                  origination and termination to other service providers. The
                  Company's execution strategy is to be 80% "On Net" across its
                  own facilities, composed of the Company's own international
                  gateways and transport facilities to targeted countries.

                  The Company is working toward establishing a highly reliable,
                  technologically advanced international transport network. The
                  international convergent IP network is being constructed using
                  technology from Lucent Technologies and Cisco. The network is
                  being built end to end using cell based ATM switching and
                  Internet Protocol for integrated


                                       14


<PAGE>


                  voice, data and video applications. The transport network is
                  optic utilizing a bi-directional SONET ring architecture where
                  fiber is available. A Network Operations Center for
                  comprehensive network management is staffed 24 hours per day,
                  365 days per year to monitor the worldwide network. In
                  addition, the Company's switching platform possesses full
                  E1/T1 capability to accommodate the standards of most every
                  country in the world. The Company believes that its network
                  characteristics will meet and exceed its customers demands for
                  reliability, quality and capacity.

         o        Build a Portfolio of Integrated Services and Applications.
                  Although the Company's current services are primarily sold to
                  wholesale customers, the Company's network infrastructure is
                  designed for the provision of both wholesale and retail
                  service offerings. Integrated services and applications offer
                  higher margins and a mix of wholesale and retail traffic helps
                  maintain optimal network utilization, which drives lower
                  network operating costs per minute. The Company has begun to
                  build a portfolio of integrated services and applications to
                  capture retail opportunities in the U.S. and in foreign
                  markets where the Company has an established presence. Planned
                  services and applications include national and international
                  long distance, local access, IP Telephony, Unified Messaging
                  and enhanced value added services and prepaid calling cards.
                  The Company has made a strategic investment in a developer of
                  Unified Messaging and IP Telephony applications and secured
                  licenses or retail distribution agreements for the Andean
                  Region Countries of Columbia and Peru.

         o        Foreign Market Traffic Origination. As the Company develops
                  and expands its relationships with foreign carriers, PTTs and
                  other foreign market providers, the Company's Carrier focus
                  will shift increasingly to originate international carrier
                  data, voice and virtual services traffic in foreign markets.
                  Foreign market origination in deregulating markets offers
                  significantly higher margins and leads to additional
                  opportunities for foreign market retail origination. The
                  Company's strategy is to migrate the ration of direct
                  arbitrage routes of foreign market and sales operations from a
                  current 5/95% ratio to a targeted 80/20% as the network plan
                  is executed.

         o        Capitalize on Experienced Management. The Company's management
                  team is made up of individuals with significant industry
                  experience. Gary Morgan, the Company's founder, Chairman of
                  the Board and Chief Executive Officer, has twenty-two years of
                  industry experience in both domestic and international
                  communications. Gary Stukes, the Company's President and Chief
                  Operating Officer, has over twenty years of industry
                  experience including twelve years with AT&T and a previous
                  position as Vice President of Carrier Sales at Totaltel.

         o        Aggregate Carrier Traffic to Forge Strategic Operating
                  Agreements. Aggregation of international call termination has
                  been and will continue to be a key asset for the Company in
                  achieving favorable positioning in foreign markets. As a
                  facilities-based carrier the Company supplies large volumes of
                  traffic to key international regions and resells "arbitrage"
                  traffic to the balance of the world. Strategically, the
                  Company uses the aggregated traffic volumes to swap routes,
                  extend business relationships to joint ventures, enter
                  deregulating markets and obtain foreign originating traffic.
                  The Company has already signed international contracts for
                  voice, data, and virtual services transmission with over 100
                  carriers worldwide.


                                       15


<PAGE>


         o        Utilize Strategic Acquisitions to Enhance Share Value. The
                  Company expects to continue to expand internally as well as
                  through acquisition and merger activities, acquiring companies
                  that provide complementary services or are positioned in
                  attractive markets. To date, the Company has acquired licenses
                  companies in Miami, Florida and Colombia.

Results of Operations

         The discussion below relates to results of operations for the fiscal
year ended March 31, 2000. The Company does not believe that it is meaningful to
compare changes from the corresponding period in the preceding year due to the
significant change in the Company's operations subsequent to the Globaltron
acquisition and the nominal operations of Globaltron in such prior fiscal year.

         Revenues for the Company for the fiscal year ending March 31, 2000
totaled $949,500. This period encompassed the initiation of operations for the
Company, and all of the revenues were generated from international carrier
termination sales of voice and data telecommunications into the Company's
foreign site Points of Presence (POP).

         The Company receives wholesale carrier telecommunications traffic into
one of its domestic switch sites, uplinks the traffic via signal from teleport
facilities in New Jersey and Miami to a satellite in geosynchronus orbit with
the Earth from which the Company has procured a designated segment of the
bandwidth of the satellite, and retransmits the signal to a downlink at the
foreign site POP.

         Although the Company's revenue grew substantially during the year,
technical issues relating to some international sites impacted revenues. The
Company believes these technical issues have now been rectified and those sites
are now fully operational.

         The Company has contracted with providers of telecommunications
transport services and facilities to process call traffic over its national and
international network. Such expenses, which are predominantly fixed recurring
monthly costs, constitute 89% of the Costs of Good Sold for the year ending
March 31, 2000. These costs, as a percentage of Costs of Goods Sold, are
expected to decrease as the Company's network reaches its expected traffic
capacity levels. The Company's build-out of its international network is
continuing. Due to the number of international sites under construction and
testing required during the period, the company incurred negative gross margins.

         Selling, general and administrative expenses ("SGA") for the year
ending March 31, 2000 reflect the developmental stage of the Company during its
first year of operations. Approximately $860,000 (27% of total SGA), relating to
professional fees, was expensed during the year. Travel related expenses of
$279,000 (or 9% of total SGA), relate to organizational and financing activities
as well as the deployment of foreign sites.

         The Company recorded $540,189 of expenses during the year ending March
31, 2000, relating to the issuance by the Company of stock to certain
individuals for professional services and employment inducements. These
transactions allowed the Company to secure certain services requisite to
formation of the Company for non-cash consideration. Management regards these
expenses as one-time start-up expenses. Depreciation and amortization expense
for the year ending March 31, 2000 totaled $730,919. Interest expense for the
year totaled $165,164.

                                       16
<PAGE>

         The Company recorded a net loss for the year ending March 31, 2000 of
$4,861,063.

Liquidity and Capital Resources

         As of July 31, 2000, the Company was operating 9 networks. The costs
associated with the initial construction and operation of a network may vary,
primarily due to market variations in geographic and demographic
characteristics, and the types of construction technologies, which can be used
to deploy the network. As the Company develops, introduces and expands its
high-speed data/Internet and voice services in each of its markets, additional
capital expenditures and net operating costs will be incurred. The amount of
these costs will vary, based on the number of customers served and the actual
services provided to the customers.

         The Company is incurring negative cash flows due, in major part, to the
funding requirements for working capital, network construction or development
and voice services. Through March 31, 2000, the Company had invested
approximately $10,958,000 million in network and telecommunications equipment.
The Company expects it will continue to incur negative cash flow for at least
two years. There can be no assurance that the Company's networks or any of its
other services will ever provide a revenue base adequate to sustain
profitability or generate positive cash flow. The Company estimates that in
calendar 2000, capital required for implementation of its integrated networks
and its other services and to fund negative cash flow, including interest
payments, will be significant. As of March 31, 2000, the Company's unrestricted
cash balance was approximately $4,055,990.

         The Company's development and enhancement of new services and networks
will require substantial capital expenditures. The funding of these expenditures
is dependent upon the Company's ability to raise substantial equity and debt
financing. In certain instances the ability to secure equipment financing
requires the consent of existing vendors. Any such acquisitions or arrangements
that the Company might consider are likely to require additional equity or debt
financing, which the Company will seek to obtain as required and which may also
require that the Company obtain the consent of its debt holders.

         In order for the Company to continue to acquire the ATM/VOIP switching
network equipment necessary to develop its international telephone network, the
Company has entered into various equipment financing agreements with equipment
vendors. Capital equipment used by the Company in its international telephony
network is typically financed directly or indirectly by equipment vendors. In
the instance of a direct financing facility, the vendor itself will negotiate
the facility with the Company, advance the funding, receive payments and
administer all details related to the transaction. In an indirect financing
transaction, the vendor will have pre-selected a group of third party financial
institutions that will represent the vendor to effect customer financing. The
vendor accepts an order from the Company, while the Company and the financing
institution will together negotiate the financial details of the transaction.
The respective facility is characterized as either a conditional sales contract
or as a capital lease agreement, generally with a nominal buy-out option at
termination. Regardless of the form of the agreement, the facilities feature
deferred payment terms, multi-year maturity dates and allowance for such
ancillary soft costs as shipping, taxes, installation and set-up necessary to
place the equipment into service.

         On October 25, 1999, the Company entered into two separate Equipment
Financing Agreements with Cisco Systems Capital Corporation. On January 24,
2000, the Company entered into an additional Equipment Financing Agreement with
Cisco Systems Capital Corporation. Pursuant to the Agreements, the Company has
the ability to borrow up to an aggregate of $6,373,048 in order to purchase
switches and

                                       17

<PAGE>



routers and for related ancillary costs for equipment maintenance, installation
and preparation. The facility is available in 3 phases. The Agreement has a term
of 36 months for the purchase of equipment and 24 months for ancillary costs
including shipping, taxes, installation, cabling and software. As of July 31,
2000, all funds available under the equipment facility have been borrowed.

         On August 23, 1999, Globaltron entered into an Equipment Financing
proposal with Lucent Technologies. Pursuant to the proposal, the Company had the
ability to borrow up to $10 million in order to purchase Lucent Technologies
equipment and services and to pay for ancillary costs associated with the
installation and preparation of equipment for operation. The equipment facility
was divided into 3 phases. Phase one was for up to $1,750,000 and was to be used
towards the purchase equipment to be deployed outside the United States. Phase
two was for up to $6,750,000 and was to be used towards the purchase equipment
to be deployed in the United States. Phase three was for up to $1,500,000 and
was to be used towards the purchase of Lucent Technologies professional
services, plus costs relating to taxes and shipping. On September 15, 1999,
Globaltron entered into a Master Conditional Sale Agreement with Lucent
Technologies finalizing all of the terms and conditions of the Equipment
Financing Proposal. Through April 30, 2000, Globaltron borrowed approximately $9
million under the Lucent Technologies facility. Lucent Technologies subsequently
decided to decrease their financing role and turned new financings and renewals
to third party lenders. On June 27, 2000, the Company entered into a Equipment
Financing Agreement with Gallant Capital and Finance, LLC. The original Lucent
$10 million facility was assigned to Gallant Capital and rolled into the Gallant
Capital facility and an additional $10 million was available for borrowing under
the new Gallant Capital facility. The Gallant Capital Agreement has a term of 60
months and an annual interest rate of 12%. As of July 31, 2000, the Company has
borrowed $13.8 million under the Gallant Capital Agreement ($9 million of which
was previously delivered under the original Lucent Agreement and $4.8 million of
which was delivered under the Gallant Capital Agreement).

         The Company has also recently signed various term sheets for equipment
financing. All of these term sheets, which are described below, are subject to
the preparation and execution of definitive agreements. There can be no
assurance that such definitive agreements will be executed. As such, no funds
have been drawn under any of the term sheets described below. In June 2000, the
Company entered into a term sheet for the provision of financing by Italtel SPA.
Pursuant to the arrangement, the Company would have the ability to borrow up to
$60 million in order to purchase carrier switching equipment in 21 countries
including the Andean region of South America. The arrangement is expected to
have a term of 60 months. Interest will be at LIBOR plus a range of 25 to 75
basis points. On June 13, 2000, the Company entered into a term sheet for the
provision of equipment financing with ECI Telecom Ltd. Pursuant to the ECI term
sheet, the Company would have the ability to borrow up to $37,500,000 in order
to purchase ECI Innowave wireless local loop equipment to be deployed in the
Company's wireless local loop projects in South America. The equipment facility
is expected to be divided into 6 phases and have a term of 48 months. Each phase
will require a down payment by the Company ranging from 35% to 60% of the amount
of such phase. Interest will range downward by phase from an initial rate of
LIBOR plus 300 basis points. On July 13, 2000, the Company received a proposal
to obtain equipment financing from Tropico Sistemas e Telecomunicacoes S.A.,
CPqD Technologies & Systems, Inc. and Singer Products, Inc. Pursuant to the
terms of the proposal, the Company would have the ability to borrow up to $10
million in order to purchase digital local and tandem softswitch equipment with
the requisite software and maintenance. The arrangement is expected to have a
term of 7 years with interest at 11.5%.

         The Company's capital needs have also been funded, in part, through the
funds it received from certain credit facilities. On February 29, 2000, the
Company obtained a loan from GNB Bank. Pursuant

                                       18


<PAGE>



to the GNB Loan Agreement, GNB Bank made a loan to the Company in the principal
amount of $5.0 million, plus interest at Citibank N.A.'s base rate plus 1%. The
GNB Loan is evidenced by an unsecured convertible promissory note ("Note") due
May 29, 2001. The payment of the obligations under the Note and related
agreements and the performance of the obligations therewith, are unconditionally
guaranteed by Globaltron.

         The GNB credit facility contains certain covenants, which impose
restrictions on the Company. These include, without limitation, restrictions on
the declaration or payment of dividends with respect to capital stock of the
Company, the conduct of certain activities, certain investments, the creation of
additional liens or indebtedness, the disposition of assets and fundamental
changes.

         On July 27, 2000, the Company entered into a Loan Agreement with Arthur
E. Lipson, Trustee ("Lipson"), whereby Lipson loaned the Company the principal
amount of $900,000, plus interest at a rate of 12% per annum. The loan proceeds
are being used for working capital needs. The loan is evidenced by an unsecured
convertible promissory note due October 27, 2000.

         The Company believes that it can satisfy its cash requirements for its
existing business operations through ____________, 2000, on the basis of funds
available under the equipment and credit facilities described above. The Company
will require significant additional financing in order to continue as a going
concern and to achieve its growth and acquisition objectives. The Company
anticipates that it will need to raise significant additional debt and equity
financing during calendar year 2000 in order to expand and maintain its
business. The Company is actively seeking additional funding from a variety of
sources, including potential issuances of its securities in one or more private
transactions and various additional vendor financing arrangements. Depending
upon the Company's ability to rapidly integrate and achieve certain of its
expansion and acquisition objectives, the Company's financing needs could exceed
$100 million, a large portion of which the Company would seek in the form of
vendor financing. The Company is currently negotiating other vendor financing
arrangements. The terms upon which the Company may obtain additional funding are
restricted by the GNB Loan Agreement and the consent of GNB Bank may be
necessary to accomplish certain funding objectives of the Company. There can be
no assurance that the Company will be successful in its efforts to obtain any of
such financing. In the event the Company is not successful in obtaining
additional financing, it could be forced to curtail or cease operations. Any
financing activities by the Company could result in substantial dilution of
existing equity positions and increased interest expense. Transaction costs to
the Company in connection with such activities are also anticipated to be
significant.

Item 7.  Financial Statements

         The accompanying consolidated financial statements and financial
information have been prepared assuming that the Company will continue as a
going concern. The Company's continuation as a going concern is dependent upon
its ability to (a) generate sufficient cash flow to meet its obligations on a
timely basis, (b) obtain significant additional financing, and (c) ultimately
sustain profitability.

<TABLE>
<CAPTION>
<S>                                                                                                              <C>
Historical Financial Statements

Report of Independent Certified Public Accountants, .............................................................F1

Consolidated Financial Statements..................................................................................
    Consolidated Balance Sheet...................................................................................F2

    Consolidated Statement of Operations.........................................................................F3

    Consolidated Statement of Stockholders Equity (Deficit)......................................................F4

    Consolidated Statement of Cash Flows.........................................................................F5

    Notes to Consolidated Financial Statements................................................................F6-18
</TABLE>


                                       19
<PAGE>

Item 8.  Changes in and Disagreements with Accountants on Accounting
         -----------------------------------------------------------
         and Financial Disclosure
         ------------------------

         Effective May 28, 1999, the Company replaced Millward & Co., with
London Witte & Company, P.A., as its independent auditors when Millward & Co.,
Inc. declined to stand for re-election or appointment. Millward & Co.'s report
on the financial statement since the Company's inception did not contain any
adverse opinion, any disclaimer of opinion, nor has any opinion been modified as
to uncertainty, audit scope or accounting principles.

         During the Company's two fiscal years and subsequent interim periods
preceding the change in independent auditors, the Company had no disagreements
with Millward & Co. on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.

         London Witte & Company, P.A. was selected by management to replace
Millward & Co. as the Company's independent auditors, and was determined as such
by the Company's then sole director and executive officer, Debra Janssen. London
Witte & Company, P.A. acted as the Company's independent auditors prior to the
acquisition of Globaltron, the Company's operating entity. Grant Thornton was
selected to be the independent auditors to Globaltron and subsequently became
the Company's independent auditors on March 10, 2000. The Company had no
disagreements with London Witte & Company, P.A. on any matter of accounting
principles or practices, financial statement disclosure, auditing scope or
procedure. London Witte & Company continues to perform selected assignments on
behalf of the Company.

                                    PART III

Item     9. Directors, Executive Officers, Promoters and Control Persons;
         ----------------------------------------------------------------
         Compliance with Section 16(a) of the Exchange Act
         -------------------------------------------------

         The following table sets forth certain information concerning the
Company's executive officers and directors as of August 18, 2000:

                                       20



<PAGE>


<TABLE>
<CAPTION>

              Name                          Age          Position
------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>
Gary D. Morgan                              43           Chief Executive Officer, Chairman of the Board of
                                                         Directors

Gary P. Stukes                              46           President and Chief Operating Officer

Roman Fisher                                53           Director

Alvaro Davila Pena                          36           Vice President and Chief Operating Officer of Latin
                                                         American Operations, Director

Herbert Margolis                            50           Vice President of Marketing of Globaltron

David Walsh                                 53           Vice President of Finance of Globaltron

------------------------------------------------------------------------------------------------------------------------
</TABLE>

         It is the Board's intent to increase the size of the Board of Directors
in the near future and to create an Audit Committee and a Compensation Committee
comprised of certain members of the Board.

         Each Director is elected at the Company's annual meeting of
shareholders and holds office until the next annual meeting of shareholders, or
until the successors are elected and qualified. At present, the Company's bylaws
provide for not less than one nor more than nine Directors. Currently, there are
five (5) directors in the Company. The bylaws permit the Board of Directors to
fill any vacancy and such director may serve until the next annual meeting of
shareholders or until his successor is elected and qualified. Officers are
elected by the Board of Directors and their terms of office are, except to the
extent governed by employment contracts, at the discretion of the Board. There
are no family relations among any executive officers or directors of the
Company. The officers of the Company devote full time to the business of the
Company.

GARY D. MORGAN has been the Company's Chief Executive Officer and Chairman of
the Board since January 1999. Mr. Morgan has 22 years of experience in the
telecommunications industry. Mr. Morgan founded Pointe Communications
Corporation, a telecommunications company, in May 1998 where he served as the
President and Chief Operating Officer until present. From January 1997 to
February 1998, Mr. Morgan was the Vice President of U.S. West of Lucent
Technologies (LU:NYSE). From January 1988 to December 1996, Mr. Morgan was the
Vice President of RBOC Markets of Siemens Corporation. Mr. Morgan holds a
Bachelor of Science in Business Administration from Western Carolina University.

GARY P. STUKES has been the Company's President and Chief Operating Officer
since January 2000. From July 1998 to December 1999, Mr. Stukes was the Senior
Vice President of Totaltel Covista Communications (TELU:Nasdaq National Market),
a telecommunications company. From June 1997 to July 1998, Mr. Stukes was the
Regional Vice President of Primus Corporation (PRTL:Nasdaq), a
telecommunications company. From May 1996 to June 1997, Mr. Stukes was a
consultant to Starlink Communications, Ltd., a financial services company. From
May 1993 to May 1996, Mr. Stukes was the President of Results Oriented
Associates, Inc., a business consulting company. Mr. Stukes holds a Bachelor of
Science in Marketing from the University of Bridgeport, a Bachelor of Science
from Jersey City State College and an MBA from Fairleigh Dickinson University.


                                       21

<PAGE>



ROMAN FISHER was the President of the Company from May 1999 to January 2000 and
has been a member of the Board of Directors of Globaltron since January 2000.
Since December 1998, Mr. Fisher has been the Executive Vice President of Bork
Consulting Corporation, a financial consulting company. From January 1993 to
December 1999, Mr. Fisher was the Vice President of Crystal River MRI, Inc., a
diagnostic imaging company. From September 1996 to December 1998, Mr. Fisher was
the Executive Vice President of Metropolitan Health Networks (MDPAE.OB:OTCBB), a
medical practice management company. From September 1996 to December 1998, Mr.
fisher was the Chief Operating Officer of MRI Scan Center, a diagnostic imaging
company. From February 1985 to September 1997, Mr. Fisher was the Director of
Administration of Magnetic Imaging Systems I, Ltd., a diagnostic imaging
company. From February 1985 to January 1992, Mr. Fisher was the Executive Vice
President of Medical Diagnostic Services, a diagnostic imaging company. From
January 1990 to December 1991, Mr. Fisher was the Vice President of Prolease,
Inc., an equipment leasing company. Mr. Fisher holds an LL.M degree in
International Law from the University of Basel in Switzerland. Mr. Fisher also
holds a Master of Science degree in Counseling Psychology from Nova University.

ALVARO DAVILA PENA has served as the Company's Vice President and Chief
Operating Officer of Latin American Operations since January 2000, and has
served as a member of the Company's Board of Directors since August 18, 2000.
From February 1999 to present, Mr. Davila has been a partner in and a member of
the Board of Directors of Davila Davila Asociados LTDA, a law firm located in
Bogota, Colombia. From March 1995 to January 1999, Mr. Davila was a partner and
a member of the Board of Directors of Gomez Davila Associates, a law firm
located in Bogota, Colombia. Mr. Davila was a partner and a member of the Board
of Directors of Graphic Production Systems, a digital printing company from June
1999 until present.  In addition, Mr. Davila served as a member of the
Assessment Committee of the Communication Law Specialization program of the
Javeriana University from ______ 1995 to ______ 2000. Mr. Davila holds a law
degree from Universidad Colegio Mayor de Nuestra Senora del Rosario.

HERBERT MARGOLIS has served as the Vice President of Marketing of Globaltron
since August 1999. From January 1999 to August 1999, Mr. Margolis directed the
marketing efforts of Pointe Communications Corporation, a telecommunications
company, for the retail products division of its local exchange carrier
operations. From January 1999 to August 1999, Mr. Margolis was the Vice
President of Marketing of Pointe Communications Corporation and was a consultant
for Pointe Communications Corporation from November 1998 to December 1998. From
August 1996 to January 1997, Mr. Margolis was a merchandising consultant to Don
King Productions, Inc., a boxing promotions company. From January 1997 to
January 1999, Mr. Margolis was a consultant to Jared M. 24K Clothing, a custom
clothing company. Mr. Margolis founded Sportsman's Paradise, a retail sporting
goods chain, in March 1971 and was its President and Chief Executive Officer
from March 1971 to September 1996. Mr. Margolis has an Associates of Arts degree
from Miami Dade Community College and has completed courses in international
relations at Florida International University.

DAVID WALSH has served as the Vice President of Finance of Globaltron since
August 1999. From August 1995 to August 1998, Mr. Walsh was an Executive Vice
President of Corporate Express, a services and distribution company, and was
responsible for business consolidations of six acquired companies, four systems
implementations, as well as alpha site development of prototype warehouse
management systems and processes. From June 1992 to February 1994, Mr. Walsh was
the Vice President of Finance and Administration for Gold Coast Beverage, a
beverage distributor company and

                                       22



<PAGE>



was a part of a management team that acquired the third largest beverage
distributor in the United States. Mr. Walsh is published in Coors Brewing
Priority Magazine. Mr. Walsh holds a Masters of Accountancy from the University
of Houston and a CPA from the State of Texas.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who own more than ten (10%)
percent of the outstanding Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership on Form 3 and
reports of changes in ownership of Common Stock on Forms 4 or 5. Such persons
are required by SEC regulation to furnish the Company with copies of all such
reports they file.

         Based solely on its review of the copies of such reports furnished to
the Company or written representations that no other reports were required, the
Company believes that all Section 16(a) filing requirements applicable to its
officers, directors and greater than (10%) percent beneficial owners were
complied with during the year ended March 31, 2000.

Item 10.  Executive Compensation
          ----------------------

         The following table sets forth certain summary information for the
years indicated concerning the compensation awarded to, earned by, or paid to
(i) those persons serving as the Chief Executive Officer during the 2000 fiscal
year, (ii) the other four most highly compensated executive officers of the
Company who were serving as such at March 31, 2000, and (iii) up to two
additional individuals who had served as an executive officer of the Company
during the 2000 fiscal year but who were not executive officers at March 31,
2000, except that persons referred to in clauses (ii) and (iii) above generally
are not included in the table if they received total annual salary and bonus of
$100,000 or less for the 2000 fiscal year end. The persons named in this table
shall be collectively referred to as the "Named Executive Officers".

                                       23


<PAGE>



                                            Summary Compensation Table
                                     For the Fiscal Year Ended March 31, 2000
<TABLE>
<CAPTION>
                                                                                              LONG-TERM COMPENSATION


                                                 ANNUAL COMPENSATION                       AWARDS                   PAYOUTS
-----------------------------------------------------------------------------------------------------------------------------------
           (a)                (b)           (c)           (d)           (e)           (f)          (g)          (h)          (i)
                                                                       Other       Restricted   Securities                All Other
                                                                       Annual        Stock     Under-lying     LTIP        Compen-
        Name and                                                       Compen       Award(s)     Options/     Payouts       sation
   Principal Position        Year        Salary($)      Bonus($)     sation ($)       ($)        SARs($)        ($)          ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>             <C>        <C>        <C>               <C>         <C>          <C>            <C>
Gary D. Morgan              3/31/00         60,000     -0-           -0-            --          -0-          -0-            -0-
Chairman and
Chief Executive Officer
James Cooney (1)            3/31/00         75,000     -0-        40,000(2)         --          -0-          -0-            -0-
Vice President and
General Counsel,
Globaltron

Herbert Margolis            3/31/00         75,000     -0-           -0-            --          -0-          -0-            -0-
Vice President of
Marketing, Globaltron
Gary P. Stukes              3/31/00        276,000     (3)           -0-            --          -0-          -0-            (4)
President
Chief Operating Officer
David Walsh                 3/31/00         75,000     -0-           -0-            --          -0-          -0-            -0-
Vice President of
Finance, Globaltron
</TABLE>


(1)      Mr. Cooney's ceased being the General Counsel of Globaltron on
         May 17, 2000 and he died in August 2000.

(2)      Pursuant to a termination agreement dated May 17, 2000 an outstanding
         debt of $40,000 was forgiven.

(3)      Bonus of 2% of the excess of the ending market cap over beginning
         market cap of $150,000,000, based on average closing price of Company's
         stock for last 20 trading days of year 2000. For years after 2000, the
         base for market cap is the first 20 days of the trading year and the
         last 20 trading days of calendar year 2000. Bonus continues through
         12/31/2002. Through August 18, 2000, no bonus payments have been paid
         to Mr. Stukes.

(4)      Mr. Stukes received incentive warrants for up to 500,000 shares of
         common stock of the Company, exercisable in amounts up to 166,666
         shares per year based upon defined revenue and EBITDA performance
         goals. The purchase price for shares granted under this program is
         $1.00 per share.

                                       24


<PAGE>


Stock Option Grants in Last Fiscal Year

         During the fiscal year ended March 31, 2000, the following options were
granted to the following Named Executive Officers, as well as certain other
executive officers:

<TABLE>
<CAPTION>

                                        OPTIONS/SAR GRANTS IN THE YEAR ENDED MARCH 31, 2000

                                                              Individual Grants
----------------------------------------------------------------------------------------------------------------------------------
              (a)                             (b)                         (c)                    (d)                 (e)
                                                                   Percent of Total
                                                                     Options/SARs
                                      Number of Securities            Granted to
                                      Underlying Options/            Employees in          Exercise or Base       Expiration
              Name                      SARs Granted ($)              Fiscal Year            Price ($SH)             Date
----------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                           <C>                     <C>                     <C>
Gary P. Stukes                    500,000 (1)                   100%                    $1.00/share             December 1, 2007

</TABLE>

(1)      The warrants were granted to Mr. Stukes pursuant to his employment
         agreement and are exercisable one-third on December 31, 2000; one-third
         on December 31, 2001; and one-third on December 31, 2002 based upon
         defined revenue and EBITDA performance goals.

               Other than the warrants granted to Mr. Stukes, the Company did
         not issue any other options. However, the Company has undertaken to
         adopt a stock incentive plan which is anticipated to authorize both
         non-qualified and incentive stock options. Upon the adoption of such
         stock incentive plan, the Company has agreed to issue options to
         acquire an aggregate of approximately 75,000 shares to certain
         designated employees of the Company. It is also anticipated that
         additional options will be issued from time to time under the plan.

               Option Exercises and Year End Values

               The following table provides information on options exercised in
         the fiscal year ended March 31, 2000 by the persons named in the
         "Summary Compensation Table" above, the number of unexercised options
         each of them held at March 31, 2000 and the value of the unexercised
         "in-the-money" options each of them held as of that date.


                                       25


<PAGE>

<TABLE>
<CAPTION>
                                    Aggregated Option/SAR Exercises in Last Fiscal Year
                                               and FY-End Option/SAR Values

           (a)                     (b)                 (c)                     (d)                            (e)
                                                                      Number of Securities            Value of Unexercised
                                                                     Underlying Unexercised               In-the-money
                             Shares Acquired          Value           Options/SAR at FY-End          Options/SARs at FY-End
           Name              on Exercise (#)         Realized                  (#)                            ($)
                                                       ($)          Exercisable/Unexercisabl       Exercisable/Unexercisable
                                                                                   e
------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                       <C>                <C>                               <C>
Gary P. Stukes             --                        --                 500,000                           (1)
</TABLE>


(1)      The warrants were granted to Mr. Stukes pursuant to his employment
         agreement and are exercisable one-third on December 31, 2000; one-third
         on December 31, 2001; and one-third on December 31, 2002 based upon
         defined revenue and EBITDA performance goals.

Compensation of Directors

         Directors currently receive no fees or remuneration for acting in their
         capacities as Directors of the Company.

Employment and Consulting Agreements

         Globaltron executed an employment agreement dated December 31, 1999
with Gary Stukes, the Company's President. The agreement terminates on December
31, 2002 and is automatically renewable for additional one-year terms unless
either party gives the other notice of non-extension in writing at least ninety
days prior to the end of the then current term. Pursuant to such employment
agreement, Mr. Stukes is to receive an annual base salary of $276,000 for the
portion of the year ending December 31, 2000. The annual base salary for each
additional calendar year shall be increased by 7.5% over the base salary of the
prior year. The agreement also provides that Mr. Stukes is entitled to receive
all normal Company benefits, reimbursement for reasonable out-of-pocket expenses
incurred in connection with Company business and use of a premium class
automobile. Additionally, the agreement provides for a bonus based upon growth
in the Company's public market capitalization ("market cap") equivalent to 2% of
the excess of ending market cap (as defined in the employment agreement) over
the beginning market cap (as defined in the employment agreement) for a 3-year
period ending December 31, 2002. The agreement also provides that Mr. Stukes is
entitled to receive incentive warrants for up to 500,000 shares of the Company's
Common Stock, exercisable in increments over a 3-year period, for attainment of
specified revenue and EBITDA goals. Pursuant to the employment agreement, Mr.
Stukes is subject to confidentiality, nonsolicitation and noncompetition
provisions. Specifically, during his employment and for one year thereafter,


                                       26


<PAGE>


Mr. Stukes may not (i) divulge any confidential information concerning the
Company's business or trade secrets, (ii) solicit or divert from the Company the
telecommunications services of any person or entity for which the Company
provided telecommunications services at any time during the period of 12 months
immediately preceding the time of such solicitation or diversion and with whom
Mr. Stukes has significant contact, or solicit or induce any person employed by
the Company to leave such employment, or (iii) operate the same line of business
in which the Company is operating. In consideration for the foregoing covenant
not to solicit and not to compete, Mr. Stukes shall be paid a consulting fee
(based on his same rate of pay as set forth above) for one year following the
termination of his employment. In the event of a change of control of the
Company (as defined in the employment agreement) and the Company terminates Mr.
Stukes' employment, the Company shall pay to Mr. Stukes his base salary then in
effect for the remaining term of the agreement (together with such benefits as
which Mr. Stukes would be entitled during that time), and Mr. Stukes would
remain eligible to receive the market cap bonus attributable to calendar years
up to and including the year of termination and to exercise the incentive
warrants granted. For a complete description of Mr. Stukes' employment
agreement, please see the actual employment agreement attached as an Exhibit to
this Form 10-KSB.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
          --------------------------------------------------------------

                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

         The following table sets forth, as of August 18, 2000, the shares of
Common Stock beneficially owned by each director of the Company, each executive
officer of the Company named in the Summary Compensation Table, each person
known to the Company to own more than 5% of the outstanding shares of Common
Stock and all directors and executive officers as a group.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
   Name(1)                       Current Title                            Shares Beneficially Owned            Percent of Class
--------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                                               <C>                              <C>
   Gary D. Morgan (2)            Chief Executive Officer,
                                 Chairman of the Board of                          8,294,000                         45%
                                 Directors
--------------------------------------------------------------------------------------------------------------------------------
   Gary P. Stukes (3)            President
                                 Chief Operating Officer                             275,000                        1.5%
--------------------------------------------------------------------------------------------------------------------------------
   Herbert Margolis              Vice President of Marketing of
                                 Globaltron                                          650,000                        3.6%
--------------------------------------------------------------------------------------------------------------------------------
   Roman Fisher                  Director                                              --                            --
--------------------------------------------------------------------------------------------------------------------------------
   David Walsh                   Vice President of Finance of
                                 Globaltron                                          650,000                        3.6%
--------------------------------------------------------------------------------------------------------------------------------
   Alvaro Davila Pena,           President and Chief Operating
   M.D.                          Officer of Latin American                           100,000                          *
                                 Operations, Director
--------------------------------------------------------------------------------------------------------------------------------

                                                       27


<PAGE>


------------------------------------------------------------------------------------------------------------------------------
All Executive Officers
and                                                                                      9,969,000                       54.9%
Directors (6 persons)
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

-------------
*Less than 1%.

(1)      The address for each of Win-Gate's Directors, nominees for Directors,
         and Executive Officers is 45 Broadway, 17th Floor, New York, New York
         10006.

(2)      As an inducement for GNB Bank to enter into the GNB Loan Agreement,
         pursuant to a letter dated February 29, 2000 (the "February Letter
         Agreement") from Gary D. Morgan ("Morgan") to GNB Bank, Morgan agreed
         with GNB Bank that: (i) for a period of three years from the date of
         the February Letter Agreement, Morgan will not sell, exchange or
         otherwise transfer all or part of Morgan's stock in the Company;
         provided, however, that Morgan may transfer his shares in the Company
         in the event of a merger, consolidation or other sale of assets or
         other reorganization; (ii) after the three-year period referred in
         clause (i) above, if and to the extent Morgan transfers all or part of
         his stock in the Company, GNB Bank has tag-along rights on the stock
         sold or transferred on the same terms and conditions it is offered to
         Morgan; (iii) Morgan will vote his stock in the Company in favor of GNB
         Bank's designee(s) nominated to serve as one of the five directors on
         the Board of Directors of the Company; and (iv) Morgan will not vote
         his stock in the Company without GNB Bank's permission, in favor of
         certain corporate actions (as more particularly set forth in the
         February Letter Agreement). In the event that Morgan fails to vote his
         stock in accordance with clauses (iii) and/or (iv) of the foregoing
         paragraph, then, in addition to such other rights and remedies as may
         be available to GNB Bank, Morgan appoints GNB Bank as his proxy, which
         proxy is irrevocable, to vote Morgan's stock on all such matters as are
         within the contemplation of such clauses (iii) and/or (iv). In any such
         event, GNB Bank has full power of substitution with regard to such
         proxy.

(3)      Includes incentive warrants to purchase up to 500,000 shares of
         Win-Gate Common Stock at $1.00 per share through December 31, 2007.


Item 12.  Certain Relationships and Related Transactions

         On January 21, 2000, the Company entered into and consummated a stock
purchase agreement ("Stock Purchase Agreement") with all of the shareholders of
Globaltron. Pursuant to the Stock Purchase Agreement, the Company acquired 100%
of the issued and outstanding shares of Globaltron, an international
communications company, in exchange for approximately 13.3 million shares of
Common Stock. Prior to the transaction, Gary D. Morgan, the Company's current
Chief Executive Officer and Chairman of the Board, owned approximately 55% of
Globaltron's outstanding stock. Additionally, at the time of the transaction (i)
James Cooney, then General Counsel of Globaltron, owned 4.3% of the outstanding
shares of Globaltron, (ii) Herbert Margolis, Vice President of Marketing of
Globaltron, owned 4.3% of the outstanding shares of Globaltron, (iii) David
Walsh, Vice President of Finance of Globaltron, owned 4.3% of the outstanding
shares of Globaltron, and (iv) Gary P. Stukes, the Company's President and Chief
Operating Officer, owned 1.8% of the outstanding shares of Globaltron.

         Alvaro Davila Pena, Vice President and Chief Operating Officer of Latin
American Operations is an attorney and partner in the law firm, Davila Davila
Asociados LTDA in Bogota, Colombia. Mr.

                                       28


<PAGE>


Davila and his law firm perform certain legal services on behalf of the Company.
The fees for such legal services are invoiced by Mr. Davila at his normal and
customary rates. Mr. Davila is also reimbursed for all out-of-pocket expenses
incurred in connection with the performance of such legal services. As of July
31, 2000, the total amount invoiced to Davila Davila Asociados LTDA was
$169,270.

Item 13.  Exhibits and Reports on Form 8-K
          --------------------------------

(a)      The financial statements listed under Item 7 above are filed as part
         of this Form 10-KSB.

(b)      Reports on Form 8-K

         (i) Subsequent to December 31, 1999, the Company filed on January 31,
2000, a Current Report on Form 8-K announcing the acquisition of all of the
issued and outstanding shares of Globaltron Communications Corporation.

         (ii) Subsequent to December 31, 1999, the Company filed on March 20,
2000, a Current Report on Form 8-K announcing a loan agreement between the
Company and GNB Bank Panama, S.A.

         (iii) Subsequent to December 31, 1999, the Company filed on March 24,
2000, an amendment to the Current Report on Form 8-K filed January 31, 2000 with
respect to the acquisition of all of the issued and outstanding shares of
Globaltron Communications Corporation.

(c)      Exhibits

2        Stock Purchase Agreement between Win-Gate Equity Group, Inc. and the
         Shareholders of Globaltron Communications Corporation dated
         January 21, 2000.  (1)
3.1      Articles of Incorporation of Win-Gate Equity Group, Inc.  (2)
3.2      By-Laws of Win-Gate Equity Group, Inc.  (2)
4.1      Specimen Common Stock Certificate.  (2)
10.1     Forms of Subscription Documentation for Prospective Investors. (2)
10.2     Win-Gate Equity Group, Inc. 1996 Stock Option Plan.  (2)
10.3     Loan Agreement.  (2)
10.4     Loan Agreement dated February 29, 2000, by and among Win-Gate Equity
         Group, Inc. Globaltron Communications Corporation and GNB Bank Panama,
         S.A.  (4)
10.5     Letter Agreement dated February 29, 2000, between Gary D. Morgan and
         GNB Bank Panama, S.A. (4)
10.6     Loan Agreement dated July 26, 2000 between Win-Gate Equity group, Inc.
         and Arthur E. Lipson, Trustee. (5)
10.7     Equipment Financing Proposal dated August 23, 1999 between Globaltron
         Communications Corporation and Lucent Technologies. (5)
10.8     Master Conditional Sale Agreement dated September 15, 1999 between
         Globaltron Communications Corporation and Lucent Technologies. (5)
10.9     Term Sheet dated June 23, 2000 between Globaltron Communications
         Corporation and Italtel SPA. (5)
10.10    Equipment Financing Agreement dated October 25, 1999 between Globaltron
         Communications Corporation and Cisco Systems Capital Corporation. (5)
10.11    Soft Cost Financing Agreement dated October 25, 1999 between Globaltron
         Communications Corporation and Cisco Systems Capital Corporation. (5)


                                       29


<PAGE>


10.12    Equipment Financing Agreement dated January 24, 2000 between Globaltron
         Communications Corporation and Cisco Systems Capital Corporation. (5)
10.13    Term Sheet dated July 13, 2000 between Globaltron Communications
         Corporation and Tropico Sistemas e Telecomunicacoes S.A. (5)
10.14    Term Sheet dated July 11, 2000 between Globaltron Communications
         Corporation and CPqD Technologies. (5)
10.15    Equipment Financing Agreement dated June 23, 2000 between Globaltron
         Communications Corporation and Gallant Capital & Finance, LLC.  (5)
10.16    Term Sheet dated June 13, 2000 between Win-Gate Equity Group, Inc. and
         ECI Telecom Ltd. (5)
10.17    Executive Employment Agreement between Globaltron Communications
         Corporation and Gary Stukes. (5)
10.18    Purchase and Sale Agreement dated July 11, 2000 between Globaltron
         Communications Corporation, Tropico Sistemas e Telecomunicacoes S.A.
         and Singer Products Inc. (5)
10.19    License Agreement dated July 11, 2000 between Globaltron Communications
         Corporation, CpqD Technologies and Systems, Inc. and Singer Products
         Inc. (5)
10.20    Services Agreement dated July 11, 2000 between Globaltron
         Communications Corporation and Singer Products, Inc. (5)
10.21    [Startcomm Acquisition Agreement]
27.1     Financial Data Schedule. (5)
99       Financial Statements of Startcomm Corporation for the Year Ended
         December 31, 1997 and December 31, 1998 and for the Ten Months Ended
         October 31, 1999. (5)


(1)      Filed as an exhibit to the Company's Current Report on Form 8-K (File
         No. 333-05188- A), as filed with the Securities and Exchange Commission
         on January 31, 2000.

(2)      Filed as an exhibit to the Company's Registration Statement on Form
         SB-2 (File No. 333- 5188-A), as filed with and declared effective by
         the Commission on October 10, 1997.

(3)      Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
         the fiscal year ended December 31, 1998 (File No. 333- 5188-A), filed
         with the Commission on October 27, 1999.

(4)      Filed as an exhibit to the Company's Current Report on Form 8-K (File
         No. 333-05188- A), as filed with the Securities and Exchange Commission
         on March 20, 2000.

(5)      Filed herewith.


                                       30


<PAGE>


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

WIN-GATE EQUITY GROUP, INC.


By: /s/ Gary D. Morgan
    -----------------------------------------
    Chief Executive Officer


Date:  August 24, 2000


                                       31


<PAGE>



         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

/s/ Gary D. Morgan                                Date: August 24, 2000
---------------------------------
Gary D. Morgan
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)




/s/ David Walsh                                   Date: August 24, 2000
----------------------------------
David Walsh
(Principal Financial Officer)




/s/ Roman Fisher                                  Date: August 24, 2000
----------------------------------
Roman Fisher
Director




                                                  Date: ________________, 2000
----------------------------------
Alvaro Davila Pena
Director





                                       32
<PAGE>


                     FINANCIAL STATEMENTS AND
                  REPORT OF INDEPENDENT CERTIFIED

                        PUBLIC ACCOUNTANTS
                    WIN-GATE EQUITY GROUP, INC.
                         AND SUBSIDIARIES

                          March 31, 2000


<PAGE>


                                 C O N T E N T S



                                                                  Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                 F-1


CONSOLIDATED FINANCIAL STATEMENTS

    CONSOLIDATED BALANCE SHEET                                     F-2

    CONSOLIDATED STATEMENT OF OPERATIONS                           F-3

    CONSOLIDATED STATEMENT OF STOCKHOLDERS'
      EQUITY (DEFICIT)                                             F-4

    CONSOLIDATED STATEMENT OF CASH FLOWS                           F-5

    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     F-6 - F-18




<PAGE>



                         REPORT OF INDEPENDENT CERTIFIED
                               PUBLIC ACCOUNTANTS

Board of Directors
Win-Gate Equity Group, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Win-Gate Equity
Group, Inc. and Subsidiaries as of March 31, 2000, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
year then ended. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of 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. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above presents fairly, in
all material respects, the consolidated financial position of Win-Gate Equity
Group, Inc. and Subsidiaries as of March 31, 2000, and the consolidated results
of their operations and their consolidated cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United
States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company has experienced a net loss of $4,861,063 for
the year ended March 31, 2000. Additionally, the Company's current liabilities
exceeded its current assets by $2,978,411, the Company had a shareholders'
deficit of $1,389,288 at March 31, 2000 and the Company used cash of $1,775,837
in its operations for the year ended March 31, 2000. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note C. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Miami, Florida
June 29, 2000

                                      F-1
<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEET

                                 March 31, 2000

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                                                              <C>
Current assets

    Cash                                                                                         $     4,055,992
    Accounts receivable, less allowance for doubtful
      accounts of $4,300                                                                                 120,250
    Prepaid expenses and other current assets                                                            118,855
                                                                                                 ---------------

               Total current assets                                                                    4,295,097

Property and equipment, net                                                                           10,065,869
Goodwill                                                                                               2,070,918
Deposits and other                                                                                       524,442
                                                                                                 ---------------

               Total assets                                                                      $    16,956,326
                                                                                                 ===============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities

    Loan payable                                                                                 $       667,000
    Accounts payable                                                                                   3,641,057
    Capital lease obligations, current portion                                                         1,583,814
    Customer deposits                                                                                    767,406
    Accrued expenses and other current liabilities                                                       614,231
                                                                                                 ---------------

               Total current liabilities                                                               7,273,508

Long-term capital lease obligation, net of current portion                                             6,072,106

Convertible loan payable to bank                                                                       5,000,000

Stockholders' deficit

    Common stock, par value of $.001, 20,000,000 shares
      authorized; 18,150,702 shares issued and outstanding                                                18,150
    Additional paid-in capital                                                                         3,457,625
    Accumulated deficit                                                                               (4,865,063)
                                                                                                 ---------------

               Total stockholders' deficit                                                            (1,389,288)
                                                                                                 ---------------

               Total liabilities and stockholders' deficit                                       $    16,956,326
                                                                                                 ===============

The accompanying notes are an integral part of this statement.
</TABLE>

                                       F-2
<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENT OF OPERATIONS

                        For the Year Ended March 31, 2000

<TABLE>
<CAPTION>
<S>                                                                                              <C>
Revenue                                                                                          $       949,514

Expenses

    Cost of sales                                                                                      1,015,405
    General and administrative                                                                         3,222,205
    Depreciation and amortization                                                                        464,108
    Stock related expense                                                                                540,189
    Goodwill amortization                                                                                266,811
                                                                                                 ---------------

               Operating loss                                                                         (4,559,204)

Other income (expense)
    Interest expense                                                                                     165,164
    Other expense                                                                                        136,695
                                                                                                 ---------------

               Loss before income taxes                                                               (4,861,063)

Income tax benefit                                                                                             -
                                                                                                 ---------------

               Net loss                                                                          $    (4,861,063)
                                                                                                 ===============

Net loss per common share - basic and fully diluted                                              $          (.44)
                                                                                                 ===============
</TABLE>

The accompanying notes are an integral part of this statement.

                                       F-3


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

                        For the Year Ended March 31, 2000

<TABLE>
<CAPTION>
                                                                                                               Total
                                        Shares of                        Additional                        Stockholders'
                                         Common           Commo           Paid-in        Accumulated         Equity
                                         Stock            Stock           Capital          Deficit          (Deficit)
                                    -------------    -------------     -------------    -------------     -------------
<S>                                   <C>            <C>               <C>              <C>               <C>
Balance as of April 1, 1999                 1,950    $           2     $         748    $          -      $         750

Stock split-up effected in the
  form of a dividend
  (6,333.33 to 1)                      11,012,295           11,012            (7,012)         (4,000)                 -

Issuance of stock to consultants          781,000              781            31,619               -             32,400

Issuance of stock for September 6,
  1999 private placement                  500,399              500           935,500               -            936,000

Issuance costs                                  -                -           (77,838)              -            (77,838)

Issuance of stock to consultants            5,200                5             4,995               -              5,000

Issuance of stock to employees            227,333              227           373,073               -            373,300

Issuance of stock for
  December 5, 1999
  private placement                       528,982              529         1,948,471               -          1,949,000

Issuance costs                                 -                 -           (77,837)              -            (77,837)

Issuance of stock in return
  for note receivable                      66,700               67           332,933               -            333,000

Issuance of stock to consultants          840,000              840           150,160               -            151,000

Payment to Win-Gate

  shareholders                                  -                -          (153,000)              -           (153,000)

Merger with Win-Gate Equity
  Group, Inc., net of 713,157
  shares issued in consideration
  of earlier transactions               4,186,843            4,187            (4,187)              -                  -

Net loss                                        -                -                 -      (4,861,063)        (4,861,063)
                                    -------------    -------------     -------------    -------------     -------------

Balance, March 31, 2000                18,150,702    $      18,150     $   3,457,625    $ (4,865,063)     $  (1,389,288)
                                    =============    =============     =============    =============     =============
</TABLE>


The accompanying notes are an integral part of this statement.

                                       F-4
<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                        For the Year Ended March 31, 2000

<TABLE>
<CAPTION>
<S>                                                                                              <C>
Cash flows from operating activities
     Net loss                                                                                    $    (4,861,063)
     Adjustments to reconcile net loss to net cash used
       in operating activities
         Professional services paid for in common stock                                                  188,400
         Compensation paid for in common stock                                                           373,300
         Depreciation and amortization                                                                   730,919
         Provision for bad debts                                                                         337,316
         Changes in assets and liabilities, net of effects
           from purchase of subsidiary
              Increase in accounts receivable                                                            (98,533)
              Increase in deposit and other                                                             (495,786)
              Increase in prepaid expenses and other current assets                                     (118,855)
              Increase in accounts payable                                                             1,579,801
              Decrease in customer deposits                                                              (25,567)
              Decrease in accrued expenses and other liabilities                                         614,231
                                                                                                 ---------------
                  Net cash used in operating activities                                               (1,775,837)
                                                                                                 ---------------

Cash flows from investing activities
     Acquisitions of property and equipment                                                           (1,311,606)
                                                                                                 ---------------
                  Net cash used in by investing activities                                            (1,311,606)
                                                                                                 ---------------

Cash flows from financing activities
     Borrowings under convertible loan payable to bank                                                 5,000,000
     Payments on capital lease obligations                                                              (432,890)
     Payment to Win-Gate shareholders                                                                   (153,000)
     Proceeds from the sale of common stock                                                            2,885,000
     Private placement costs incurred                                                                   (155,675)
                                                                                                 ---------------
                  Net cash provided by financing activities                                            7,143,435
                                                                                                 ---------------

Net increase in cash                                                                                   4,055,992

Cash at beginning of year                                                                                     -
                                                                                                 ---------------

Cash at end of year                                                                              $     4,055,992
                                                                                                 ===============


Supplemental disclosure of cash flow information: Cash paid during the year for:

         Taxes                                                                                   $            -
                                                                                                 ===============
         Interest                                                                                $       107,151
                                                                                                 ===============

Noncash investing and financing activity:

     In acquiring 64% of the outstanding shares of Startcomm Corp., the Company
       entered into a promissory note for $667,000.  In addition, Globaltron assumed
       all liabilities of Startcomm Corp. (approximately $3 million).

     The Company entered into capital leases for telecommunication equipment of
       approximately $8 million.
</TABLE>


The accompanying notes are an integral part of this statement.

                                       F-5


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Description of Business

     Win-Gate Equity Group, Inc. (the "Company") is a Florida corporation,
     organized on May 17, 1996, to initially locate and effect business
     combinations with existing businesses. On January 21, 2000, the Company
     entered into and consummated a stock purchase agreement ("Stock Purchase
     Agreement") with all of the shareholders of Globaltron Communications
     Corporation, an international communications company. Pursuant to the Stock
     Purchase Agreement, the Company acquired 100% of the issued and outstanding
     shares of Globaltron. As a result, Globaltron became a wholly-owned
     subsidiary of the Company. Unless otherwise provided herein, references to
     the "Company" shall mean the Company and its subsidiaries.

     The Company is an FCC licensed 214 international telecommunications
     provider operating as a small to mid-cap competitive multinational carrier.
     They are a service provider of voice, data, video and Internet services.
     The Company has ATM/VOIP switching network operating in the United States
     and extending to eight countries and currently has offices in Miami,
     Florida, New Jersey and New York.

     Basis of Presentation

     The consolidated financial statements include the accounts of Win-Gate
     Equity Group, Inc. and its wholly-owned subsidiaries Globaltron
     Communications Corporation and First Riveria Holding Company and a 64%
     percent owned subsidiary, Startcomm Corp. All significant intercompany
     accounts and transactions have been eliminated in consolidation.

     Cash and Cash Equivalents

     The Company considers all highly liquid investments with original
     maturities of three months or less, when purchased, to be cash equivalents.
     As of March 31, 2000, $4,001,238 was in a bank located in Panama.

                                                                     (continued)


                                       F-6


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Property, Plant and Equipment

     Depreciation and amortization are provided for in amounts sufficient to
     relate the cost of depreciable assets to operations over their estimated
     service lives. Leasehold improvements are amortized over the lives of the
     respective leases or the service lives of the improvements, whichever is
     shorter. Leased property under capital leases is amortized over the lives
     of the respective leases or over the service lives of the assets for those
     leases which substantially transfer ownership. The straight-line method of
     depreciation is followed for substantially all assets for financial
     reporting purposes.

     Goodwill

     Goodwill is being amortized on a straight-line basis to earnings over five
     years to reflect the Company's current expectation of future benefit.
     Accumulated amortization was approximately $195,000 at March 31, 2000.
     Subsequent to acquisitions, the Company continually evaluates whether later
     events and circumstances have occurred which indicate that the remaining
     estimated useful life of intangible assets may warrant revision or that the
     remaining balance of such assets may not be recoverable.

     Income Taxes

     Deferred income taxes have been provided for elements of income and expense
     which are recognized for financial reporting purposes in periods different
     than such items are recognized for income tax purposes. The Company
     accounts for deferred taxes utilizing the liability method, which applies
     the enacted statutory rates in effect at the balance sheet date to
     differences between the book and tax basis of assets and liabilities. The
     resulting deferred tax liabilities and assets are adjusted to reflect
     changes in tax laws. A valuation allowance is provided against deferred
     income tax assets to the extent of the likelihood that the deferred tax
     asset may not be realized.

     Use of Estimates

     In preparing financial statements in conformity with generally accepted
     accounting principles, management is required to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     the disclosure of contingent assets and liabilities at the date of the
     financial statements and revenues and expenses during the reporting period.
     Actual results could differ from those estimates.

                                                                     (continued)

                                       F-7


<PAGE>

                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Use of Estimates - Continued

     The Company's operations and ability to grow may be affected by numerous
     factors, including changes in customer requirements, new laws and
     governmental regulations and policies, technological advances, entry of new
     competitors and changes in the willingness of financial institutions and
     other lenders to finance acquisitions and operations. The Company cannot
     predict which, if any, of these or other factors might have a significant
     impact on the telecommunications industry in the future, nor can it predict
     what impact, if any, the occurrence of these or other events might have on
     the Company's operations.

     Fair Value of Financial Instruments

     The Company estimates that the fair value of its financial instruments
     approximates the carrying value of its financial instruments at March 31,
     2000.

     Loss Per Share

     Basic earnings per common share are based on the weighted average number of
     common shares outstanding. The total number of such weighted average shares
     was 11,101,941 for the year ended March 31, 2000. Diluted earnings per
     common share are based on the assumption that all dilutive potential common
     shares and dilutive stock options were converted at the beginning of the
     year. For the year ended march 31, 2000, Stock options and warrants were
     not included in common stock equivalents because their inclusion would be
     antidulitve.

     The following table illustrates the reconciliation of the income and
     weighted average number of shares of the basic and diluted earnings per
     share computations:

                                           Year Ended March 31, 2000
                           -----------------------------------------------------
                                                  Weighted
                                                   Average           Per Share
                                Net loss             Share            Amount

         Basic EPS         $    (4,861,063)       11,101,941       $     (.44)

         Diluted EPS       $    (4,861,063)       11,101,941       $     (.44)

     Revenue Recognition

     Revenue is recognized as the service is provided.

                                                                     (continued)

                                       F-8


<PAGE>

                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     Recently Issued Pronouncement

     In June 1998, the FASB issued Statement of Financial Accounting Standards
     (FAS) No. 133, "Accounting for Derivative Instruments and Hedging
     Activities" which was amended by FAS No. 138. FAS No. 133 establishes
     standards for accounting and reporting for derivative instruments, and
     conforms the requirements for treatment of different types of hedging
     activities. These statements are effective for all fiscal years beginning
     after June 15, 2000. Management does not expect these standards to have a
     significant impact on the Company's operations.

NOTE B - MERGER INTO WIN-GATE EQUITY GROUP, INC.

     Effective January 21, 2000, Win-Gate Equity Group, Inc. (a shell company),
     acquired all of the outstanding common stock of Globaltron Communications
     Company ("Globaltron"). For accounting purposes, the acquisition has been
     treated as a recapitalization of Globaltron with Globaltron as the acquirer
     (reverse acquisition). The merger was effected by Win-Gate Equity Group,
     Inc. issuing approximately 13.3 million common shares to the former
     Globaltron stockholders. In addition, Globaltron paid $153,000 to former
     Win-Gate stockholders and in return the former Win-Gate stockholders, at
     the request of Globaltron, would transfer their shares to certain
     individuals. At the date of the merger, Globaltron Communications Company
     had approximately 15.7 million common shares issued and outstanding.
     Globaltron Communications Company and Win-Gate Equity Group, Inc. executed
     the merger transaction as a tax free reorganization described in the
     Internal Revenue code of 1986, as amended. The Company did not recognize
     any gain or loss as a result of the merger.

NOTE C - OPERATIONAL MATTERS

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles, which contemplate continuation of
     the Company as a going concern. However, the Company has sustained a net
     loss of $4,861,063 for the year ended March 31, 2000. In addition, at March
     31, 2000, the Company's current liabilities exceeded its current assets by
     $2,978,411 and the Company has used cash of $1,775,837 in its operations
     for the year ended March 31, 2000.

                                                                     (continued)

                                       F-9


<PAGE>


NOTE C - REALIZATION OF ASSETS - Continued

     In view of the matters described in the preceding paragraph, recoverability
     of a major portion of the recorded asset amounts shown in the accompanying
     balance sheet is dependent upon continued operations of the Company, which
     in turn is dependent upon the Company's ability to meet its financing
     requirements on a continuing basis, to maintain present financing, and to
     succeed in its future operations. The financial statements do not include
     any adjustments relating to the recoverability and classification of
     recorded asset amounts or amounts and classification of liabilities that
     might be necessary should the Company be unable to continue in existence.

     "In response to the matters described in the preceding paragraphs,
     management states that a significant portion of its losses to date and
     shreholders deficit is the result of normal expenses of a start-up entity
     in the industry in which the Company operates. Management believes that on
     the basis of funds being made available to it under existing equipment
     facility financing commitments, the realization of returns on investments
     to date in network buildout, the non recurrence of initial start up costs
     to the extent previously incurred and the Company securing additional long
     term debt financing and equity contributions in the short term of
     $15,000,000, that the Company will be able to operate its business in the
     normal course."

NOTE D - ACQUISITION

     On November 9, 1999, the Company acquired 64% of Startcomm Corporation, a
     Miami based telecommunications company. The purchase price was a $667,000
     note payable. The acquisition has been accounted for in the accompanying
     consolidated balance sheet under the purchase method of accounting for
     business combinations. The purchase price was allocated based on the
     estimated fair value of acquired assets and liabilities at the date of
     acquisition. The operating results of the acquired company has been
     included in the consolidated statement of operations from the acquisition
     date. Startcomm's principal assets consist of telecommunications equipment.
     The $667,000 note payable is outstanding at March 31, 2000 and has an
     interest rate at approximately 7.6875% per annum payable quarterly and is
     due on May 1, 2000. The note has been extended to December 31, 2001. In
     consideration for the extension of the loan, the Company has issued an
     additional 6,000 shares of common stock to the former owners. The note is
     personally guaranteed by the President of the Company. The Company recorded
     goodwill in the amount of approximately $2,300,000 as a result of this
     transaction.

                                                                     (continued)

                                       F-10


<PAGE>


NOTE D - ACQUISITION - Continued

     The following unaudited pro forma condensed combined financial information
     of Globaltron Communications Corporation and Startcomm Corporation
     demonstrates the results of operations had the merger and acquisitions
     related transactions been completed at the beginning of the period
     presented.

<TABLE>
<CAPTION>
<S>                                                                               <C>

                                                                                    (Unaudited)
                                                                                  ---------------

                  Revenue                                                         $     1,314,830
                                                                                  ===============

                  Net loss                                                        $    (6,407,320)
                                                                                  ===============

                  Loss per common share:
                      Basic and diluted                                           $          (.58)
                                                                                  ===============
</TABLE>

NOTE E - FIXED ASSETS

     Property and equipment consisted of the following at March 31, 2000:
<TABLE>
<CAPTION>

                                                                                     Estimated
                                                                                        Useful
                                                                                   Life - Years
                                                                                 ----------------
<S>                                                         <C>                    <C>
                  Office equipment and
                    furniture and fixtures                  $       104,280            4 - 7
                  Leasehold improvements                            457,412        Primary term
                                                                                     of lease
                  Site preparation, telecommunication
                    and satellite equipment                      10,396,019            5 - 7
                                                            ---------------
                                                                 10,957,711

                  Less accumulated depreciation                    (891,842)
                                                            ---------------

                                                            $    10,065,869
</TABLE>


                                       F-11


<PAGE>

                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE F - ACCOUNTS PAYABLE

     Included in accounts payable is a liability for the purchase of
     telecommunications equipment of $1,172,038. First payment is due sixty days
     after issuance of certificate of completion by supplier. On May 25, 1999,
     the Company received the certificate.

NOTE G - CUSTOMER DEPOSITS

     One of the customer deposits in the amount of $637,948 is an advance
     payment for termination services to be used against future billings. As the
     Company bills the customer, the deposit will be reduced and revenue
     recognized.

     Customer deposits in the amount of $129,458 are guarantee deposits for
     certain termination service agreements. In the event the customers default
     on their obligations, the deposits will be used to cover these obligations.

NOTE H - CONVERTIBLE LOAN PAYABLE TO BANK

     In February 2000, the Company and a financial institution based in Panama
     entered into a convertible loan agreement for $5 million. The interest rate
     is equal to the Citibank base rate plus 1% (9.75% as of March 31, 2000) and
     is paid quarterly. The loan matures on May 29, 2001. The loan is
     convertible to common stock at the request of the lender at 2.68%, of the
     total issued and outstanding stock on the conversion date. The loan is also
     convertible if the Company consummates a Qualifying Private Placement, as
     defined. If prior to the maturity date the Company consummates such an
     offering, the lender will receive 2.68% of the total issued and outstanding
     common stock immediately after the consummation of the qualifying private
     placement on a fully dilutive basis. Upon issuance of the common stock
     shares, the loan will be cancelled, subject to the payment of accrued
     interest. The total amount of the loan is outstanding as of March 31, 2000.
     The loan is guaranteed by the Company. The loan contains certain covenants,
     which impose certain restrictions on the Company. These include
     restrictions on dividends, the conduct of certain activities, certain
     investments, the creation of additional liens or indebtedness, the
     disposition of assets and fundamental charges.


                                       F-12


<PAGE>

                  Win-Gate Equity Group, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000

NOTE I - INCOME TAXES

     The Company has no current income tax expense as a result of a tax net
     operating loss for the year ending March 31, 2000.

     The Company has not recorded a deferred tax expense because of a valuation
     allowance which completely provides for the deferred tax assets.

     The following table summarizes the differences between the Company's
     effective tax rate and the statutory federal rate as follows:

<TABLE>
<CAPTION>
<S>                                                                               <C>

                  Statutory federal rate 34.0 % Increase (decrease) in tax
                  resulting from:

                      Nondeductible items                                                     2.1 %
                      State taxes, net of federal tax benefit                                 3.0 %
                      Valuation allowance                                                   (39.1)%
                                                                                    -------------

                           Effective tax rate                                                   - %
                                                                                    =============

     Deferred tax assets are comprised of the following at March 31, 2000.

                  Stock compensation                                              $       203,000
                  Net operating loss                                                    2,876,000
                                                                                  ---------------

                      Deferred tax assets                                               3,079,000

                  Less valuation allowance                                             (3,079,000)
                                                                                  ---------------

                                                                                  $             -
                                                                                  ===============
</TABLE>

     At March 31, 2000, Globaltron had net operating loss carryforwards for
     federal tax purposes of approximately $3,600,000, expiring in 2020.
     Startcomm Corp. has net operating loss carryforwards of approximately
     $4,400,000 expiring beginning in 2012. This net operating loss relates to
     the separate return limitation year ("SRLY") provisions which apply to the
     net operating loss of a subsidiary. The utilization of the Startcomm net
     operating loss will be limited to $95,000 per year for seventeen years.
     This is a result of the ownership change rules in the Internal Revenue
     Code.


                                       F-13


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE J - LEASE COMMITMENTS

     The Company leases certain equipment under agreements which are classified
     as capital leases. The leases are for equipment that is used in the
     operations of the Company. Assets under capital leases are included in the
     consolidated balance sheet as follows:

<TABLE>
<CAPTION>
<S>                                                          <C>

                  Telecommunication equipment                $     8,043,729

                  Accumulated amortization                          (287,276)
                                                             ---------------

                                                             $     7,756,453
                                                             ===============
</TABLE>

     Future minimum payments, by year and in the aggregate, under the
     aforementioned leases and other noncancellable operating leases for office
     space with initial or remaining terms in excess of one year as of March 31,
     2000, are as follows:
<TABLE>
<CAPTION>
                         Year                                       Capital           Operating
                        Ending                                      Leases              Leases
                      ---------                               ---------------     ---------------
<S>                                                           <C>                 <C>
                         2001                                 $     1,795,480     $       564,068
                         2002                                       1,464,000             586,827
                         2003                                       3,086,926             605,896
                         2004                                       2,233,080             551,969
                         2005                                       1,116,739             531,735
                      Thereafter                                           -            2,561,964
                                                              ---------------     ---------------

                   Total minimum lease payments                     9,696,225           5,402,459

                   Less amount representing interest               (2,040,305)

                   Present value of net minimum
                     lease payments                                 7,655,920

                   Less current portion                            (1,583,814)
                                                              ---------------

                                                              $     6,072,106
</TABLE>

     Rent expense was 254,448 for the year ended March 31, 2000.


                                       F-14


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE K - COMMITMENTS AND CONTINGENCIES

     The Company has an agreement with a supplier of telecommunications services
     ("Vendor"), which began November 1999 and continues monthly unless
     terminated by one of the parties. Under the agreement, the Vendor provides
     satellite service for the Company telecommunication service. The Company is
     required to pay the Vendor for service totaling $3,000,492 for a period of
     36 months.

     In December 1999, the Company and the Company's President and Chief
     Operating Officer entered into a three-year employment agreement providing
     a base salary of $276,000 and a bonus based on the Company's public market
     capitalization. The base salary shall be increased by 7.5% each year. In
     addition, he was granted incentive warrants to purchase up to 500,000
     shares of Common Stock at $1.00 each which shall be exercisable in amounts
     up to 166,666 shares per year based upon the degree of achievement by the
     Company of revenue and EBITDA goals for calendar years 2000, 2001, 2002.

     The Company has employment agreements with four employees. These agreements
     indicate the Company will issue a total of 26,000 options to these
     employees when the Company adopts and the stockholders approve a stock
     incentive plan. The Company plans to adopt and recommend to the
     stockholders that they approve a stock incentive plan no later than the
     second quarter of fiscal year 2001.

NOTE L - EQUITY TRANSACTIONS

     Stock Issued for Services

     During the year ended March 31, 2000, the Company issued 227,733 shares of
     stock to employees. As a result of these stock issuances, the Company
     recorded $373,300 in compensation expense and $373,073 additional paid-in
     capital.

     During the year ended March 31, 2000, the Company issued 1,626,200 shares
     of stock to consultants who performed services for the Company. As a result
     of these stock issuances, the Company recorded $188,400 in expense and
     $186,774 additional paid-in capital.

                                                                     (continued)

                                       F-15


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE L - EQUITY TRANSACTIONS - Continued

     Stock Dividend

     On June 26, 1999, the Company declared a 6,333.33 to 1 stock dividend to
     shareholders of record as of that date. On December 1, 1999, the Company
     issued 7,928,738 shares of common stock in conjunction with this dividend.
     As this is considered a stock split-up effected in the form of a dividend,
     accumulated deficit will only be capitalized to meet legal requirements.
     Accordingly, amounts equal to the par of the additional shares issued have
     been charged to accumulated deficit and additional paid-in capital and
     credited to common stock. Loss per common share, weighted average shares
     outstanding, and all stock option activity have been restated to reflect
     the 6,333.33 to 1 stock dividend.

     Stock Split

     On December 1, 1999, the Company's Board of Directors approved a 2.6 to 1
     common stock split to be distributed in the form of a stock dividend. As a
     result of this action, approximately 8 million shares were issued to
     shareholders of record on that date. Par value remains at $.001 per share
     as a result of transferring approximately $8,000 to common stock from
     additional capital, representing the aggregate par value of the shares
     issued under the stock split. All references throughout these financial
     statements to number of shares, per share amounts, stock option data and
     market prices of the Company's common stock have been restated.

     Stock Options

     In November, the Company issued 50,000 options to one employee. The
     exercise price was equal to the market price at the date of grant. The
     options vest 50% at the end of one year and 50% at the end of the second
     year.

NOTE M - RELATED PARTY TRANSACTIONS

     During 1999, the Company entered into a joint venture agreement with an
     individual who owns shares of the Company. The joint venture is to provide
     telephone termination services to Brazil. Both parties agreed to share
     equally the cost of certain start up items and share profits and losses on
     a 75/25 percent basis (with 75% going to the Company). As of March 31,
     2000, the joint venture was in the build out stage and had not begun
     operations. As of March 31, 2000, the shareholder owed the Company an
     immaterial amount.

                                                                     (continued)

                                       F-16


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE M - RELATED PARTY TRANSACTIONS - Continued

     During 1999, the Company issued 66,700 shares of stock to a former owner of
     Startcomm Corporation in return for a note receivable payable by the
     minority owner of Startcomm Corporation.

     A director performed certain legal services for the Company. These services
     totaled approximately $170,000 for the year ended March 31, 2000.

NOTE N - CONCENTRATION

     The Company principally provides services and has telecommunication's
     equipment located throughout Latin America. No one customer accounts for
     more than 10% of sales. The Company provides trade credit to its customers
     in the normal course of business. The operation of the telecommunication
     equipment is susceptible to changes in Latin American economies and
     political climate.

NOTE O - SUBSEQUENT EVENTS

     Interloop

     On April 11, 2000, the Company signed an agreement to acquire 75% of
     Interloop Americas, Inc. ("Interloop"), a start-up telecommunications
     operator based in Bogota, Columbia. The Company acquired these shares in
     Interloop in exchange for one million shares of the Company's common stock
     and a promissory note for $7,000,000. The principal amount of the note is
     due on October 31, 2001, with an interest rate of 12%. This transaction has
     not closed.

     Ve-Mail

     On April 20, 2000, the Company entered into agreement with Ve-Mail Limited,
     a developer of a unified messaging/virtual assistants operating system, to
     purchase Intellectual property (software) and 10% of Ve-Mail Limited's
     capital stock. The Company agreed to pay $750,000 for the software and
     $1,850,000 for 108 shares of capital stock. As of March 31, 2000, the
     Company paid $100,000 which is recorded as a deposit.

                                                                     (continued)

                                       F-17


<PAGE>


                  Win-Gate Equity Group, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                 March 31, 2000


NOTE O - SUBSEQUENT EVENTS - Continued

     Atlas Communications

     In May 2000, the Company signed a letter of intent to purchase 100% of
     Atlas Communications Ltd., a telecommunications carrier that provides its
     wholesale and retail customers with integrated international and domestic
     long distance service. The Company intends to acquire its equity interest
     in Atlas Communications Ltd. in exchange for common stock and debt.

     Peru

     In March 2000, the Company began to negotiate the dissolution of a contract
     with a third party. This contract would have provided the licensing and the
     sites for the Company to establish operations in Peru. The settlement of
     the contract was finalized in May 2000 and required a payment of $263,000
     by the Company for equipment and network services. These network services
     as well as additional expenses related to the dissolution of this contract
     of approximately $380,000 are included in general and administrative
     expense.

     Equipment Financing

     In July 2000, the Company entered into a financing agreement whereby they
     will receive up to $20 million for the cost of leased equipment. The term
     of each individual lease will be five years, having a $1 buy-out purchase
     option. The individual leases may be funded no sooner than June 30, 2000,
     and no later than September 30, 2000.

     Loan

     In July 2000, the Company entered in a convertible loan agreement with a
     third party for $900,000. The interest rate is 12% and is paid quarterly.
     The loan matures in October 2000. Prior to the maturity date, the loan is
     convertible to common stock after the Company has done a Qualifying Private
     Placement, as defined.


                                       F-18





© 2019 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission