U.S. Securities and Exchange Commission
Washington, D.C. 20549
<P>
Form 10-SB
<P>
General form for registration of securities of small
business issuers under Section 12(b) or (g) of the
Securities Exchange Act of 1934
<P>
i-Teleco.com, Inc.
(Name of Small Business Issuer in its charter)
<P>
<TABLE>
<S> <C> <C>
Florida 65-0928369
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
<P>
1221 Brickell Avenue, Suite 900
Miami, Florida 33131
(Address of principal executive offices) (Zip Code)
<P>
(305)358-3678
(Issuer's telephone number)
<P>
Securities to be Registered Under Section 12(b) of the Act:
None
<P>
Securities to be Registered Under Section 12(g) of the Act:
Common Stock
$.0001 Par Value
(Title of Class)
<P>
To simplify the language in this Registration Statement i-
Teleco.com, Inc. is referred to herein as "the Company" or
"We".
<P>
PART I
<P>
Item 1. Description of Business.
<P>
Business Development. We were incorporated under the name
Mastertel, Inc. in the State of Florida on December 16, 1998
as a wholly owned subsidiary of i-Incubator.com, Inc., a
public company trading on the NASDAQ OTC Electronic Bulletin
Board. On December 2, 1999, the Company filed a Certificate
of Amendment changing the name of the Company to i-
Teleco.com, Inc.
<P>
We have not been involved in any bankruptcy, receivership or
similar proceeding. We have not been involved in any
material reclassification, merger consolidation, or purchase
or sale of a significant amount of assets not in the
ordinary course of business.
<P>
Business of Issuer. We are a development stage company which
will provide telecommunications services in various markets
throughout the United States. The result is that we
anticipate that we will become a provider of local and long
distance telephone services and related services.
Ultimately, we intend to provide local and long distance
services plus Internet access, Personnel Communications
Services ("PCS"), cellular, paging, facsimile, enhanced
calling cards, prepaid phone cards and calling cards and
video communications services. We also intend to qualify as
an "Integrated Communications Provider" ("ICP") under the
Federal Telecommunications Act of 1996 (the
"Telecommunications Act"). Under the Telecommunications
Act, such ICPs can offer cellular, PCS, paging, voice mail,
and a host of other telecommunications services along with
local and long distance service. We intend to target its
services to small and mid-size commercial end users.
<P>
Presently, we have received our licenses to operate as a
local and long distance reseller in Texas, California, New
York and Florida. i-Teleco intends to apply for local
reseller licenses in other states. In addition, we own our
own domain name www.i-Teleco.com.
<P>
i-Teleco anticipates becoming a global provider of long
distance telecommunications and inter-connectivity
solutions. i-Teleco anticipates that it will leverage a
robust infrastructure, state of the art telephony
architecture and its relationship with anticipated business
partners to deliver high quality voice and data distribution
products. i-Teleco will take advantage of management's
expertise in growing revenues by extending the company's
anticipated strategic partner network, by negotiating
reseller agreements with premier carriers and by making
strategic acquisitions of regional telecommunication
companies.
<P>
The Company anticipates that the aforementioned initiatives
will position i-Teleco to take advantage of economies of
scale: thereby reducing i-Teleco's expense base and enabling
i-Teleco to offer competitive rates to their customers. In
addition, by co-sourcing, and in some cases, outsourcing the
administrative functions, i-Teleco will reap additional cost
reduction benefits that can then be passed on to the
consumer.
<P>
The business plan calls for the rapid integration of i-
Teleco's acquisitions. The Company anticipates that these
acquisitions will not only be in the area of regional
telecommunications but may also include telephony hardware
and software providers, WAP specialized companies, Internet
service providers, calling card marketing firms and telecom
hotels. The goal of these acquisitions is to extend the
reach of i-Teleco's market and to increase the number of
products and services the company will provide. Through
the anticipated successful vertical integration of
acquisitions and i-Teleco developed products, the company
will be in a position to offer their customers a
comprehensive suite of inter-connectivity solutions.
<P>
i-Teleco's vision is to offer a wide range of products and
services to customers who have growing telecommunication
based requirements. On one level, i-Teleco anticipates it
will take care of the customer's long distance and other
connectivity requirements. On another level, i-Teleco will
attempt to provide the customer with a resource for
navigating through the complex and ever changing world of
converging communication technologies. In a sense, i-
Teleco intends to become a virtual business partner who can
ensure the highest quality and most reliable solutions for
today's business and residential telecommunications.
<P>
The aforementioned points translate into the following
mission statements:
<P>
1. Enhance proven models with a coherent consumer
plan:
2. Earn and retain consumer loyalty.
3. Eliminate competitive pressures and expand
revenues.
4. Innovate and add new features to current
products.
5. Expand market share across the Internet.
<P>
i-Teleco's mission is to become a provider of communication
and inter-connectivity solutions to business and residential
customers. The convergence of voice, data and internet
technologies has made it a competitive advantage for
companies to harness the synergies that this presents. The
key is to translate these technological advances into
practical business solutions. Too often telecommunication
providers have not mastered the ability to understand a
customer's needs and do not realize how daunting the new age
of communication can seem.
<P>
Presently, traditional carriers dominate both the regional
and long distance data transmission markets. New companies
who use web-based telephony to increase throughput are
gaining market share and making inroads in the traditional
long distance and regional communication markets. Calling
card marketing firms and other specialty niche companies
have been profitable by focusing on target markets and by
negotiating favorable terms for the lines they lease from
the major carriers. These events have left the market for
regional and long distance data transmission both fragmented
and without clear standards for the structure or transmittal
of data.
<P>
It is becoming exceedingly difficult for the smaller
regional and specialty telecommunications firms to compete
with the larger carriers. Clients would rather deal with a
telecommunications firm that can supply all of their data
transmission needs and not just a particular segment. The
reasons are obvious: a client does not want to have to
manage 4 or 5 separate companies and have to spend time
trouble shooting which segment is not working. Although
the major telecommunication providers do offer a global
reach and nearly end-to-end solutions, customers,
particularly small business owners, feel neglected. The
major telecommunications providers do not offer the same
level of customer service to the small to medium size
business owners as they would to their larger corporate
clients.
<P>
At the same time, those new telecommunications companies
that employ web-based technologies are slow to embrace the
insatiable need by their clients for customer service. The
rapid pace of technological advancement and the ever
increasing requirements placed upon the telecommunications
provider have sometimes left the customer without adequate
recourse for having their needs and problems handled in an
efficient manner.
<P>
Our marketing strategy will be to provide the consumer or
business with a single source for all of their
telecommunications needs, all billed on a single invoice.
Our customers will receive a "Management Report Style"
invoice, one that is easily read and understood on an
all-in-one-bill. We will format customer invoices and
out-source printing and mailing. The Company is currently
working toward a real time Internet bill presentation.
Online payment works to our benefit by ensuring prompt
payment, no postage expense and minimal bad debt.
<P>
Our current business strategy is to provide
telecommunications services in the following geographical
areas:
<TABLE>
<S> <C> <C>
New York City, New York Miami, Florida Orlando, Florida
San Francisco, California Los Angeles, California Dallas, Texas
Las Vegas, Nevada Chicago, Illinois
</TABLE>
<P>
We also anticipate that we will grow through acquisitions of
income producing telecommunication companies. Acquisitions
will be determined based upon the operating structures of
the target, including the quality or existence of sales,
billing and customer service departments. The Company
intends to consolidate the operations of the acquired
entities into a single operation resulting in significant
cost savings and substantial revenues within a minimal
period of time. Operational functions such as billing,
customer service and management functions will be
centralized, thereby eliminating redundant systems and
functions. We will utilize the existing billing and
customer services infrastructure of the acquired entities
where appropriate, and expand or contract such
infrastructure as operations dictate. The Company
anticipates that its acquisition strategy will also provide
us with immediate revenues which will, upon reaching a
certain level, provide the Company with advantages resulting
from economies of scale.
<P>
Once we have acquired a reseller, we will contact the
resellers' customers with a view towards marketing to the
customer a host of other telecommunications services we
offer. Management believes that its ability to customize
telecommunications services and its effective pricing of
services, along with the attractiveness of single invoicing,
will attract customers and expand current usage by existing
customers.
<P>
According to the Telecommunication Industry Association, the
telecommunications industry has grown more than twice as
fast as the U.S. economy; generating nearly $518 billion in
spending. The Telecommunication Industry Association report
goes on to list the following factors as the reasons for the
increased spending:
<P>
-The need to transmit larger volumes of information.
-Increased spending by small and medium-sized
companies.
-The desire to integrate voice and data.
-Greater interoperability of equipment stemming from
the development of standards.
-The search for cost-effective solutions.
-An expanding international market.
<P>
The fastest growth has occurred in systems with 1,000 lines
or less; this is a clear sign that small and medium sized
companies are acquiring the technology previously only
available to large companies. Many of these small
businesses are becoming broadband subscribers. This has led
to an exponential rate of growth for broadband services and
a wealth of new applications that exploit the speed and
capacity broadband offers.
<P>
Wireless communications and frame relay solutions have just
begun to gain popularity with smaller companies and should
afford smaller businesses the same productivity gains
presently being realized by larger corporate consumers.
<P>
Within the long distance market, resale is the fastest
growing segment. In 1998 and again in 1999 revenues from
resold long distance services have had a compounded annual
growth rate of nearly 20%. Of course, this statistic does
not belie the fact that the three major carriers,
MCI/Worldcom, ATT and Sprint currently control over 70% of
the market for long distance. Yet the trend indicates that
the resellers of long distance service who can compete
effectively will take away market share from the
"traditional" providers.
<P>
In each of the markets we intend to serve, we will seek to
become a competitor to the incumbent local exchange carrier
("I-LEC") for its targeted customers by providing an
integrated package of high quality local, long distance and
enhanced telecommunications services at competitive prices.
The Company will try to serve as a competitive local
exchange company ("C-LEC") to enter the local telephone
service business. Under the Telecommunications Act, I-LECs
must provide C-LECs such as the Company with access to their
facilities at a substantial discount thereby enabling C-LECs
to provide local telephone services to the public. We
anticipates that we will be able to offer telecommunications
services to customers at less than the prices which the
customer can obtain if they purchase the services directly
from the I-LECs.
<P>
i-TeleCo.com's anticipates that its market segment will
primarily encompass residential consumers and middle market
companies headquartered in large metropolitan areas, ( but
with significant national and international branch offices).
i-TeleCo.com expects the largest growth in demand and the
highest margins will be realized by targeting these
consumers. Typically this customer base will have anywhere
from 10-1,000 external lines, basic voice processing
requirements, (voice mail, automatic call distributors,
interactive voice response and predictive dialing) and
varying degrees of need for calling card services, internet
service, and wireless access.
<P>
These consumer's businesses will range from technology,
consumers products and healthcare to financial, energy and
transportation. Professional offices such as law firms and
medical practices will also be target markets. These
sectors will be extremely price sensitive but, at the same
time, attach a premium to superior customer service. These
accounts will have felt neglected by the major carriers and
overwhelmed by the techno speak thrown at them by other
providers.
<P>
However, it is these very same consumers who will
immediately recognize the benefit and capitalize on the
efficiencies to be gained by effective use of these new
telecommunication technologies. Because of their size, these
customers can deploy new technology and application services
in a timely manner and begin reaping the benefits
immediately.
<P>
Employees
<P>
As of November 1, 2000, the Company employed a total of two
persons, one on a full time basis and one on a part time
basis. In addition, depending on demand, the Company will
utilize manpower agencies to contract between additional
persons on a temporary, part-time basis. None of the
Company's employees are represented by a labor union. The
Company believes that its relations with its employees are
good.
<P>
Risk Factors
<P>
Limited Operating History/Anticipated Losses.
<P>
The Company was incorporated on November 16, 1998 and has
not generated any revenues to date. The Company has no
significant assets or financial resources. The Company has
been engaged solely in start-up activities and has not
commenced material operations in its core business of
providing telecommunications services in various markets
throughout the United States which will allow us to become a
provider of local and long distance telephone services and
related services. The likelihood of the success of the
Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently
encountered by a small developing company starting a new
business enterprise and the highly competitive environment
in which the Company will operate. To address these risks,
the Company must, among other things, respond to competitive
developments; continue to attract, retain and motivate
qualified persons, research and develop new technology; and
commercialize services incorporating such technologies.
There can be no assurance the Company will be successful in
addressing these risks or any other risks. The Company has
not been in business long enough to make a reasonable
judgment as to its future performance. There can be no
assurance the Company will be able to successfully implement
its business plan, generate sufficient revenue to meet is
expenses, operate profitably or be commercially successful.
<P>
The Company anticipates incurring losses during its initial
stages of development and expansion. There can be no
assurance that the Company will be successful in obtaining
revenues in amounts necessary to fund its operations,
implement its business strategy or fund planned
acquisitions.
<P>
Need for Additional Funds
<P>
The Company's capital requirements to implement its business
strategy will be significant. The Company may need
additional funds from loans and/or the sale of equity
securities. Furthermore, the Company currently intends to
effect future acquisitions with cash and the issuance of
debt and equity securities. The cost of anticipated
acquisitions may require the Company to seek additional
financing. The Company anticipates requiring additional
funds in order to fully implement its business plan to
significantly expand its operations. No assurance can be
given that such funds will be available or, if available,
will be on commercially reasonable terms satisfactory to the
Company. There can be no assurance that the Company will be
able to obtain financing if and when it is needed on terms
the Company deems acceptable. The inability of the Company
to obtain financing would have a material adverse effect on
the Company's ability to implement its acquisition strategy,
and as a result, could require the Company to diminish or
suspend its acquisition strategy.
<P>
Acquisition Related Risks
<P>
The Company intends, as part of its business strategy to
acquire other businesses which are in the industry.
Management is unable to predict whether or when any
prospective acquisitions will occur or the likelihood of a
material transaction being completed on favorable terms and
conditions. The Company's ability to finance acquisitions
may be constrained by, among other things, its ability to
raise additional capital or obtain debt financing. Although
the Company has no current plans to incur debt financing,
the terms of any future debt financings may significantly
limit the Company's ability to incur indebtedness in
connection with other acquisitions. In addition,
acquisitions of other companies commonly involve certain
risks, including, among others: the difficulty of
assimilating the acquired operations and personnel; the
potential disruption of the Company's ongoing business and
diversion of resources and management time; the possible
inability of management to maintain uniform standards,
controls, procedures and policies; the risks of entering
markets in which the Company has little or no direct prior
experience; and the potential impairment of relationships
with employees or customers as a result of changes in
management.
<P>
There can be no assurance that the Company will be able to
identify, acquire or profitably manage additional companies
or successfully integrate the operations of additional
companies into those of the Company without encountering
significant delays, costs or other problems. The Company
may compete for expansion and acquisition opportunities with
other companies who may have greater financial and other
resources than the Company. There can be no assurance that
any acquisition will be made, that the Company will be able
to obtain additional financing needed to finance such
acquisitions and, if any acquisitions are so made, that the
acquired business will be successfully integrated into the
Company's operations or that the acquired business will
perform as expected. The Company has no definitive agreement
with respect to any acquisition, although from time to time
it has discussions with other companies and assesses
opportunities on an ongoing basis.
<P>
The Company also anticipates that it will enter into joint
venture transactions. These transactions present many of
the same risks involved in acquisitions and may also involve
the risk that other joint venture partners may have
economic, business or legal interests or objectives that are
inconsistent with those of the Company. Joint venture
partners may also be unable to meet their economic or other
obligations, thereby forcing the Company to fulfill these
obligations.
<P>
Government Regulation
<P>
The Company's services will be subject to significant
regulation at the federal, state and local levels. Delays in
receiving required regulatory approvals or the enactment of
new adverse regulation or regulatory requirements may have a
material adverse effect upon the Company.
<P>
Government regulation and legal uncertainties could add
additional costs to doing business on the Internet. There
are currently few laws or regulations that specifically
regulate communications or commerce on the Internet.
However, laws and regulations may be adopted in the future
that address issues such as user privacy, pricing and the
characteristics and quality of products and services. For
example, the Telecommunications Act of 1996 sought to
prohibit transmitting various types of information and
content over the Internet. Several telecommunications
companies have petitioned the Federal Communications
Commission to regulate Internet service providers and on-
line service providers in a manner similar to long distance
telephone carriers and to impose access fees on those
companies. This could increase the cost of transmitting data
over the Internet. Moreover, it may take years to determine
the extent to which existing laws relating to issues such as
intellectual property ownership, libel and personal privacy
are applicable to the Internet. Any new laws or regulations
relating to the Internet or any new interpretations of
existing laws could adversely affect our business.
<P>
Probable Change in Control of Management
<P>
A business combination involving the issuance of the
Company's common stock will, in all likelihood, result in
shareholders of another company obtaining a controlling
interest in the Company. Any such business combination may
require shareholders of the Company to sell or transfer all
or a portion of the Company's common stock held by them. The
resulting change in control of the Company will likely
result in removal of the present officer and director of the
Company and a corresponding reduction in or elimination of
his/her participation in the future affairs of the Company.
<P>
Need for Additional Management
<P>
We require additional management, middle management and
technical personnel. Our business is dependent on continued
services of our key personnel, particularly, Joshua Lurie,
our President and Jamee M. Kalimi, our Vice President and
Secretary. However, in order to implement an expanded
website program, we must hire additional management and
middle management and technical personnel. We may be unable
to retain our key employees or attract, assimilate or retain
other highly qualified employees. We have experienced, and
we expect to continue to experience, difficulty in hiring
and retaining highly skilled employees with appropriate
qualifications. There is significant competition for
qualified employees in the computer programming and Internet
industries. If we do not succeed in attracting new personnel
or retaining and motivating our current personnel, our
business will be adversely affected.
<P>
Risks Relating To Long Distance Business
<P>
The long distance business is extremely competitive and
prices have declined substantially in recent years and are
expected to continue to decline. In addition, the long
distance industry has historically had a high average churn
rate, as customers frequently change long distance providers
in response to the offering of lower rates or promotional
incentives by competitors. The Company will initially rely
on other carriers to provide transmission and termination
services for all of its long distance traffic. The Company
will need resale agreements with long distance carriers to
provide it with transmission services. Such agreements
typically provide for the resale of long distance services
on a per-minute basis and may contain minimum volume
commitments. Negotiation of these agreements involves
estimates of future supply and demand for transmission
capacity as well as estimates of the calling pattern and
traffic levels of the Company's future customers. In the
event the Company fails to meet its minimum volume
commitments, it may be obligated to pay underutilization
charges and in the event it underestimates its need for
transmission capacity, the Company may be required to obtain
capacity through more expensive means.
<P>
Competition
<P>
The telecommunications industry is highly competitive. In
each of the markets targeted by the Company, we will compete
principally with the ILEC serving that area. ILECs are
established providers of local telephone services to all or
virtually all telephone subscribers within their respective
service areas. ILECs also have long-standing relationships
with regulatory authorities at the federal and state levels.
While some FCC and state administrative decisions and
initiatives provide business opportunities to
telecommunications providers such as the Company, they also
provide the ILECs with increased pricing flexibility for
their private line and special access and switched access
services. In addition, with respect to competitive access
services (as opposed to switched local exchange services),
the FCC recently proposed a rule that would provide for
increased ILEC pricing flexibility and deregulation for such
access services either automatically or after certain
competitive levels are reached. If the ILECs are allowed by
regulators to offer discounts to large customers through
contract tariffs, engage in aggressive volume and term
discount pricing practices for their customers, and/or seek
to charge competitors excessive fees for interconnection to
their networks, ILEC competitors such as the Company could
be materially adversely affected. If future regulatory
decisions afford the ILECs increased access services pricing
flexibility or other regulatory relief, such decisions could
also have a material adverse effect on ILEC competitors such
as the Company.
<P>
We expect to face competition from other current and
potential market entrants, including long distance carriers
seeking to enter, re-enter or expand entry into the local
exchange marketplace such as AT&T Corp. ("AT&T"),
WorldCom/MCI Communications Corporation ("MCI"), Sprint
Corporation ("Sprint"), and from other CLECs, resellers,
competitive access providers ("CAPs") , cable television
companies, electric utilities, microwave carriers, wireless
telephone system operators and private networks built by
large end users. In addition, the development of new
technologies could give rise to significant new competition
for us. We will also compete with equipment vendors and
installers, and telecommunications management companies with
respect to certain portions of its business. Many of our
current and potential competitors have financial, technical,
marketing, personnel and other resources, including brand
name recognition, substantially greater than those of the
Company, as well as other competitive advantages over the
Company.
<P>
The Telecommunications Act includes provisions which impose
certain regulatory requirements on all local exchange
carriers, including ILEC competitors such as the Company,
while granting the FCC expanded authority to reduce the
level of regulation applicable to any or all
telecommunications carriers, including ILECs. The manner in
which these provisions of the Telecommunications Act are
implemented and enforced could have a material adverse
effect on the Company's ability to successfully compete
against ILECs and other telecommunications service
providers.
<P>
As a recent entrant in the integrated telecommunications
services industry, we have not achieved and do not expect to
achieve a significant market share for any of our services.
In particular, the ILECs have long-standing relationships
with their customers, have financial, technical, marketing,
personnel and other resources substantially greater than
those of the Company, have the potential to subsidize
competitive services with revenues from a variety of
businesses and currently benefit from existing regulations
that favor the ILECs over the Company in certain respects.
Certain federal and state laws and regulations allow CLECs
such as us to interconnect with ILEC facilities and provide
increased business opportunities for the Company. Such
interconnection opportunities have been accompanied by
increased pricing flexibility for and relaxation of
regulatory oversight of the ILECS.
<P>
To the extent the Company interconnects with and uses ILEC
networks to service its customers, we will be dependent upon
the technology and capabilities of the ILECs to meet certain
telecommunications needs of the Company's customers and to
maintain its service standards, and the Company must
interface with the ILECs' legacy OSS in order to properly
provision new customers. The Telecommunications Act imposes
interconnection obligations on ILECs, but there can be no
assurance that we will be able to obtain the interconnection
we require at rates, and on terms and conditions, that
permit us to offer switched services that are both
competitive and profitable. In the event that we experience
difficulties in obtaining high quality, reliable and
reasonably priced services from the ILECs, the
attractiveness of our services to our customers could be
impaired.
<P>
The long distance telecommunications market has numerous
entities competing for the same customers and a high average
churn rate, as customers frequently change long distance
providers in response to the offering of lower rates or
promotional incentives. Prices in the long distance market
have declined significantly in recent years and are expected
to continue to decline. We will face competition from large
carriers such as AT&T, MCI and Sprint. Other competitors are
likely to include RBOCs providing out-of-region (and, with
the removal of regulatory barriers, in-region) long distance
services, other CLECs, microwave and satellite carriers and
private networks owned by large end users. We may also
increasingly face competition from companies offering long
distance data and voice services over the Internet. Such
companies could enjoy a significant cost advantage because
they do not currently pay carrier access charges or
universal service fees. In addition, in June 1998, Sprint
announced its intention to offer voice, data and video
services over its nationwide asynchronous transfer mode
network, which Sprint anticipates will significantly reduce
its cost to provide such services. Sprint plans to bill its
customers based upon the amount of traffic carried,
irrespective of the time required to send the traffic or the
traffic's destination.
<P>
The Internet services market is highly competitive and we
expect that competition will continue to intensify. The
Company's competitors in this market include ISPs, other
telecommunications companies, online service providers and
Internet software providers. Many of these competitors have
greater financial, technological, marketing, personnel and
other resources than those available to the Company.
<P>
We believe that the principal competitive factors affecting
our business operations will be pricing levels and clear
pricing policies, reliable customer service, accurate
billing and, to a lesser extent, variety of services. Our
ability to compete effectively will depend upon our ability
to maintain high quality, market-driven services at prices
generally equal to or below those charged by our
competitors. To maintain our competitive posture, we believe
that we must be in a position to reduce our prices in order
to meet reductions in rates, if any, offered by others. Any
such reductions could adversely affect us.
<P>
The World Trade Organization ("WTO") agreement on basic
telecommunications services could increase the level of
competition faced by us. Under this agreement, the United
States and 72 other members of the WTO committed themselves
to opening their respective telecommunications markets
and/or foreign ownership and/or to adopting regulatory
measures to protect competitors against anticompetitive
behavior by dominant telecommunications companies, effective
in some cases as early as January 1998. There can be no
assurance that the pro-competitive effects of the WTO
agreement will not have a material adverse effect on our
business, financial condition and results of operations.
<P>
A continuing trend toward consolidation, mergers,
acquisitions and strategic alliances in the
telecommunications industry could also increase the level of
competition faced by the Company.
<P>
Item 2. Management Discussion and Analysis and Plan of
Operation
------------------------------------------------------------
<P>
<TABLE>
<S> <C> <C>
For the Nine Months For the Nine Months
ended Ended
September 30, 2000 September 30, 1999
-----------------------------------------------
Development Stage Revenues $ 0 $ 0
<P>
Development Stage Expenses (185,597) (0)
<P>
Deficit Accumulated During
Development Stage (185,597) (0)
</TABLE>
<P>
The following discussion and analysis should be read in
conjunction with the financial statements of the Company and
the accompanying notes appearing subsequently under the
caption "Financial Statements." The following discussion
and analysis contains forward-looking statements, which
involve risks and uncertainties. The Company's actual
results may differ significantly from the results,
expectations and plans discussed in these forward-looking
statements.
<P>
During the past nine months, the Company has spent
considerable time and capital resources defining and
developing its strategic plan for telecommunications
services in various markets throughout the United States.
<P>
Development Stage Revenues
<P>
The Company's operations have been devoted primarily to
raising capital for licensing in five states and developing
a website. I-Teleco, Inc. is a subsidiary of i-
Incubator.com, Inc. I-Teleco was incorporated in Florida on
December 16, 1998 as Mastertel Communications Corp. and has
authority to do business in New York, Illinois, Texas,
California and Florida. Joshua M. Lurie is the President
and a Director and Jamee M. Kalimi is Vice President,
Secretary and a director of i-Teleco. At the present time,
i-Teleco has applied and been approved to operate as a local
reseller in New York, Illinois, Texas, California and
Florida.
<P>
I-Incubator.com, Inc. shall remain the parent company of i-
Teleco, Inc. i-Incubator owns 19,000,000 shares of i-Teleco
common stock valued at $.0001 per share.
<P>
The ability of the Company to achieve its business
objectives is contingent upon it success in raising
additional capital until adequate revenues are realized from
operations.
<P>
Development Stage Expenses
<P>
The Company's development stage expenses were $185,697 for
the year end of September 30, 2000. The Company was
inactive for the year ended September 30, 1999 and
accordingly did not incur any development stage expenses.
This increase was primarily due to the purchase of a domain
name, corporate salary and developing a corporate website.
In addition, we have utilized funds engaging various
consulting and managerial services in search of licensing,
corporate acquisitions and advertising.
<P>
Liquidity and Capital Resources
<P>
Despite capital contributions and related party loans, the
Company from time to time experienced cash flow shortages
that have slowed the Company growth. During 2000, the
consequences of those cash flow shortages has been an
increase of accrued expenses and stockholder loans, bringing
those figures to $185,697 and $26,750 respectively at
September 30, 2000.
<P>
The Company has primarily financed its activities from loans
from a related party. A significant portion of the loans
has been used to cover working capital needs such as office
expense, travel, trade shows and various consulting and
professional fees.
<P>
The Company continues to experience cash flow shortages, and
anticipates this continuing through the foreseeable future.
Management believes that additional funding will be
necessary in order for it to continue as a going concern.
The Company is investigating several forms of private debt
and/or equity financing, although there can be no assurances
that the Company will be successful in procuring such
financing or that it will be available on terms acceptable
to the Company.
<P>
Item 3. Description of Property.
-------------------------------
<P>
The Company presently shares office space with i-
Incubator.com, Inc., the sole shareholder of the Company, in
a building located at 1221 Brickell Avenue, Suite 900,
Miami, Florida. The facility is leased pursuant to a month
to month lease. The primary tenant is Atlas Equity Group,
Inc. Atlas Equity Group, Inc. subleases the facility to i-
Incubator.com, Inc. Atlas Equity and its sole shareholder,
Michael D. Farkas are the principal shareholders of i-
Incubator.com, Inc., the parent company of i-Teleco. The
landlord is not affiliated with us. No rent is being
charged to the Company. We believe that this space is
sufficient for us at this time.
<P>
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
-----------------------------------------------------------
<P>
As of October 31, 2000, there were 19,000,000 shares of our
common stock, $0.0001 par value issued and outstanding. The
following tabulates holdings of our shares of common stock
by each person who, as of October 31, 2000, holds of record
or is known by management to own beneficially more than 5%
of our common shares and, in addition, by all of our
directors and officers individually and as a group. Each
named beneficial owner has sole voting and investment power
with respect to the shares set forth opposite their name.
<P>
Security Ownership of Beneficial Owners (1)(2):
<TABLE>
<S> <C> <C> <C>
Title of Class Name & Address Amount Percent
--------------------------------------------------------------------
Common Stock i-Incubator.com, Inc.(2) 19,000,000 100.00%
1221 Brickell Avenue
Suite 900
Miami, FL 33131
<P>
Security Ownership of Management (3):
<P>
Title of Class Name & Address Amount Percent
--------------------------------------------------------------------
Common Stock Joshua Lurie 0 0
268 W. Englewood Ave.
Teaneck, NJ 07666
<P>
Jamee M Kalimi 0 0
3314 Oak Drive
Hollywood, Florida
<P>
All directors and executive 0 0%
officers as a group (2 persons)
</TABLE>
<P>
(1) Pursuant to Rule 13-d-3 under the Securities Exchange
Act of 1934, as amended, beneficial ownership of a security
consists of sole or shared voting power (including the power
to vote or direct the voting) and/or sole or shared
investment power (including the power to dispose or direct
the disposition) with respect to a security whether through
a contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, each person indicated
above has sole power to vote, or dispose or direct the
disposition of all shares beneficially owned, subject to
applicable community property laws.
<P>
(2) Michael D. Farkas, through his affiliated entities, is
the principal shareholder of i-Incubator.com, Inc.
<P>
(3) This table is based upon information obtained from our
stock records. Unless otherwise indicated in the footnotes
to the above table and subject to community property laws
where applicable, we believe that each shareholder named in
the above table has sole or shared voting and investment
power with respect to the shares indicated as beneficially
owned.
<P>
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
-----------------------------------------------------------
<P>
Joshua Lurie has been the President and Director of the
Company since February 2000 when he joined the Company as
President to organize the company and spearhead its
corporate growth. From November 1998 through January 2000
Mr. Lurie was the Managing Director of Interglobe
Communications ICC Corp., a Petach Tikva, Israel based
company that provided international voice
telecommunications. Mr. Lurie has been active in the
telecommunications field for over ten years initially
involved in providing corporate business networking
solutions with System's Incorporated, a Connecticut based
company, Route Link and The Incom Group, both Israel based
companies and is currently implementing voice and data
technologies. Mr. Lurie has been an innovator in voice
technologies operations and marketing in the conventional
methods and in the Internet space.
<P>
Jamee M. Kalimi, 32, has been Vice President, Secretary and
Director of the Company since inception. She is a marketing
and telecommunications expert with a strong ability to
create new strategies and business plans. Since 1998, Ms.
Kalimi has been President and Director of i-Incubator.com,
Inc. a publicly traded company listed on the OTC Electronic
Bulletin Board. (OTC:BB INQU). Ms. Kalimi is also President
of i-CarAuction.com, Inc., i-AntiqueAuction.com, Inc. and i-
Aerobids.com, Inc. and is Vice President and Secretary of i-
RealtyAuction.com, Inc. all of which are subsidiaries of i-
Incubator.com, Inc. Ms. Kalimi has been heavily involved in
the telecommunications industry since 1990, specializing in
pay per call services and the marketing of such services.
She has an active real estate license in the State of
Florida which was obtained in 1995. Prior to working for
us, she was an assistant to the President of Atlas Equity
Group, Inc. from February 1998 to October 1998. She worked
as a Real Estate Sales and Leasing Manager for Sclar Realty
from April 1996 to February 1998 and President of AvJam
Communications, Inc. from January 1994 to April 1996.
<P>
All officers and directors listed above will remain in
office until the next annual meeting of our stockholders,
and until their successors have been duly elected and
qualified. There are no agreements with respect to the
election of Directors. We have not compensated our
Directors for service on our Board of Directors, any
committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any
committee of our Board of Directors. Officers are appointed
annually by our Board of Directors and each Executive
Officer serves at the discretion of our Board of Directors.
We do not have any standing committees.
<P>
None of our Officers and/or Directors have filed any
bankruptcy petition, been convicted of or been the subject
of any criminal proceedings or the subject of any order,
judgment or decree involving the violation of any state or
federal securities laws within the past five (5) years.
<P>
Item 6. Executive Compensation.
--------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Name Position Year Salary Bonus Other Stock Options
Joshua Lurie Pres/Director 2000 $125,000 0 0 0
<P>
Jamee Kalimi VP/Sec/Dir 2000 $ 0 0 0 0
<P>
</TABLE>
<P>
Our shareholders may in the future determine to pay
Director's fees and reimburse Directors for expenses related
to their activities.
<P>
Item 7. Certain Relationships and Related Transactions.
--------------------------------------------------------
<P>
The Company presently shares office space with i-
Incubator.com, Inc., the sole shareholder of the Company, in
a building located at 1221 Brickell Avenue, Suite 900,
Miami, Florida. The facility is leased pursuant to a month
to month lease. The primary tenant is Atlas Equity Group,
Inc. Atlas Equity Group, Inc. subleases the facility to i-
Incubator.com, Inc. Atlas Equity and its sole shareholder,
Michael D. Farkas are the principal shareholders of i-
Incubator.com, Inc., the parent company of i-Teleco. The
landlord is not affiliated with us. No rent is being
charged to the Company. We believe that this space is
sufficient for us at this time.
<P>
We have not and do not intend to enter into any additional
transactions with our management or any nominees for such
positions. We have not and do not intend to enter into any
transactions with our beneficial owners. We are a subsidiary
of a parent company, i-Incubator.com, Inc. Since inception,
we have not entered into any transactions with promoters
other than our officers and directors Joshua Lurie and Jamee
Kalimi.
<P>
i-Teleco has executed into two (2) promissory notes with
Atlas Equity Group, Inc. ("Atlas Equity") for a total of
$5,000 which Atlas Equity loaned to the Company. On October
25, 2000, Atlas Equity loaned $3,000 which is payable on
January 24, 2001 and is accruing interest a the rate of ten
(10%) percent per annum. On November 10, 2000, Atlas Equity
loaned $2,000 which is payable on February 9, 2001 and is
accruing interest at the rate of ten (10%) percent per
annum. Atlas Equity and its sole shareholder, Michael D.
Farkas are the principal shareholders of i-Incubator.com,
Inc., the parent company of i-Teleco.
<P>
i-Teleco has entered into five (5) promissory notes with
Ostonian Securities Limited ("Ostonian") for a total of
$21,750 which Ostonian loaned to the Company. On September
11, 2000, Ostonian loaned $5,000 which is payable on
September 10, 2001 and is accruing interest a the rate of
eight and a quarter (8.25%) percent per annum. On October
3, 2000, Ostonian loaned $3,750 which is payable on October
2, 2001 and is accruing interest at the rate of eight and a
quarter (8.25%) percent per annum. On October 13, 2000,
Ostonian loaned $4,500 which is payable on October 12, 2001
and is accruing interest a the rate of eight and a quarter
(8.25%) percent per annum. On November 2, 2000, Ostonian
loaned $4,500 which is payable on November 1, 2001 and is
accruing interest a the rate of eight and a quarter (8.25%)
percent per annum. On November 13, 2000, Ostonian loaned
$4,000 which is payable on November 12, 2001 and is accruing
interest a the rate of eight and a quarter (8.25%) percent
per annum. Ostonian representative, Michael D. Farkas is a
principal shareholder of i-Incubator.com, Inc., the parent
company of i-Teleco.
<P>
On September 1, 2000, i-Teleco entered into an agreement to
purchase the domain name "i-Teleco.com" from Michael D.
Farkas a principal shareholder of i-Incubator.com, Inc., the
parent company of i-Teleco for $50,000.
<P>
i-Teleco owes $18,537.50 to Envitro.com, Inc. for the
creation of the corporate website which to date has not been
paid. Envitro.com, Inc. is a wholly owned subsidiary of
Wealthhound, Inc. which is a wholly owned subsidiary of
Wealthhound.com, Inc. Michael D. Farkas, a principal
shareholder of Wealthhound.com, Inc., is also a principal
shareholder and director of i-Incubator.com, Inc., the
parent company of i-Teleco.
<P>
Our management is involved in other business activities and
may, in the future become involved in other business
opportunities. If a specific business opportunity becomes
available, such persons may face a conflict in selecting
between our business and their other business interests. We
have not and do not intend in the future to formulate a
policy for the resolution of such conflicts.
<P>
Item 8. Description of Securities.
-----------------------------------
<P>
Qualification.
<P>
The following statements constitute brief summaries of our
Articles of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in
their entirety by reference to the full text of our Articles
of Incorporation and Bylaws.
<P>
Common Stock.
<P>
Our amended Articles of Incorporation authorize us to issue
up to 50,000,000 Common Shares, $0.0001 par value per common
share and no Preferred Shares. As of October 31, 2000,
there are 19,000,000 shares of our common stock outstanding.
All outstanding Common Shares are legally issued, fully paid
and non-assessable.
<P>
Liquidation Rights.
<P>
Upon our liquidation or dissolution, each outstanding Common
Share will be entitled to share equally in our assets
legally available for distribution to shareholders after the
payment of all debts and other liabilities.
<P>
Dividend Rights.
<P>
We do not have limitations or restrictions upon the rights
of our Board of Directors to declare dividends, and we may
pay dividends on our shares of stock in cash, property, or
our own shares, except when we are insolvent or when the
payment thereof would render us insolvent subject to the
provisions of the Florida Statutes. We have not paid
dividends to date, and we do not anticipate that we will pay
any dividends in the foreseeable future.
<P>
Voting Rights.
<P>
Holders of our Common Shares are entitled to cast one vote
for each share held of record at all shareholders meetings
for all purposes.
<P>
Other Rights.
<P>
Common Shares are not redeemable, have no conversion rights
and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a
subsequent offering.
<P>
There are no other material rights of the common
shareholders not included herein. There is no
provision in our charter or by-laws that would delay, defer
or prevent a change in control of us. We have not issued
debt securities.
<P>
PART II
<P>
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters.
-----------------------------------------------------------
<P>
There is no established public trading market for our
securities. After this document is declared effective by
the Securities and Exchange Commission, we currently intend
to seek a listing on the OTC Electronic Bulletin Board in
the United States. Our shares can not trade on the OTC
Bulletin Board until all SEC comments relating to this Form
10 have been resolved. Our shares are not and have not been
listed or quoted on any exchange or quotation system.
<P>
At October 31, 2000, there were 19,000,000 shares of our
common stock issued and outstanding. We have never paid
dividends on our shares. We currently intend to retain
earnings for use in our business and do not anticipate
paying any dividends in the foreseeable future.
<P>
As of the date of this registration, we had one (1) holder
of record of our common stock. We currently have one class
of common stock outstanding.
<P>
Certain securities herein are restricted securities as
defined under Rule 144 of the Securities Act of 1933 and may
only be sold under Rule 144 or otherwise under an effective
registration statement or an exemption from registration, if
available. Rule 144 generally provides that a person who has
satisfied a one year holding period for the restricted
securities and is not an affiliate of us may sell such
securities subject to the Rule 144 provisions. Under Rule
144, directors, executive officers, and persons or entities
they control or who control them may sell shares that have
satisfied the one year holding period for the restricted
securities in an amount limited to, in any three-month
period, the greater of 1% of our outstanding shares of
common stock or the average of the weekly trading volume in
our common stock during the four calendar weeks preceding a
sale. All sales under Rule 144 must also be made without
violating the manner-of-sale provisions, notice
requirements, and the availability of public information
about us. A sale of shares by such security holders, whether
under Rule 144 or otherwise, may have a depressing effect
upon the price of our common stock in any market that might
develop.
<P>
Penny Stock Considerations.
<P>
Broker-dealer practices in connection with transactions in
"penny stocks" are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny
stocks generally are equity securities with a price of less
than $5.00. Penny stock rules require a broker-dealer, prior
to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure
document that provides information about penny stocks and
the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the
penny stock rules generally require that prior to a
transaction in a penny stock, the broker-dealer make a
special written determination that the penny stock is a
suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction.
<P>
These disclosure requirements may have the effect of
reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock
rules. Our shares will likely be subject to such penny stock
rules, and our shareholders will, in all likelihood, find it
difficult to sell their securities.
<P>
No market exists for our securities and there is no
assurance that a regular trading market will develop, or if
developed will be sustained. A shareholder, in all
likelihood, therefore, will not be able to resell the
securities referred to herein should he or she desire to do
so. Furthermore, it is unlikely that a lending institution
will accept our securities as pledged collateral for loans
unless a regular trading market develops. There are no
plans, proposals, arrangements or understandings with any
person in regard to the development of a trading market in
any of our securities.
<P>
Item 2. Legal Proceedings.
---------------------------
<P>
We are not a party to any pending legal proceeding, and we
are not aware of any contemplated legal proceeding by a
governmental authority involving us.
<P>
Item 3. Changes in and Disagreements with Accountants.
------------------------------------------------------
<P>
During the two most recent fiscal years and the subsequent
interim period, we have had no disagreement, resignation or
dismissal of the principal independent accountant for the
Company. Our accountant at this time is John Abitante, CPA
of Berenfeld, Spritzer, Shechter & Sheer, 7700 N. Kendall
Drive, Suite 805, Miami, Florida 33156.
<P>
Item 4. Recent Sales of Unregistered Securities.
--------------------------------------------------
<P>
The following sets forth information relating to all of our
previous sales of securities which were not registered under
the Securities Act of 1933.
<P>
i-Teleco, Inc. was incorporated in the State of Florida on
December 18, 1998 as a wholly owned subsidiary of i-
Incubator.com, Inc. and 1,000 shares were issued to i-
Incubator.com, Inc. in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended (the
"Act"). Such shares met the requirements for this exemption
since i-Incubator.com, Inc. was qualified in terms of
financial sophistication and had access to material
information about the Company. On May 19, 2000, the
Shareholder and Directors of i-Teleco, Inc. authorized a
19,000 for 1 forward stock split increasing the amount of
outstanding shares owned by i-Incubator.com, Inc., the sole
shareholder, to 19,000,000 shares.
<P>
We have never utilized an underwriter for an offering of our
securities. Other than the securities mentioned above, we
have not issued or sold any securities.
<P>
Item 5. Indemnification of Directors and Officers.
----------------------------------------------------
<P>
Our Articles of Incorporation provide that, to the fullest
extent permitted by law, none of our directors or officers
shall be personally liable to us or our shareholders for
damages for breach of any duty owed to us or our
shareholders. In addition, we shall have the power, by our
by-laws or in any resolution of our stockholders or
directors, to undertake to indemnify the officers and
directors of ours against any contingency or peril as may be
determined to be in our best interest and in conjunction
therewith, to procure, at our expense, policies of
insurance.
<P>
PART F/S
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
TABLE OF CONTENTS
<P>
BALANCE SHEETS 2
<P>
STATEMENT OF OPERATIONS 3
<P>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 4
<P>
STATEMENT OF CASH FLOWS 5-6
<P>
NOTES TO FINANCIAL STATEMENTS 7-13
<P>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
BALANCE SHEETS
<P>
ASSETS
<S> <C> <C> <C>
(UNAUDITED) (AUDITED) (AUDITED)
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2000 1999 1998
------------------------------------------------------------
CURRENT ASSETS:
<P>
Cash $ 0 $ 51 $ 0
------------------------------------------------------------
TOTAL ASSETS $ 0 $ 51 $ 0
<P>
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<P>
CURRENT LIABILITIES:
<P>
Accounts payable $ 6,004 $ 0 $ 0
Accrued expenses 31,239 3,500 0
Note payable 5,000 0 0
Loans and advances payable
- related parties 150,903 4,100 0
----------------------------------------------------------
Total Current Liabilities 193,146 7,600 0
<P>
STOCKHOLDER'S EQUITY (DEFICIT):
<P>
Common Stock, $.0001 par value,
50,000,000 shares authorized,
19,000,000 shares issued and
outstanding 19,000 19,000 19,000
Additional paid-in capital (18,900) (18,900) (18,900)
Deficit accumulated during
the development stage (193,246) (7,649) (100)
----------------------------------------------------------
Total Stockholder's Equity
(Deficit) (193,146) (7,549) 0
----------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY (DEFICIT)$ (0) $ 51 $ 0
----------------------------------------------------------
0 0 (0)
==========================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE NINE FOR THE NINE FOR THE PERIOD
MONTHS ENDED MONTHS ENDED DECEMBER 16, 1998
SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO
2000 1999 SEPTEMBER 30, 2000
-------------------------------------------------------------
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
<P>
DEVELOPMENT STAGE EXPENSES:
Accounting 2,500 0 5,000
Bank charges 164 0 194
Consulting fees 268 0 368
Domain name 50,000 0 50,000
Dues and subscriptions 175 0 175
Employee bonuses 1,700 0 1,700
Equipment rental 799 0 799
Insurance 2,126 0 2,127
Interest 21 0 21
Legal fees 6,414 0 7,414
Licenses and taxes 1,364 0 5,383
Office supplies 858 0 858
Payroll taxes 6,292 0 6,292
Salary 80,700 0 80,700
Trade shows 2,115 0 2,115
Travel 11,560 0 11,562
Web page design 18,538 0 18,538
------------------------------------------------------------
Total development stage expenses 185,597 0 193,246
------------------------------------------------------------
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (185,597) $ 0 $ (193,246)
=============================================================
LOSS PER SHARE:
Basic $ (0.0098) N/A $ (0.0102)
=============================================================
Diluted N/A N/A N/A
=============================================================
<P>
Weighted-average of common
shares outstanding 19,000,000 N/A 19,000,000
=============================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
<P>
FOR THE PERIOD DECEMBER 16, 1998 (INCEPTION) TO SEPTEMBER 30, 2000
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-----------------------------------------------------------------
Balance, December 16, 1998
(inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Common stock issued to related
party for management
services 19,000,000 19,000 (18,900) 0 100
<P>
Deficit accumulated during the
development stage for the
period December 16, 1998
(inception)
to December 31, 1998 0 0 0 (100) (100)
-----------------------------------------------------------------
Balance,
December 31, 1998 19,000,000 19,000 (18,900) (100) 0
<P>
Deficit accumulated during the
development stage for the year
ended December 31, 1999 0 0 0 (7,549) (7,549)
-----------------------------------------------------------------
Balance,
December 31, 1999 19,000,000 $19,000 $(18,900) $(7,649) $(7,549)
<P>
Deficit accumulated during the
development stage for the
nine months ended
September 30, 2000 0 0 0 (185,597) (185,597)
-----------------------------------------------------------------
Balance,
September 30, 2000 19,000,000 $19,000 $(18,900) $(193,246) $(193,146)
=================================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
INCREASE (DECREASE) IN CASH
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE NINE FOR THE NINE FOR THE PERIOD
MONTHS ENDED MONTHS ENDED DECEMBER 16, 1998
SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO
2000 1999 SEPTEMBER 30, 2000
-----------------------------------------------------------------
OPERATING ACTIVITIES:
<P>
Deficit accumulated during the
development stage $(185,597) $ 0 $ (193,246)
<P>
Adjustments to reconcile net loss to
net cash used by operations:
Consulting 0 0 100
Increase in accrued
expenses 3,500 0 7,000
Increase (Decrease) in
accrued interest expense 21 0 21
Increase in accounts
payable 6,004 6,004
Increase in payroll
taxes payable 24,218 0 24,218
--------------------------------------------------------------
Net Cash Used for
Operating Activities (151,854) 0 (155,903)
--------------------------------------------------------------
INVESTING ACTIVITIES:
Net Cash Used for
Investing Activities 0 0 0
<P>
FINANCING ACTIVITIES:
Proceeds from note payables 5,000 0 5,000
Loans and advances payable
related parties 146,803 0 150,903
--------------------------------------------------------------
Net Cash Provided by
Financing Activities 151,803 0 155,903
--------------------------------------------------------------
INCREASE (DECREASE) IN CASH (51) 0 0
--------------------------------------------------------------
CASH, BEGINNING OF PERIOD 51 0 0
--------------------------------------------------------------
CASH, END OF PERIOD $ 0 $ 0 $ 0
==============================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
AND 1999 AND FOR THE
CUMULATIVE PERIOD DECEMBER 16, 1998 (INCEPTION)
TO SEPTEMBER 30, 2000
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<P>
During the nine months ended September 30, 2000 and
1999 and for the cumulative period December 16, 1998
(inception) to September 30, 2000, the Company did not pay
any interest.
<P>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
<P>
The Company entered into the following non-cash
transaction:
<P>
During the period ended December 31, 1998, the Company
issued 1,000 shares of common stock in consideration of
management services to I-Incubator.com, Inc. formerly known
as Master Communications, Corp. The transaction was valued
at $100. The Company subsequently approved a 19,000 to 1
forward stock split (see note 10).
<P>
<TABLE>
i-TELECO.COM, INC.
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES
FOR THE NINE MONTHS ENDED SEPTEMBER 31, 2000
<S> <C> <C> <C> <C>
INCREASE DAYS SHARE
DATE DECREASE OUTSTANDING OUTSTANDING DAYS
-----------------------------------------------------------------------------------------
January 1, 2000 0 19,000,000 273 5,187,000,000
<P>
September 30, 2000 0 19,000,000 0 0
<P>
September 30, 2000 273 5,187,000,000
==================================================================
WEIGHTED SHARES 19,000,000
<P>
</TABLE>
<TABLE>
i-TELECO.COM, INC.
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES
FOR THE NINE MONTHS ENDED SEPTEMBER 31, 1999
<S> <C> <C> <C> <C>
INCREASE DAYS SHARE
DATE DECREASE OUTSTANDING OUTSTANDING DAYS
-----------------------------------------------------------------------------------------
January 1, 1999 19,000,000 272 5,168,000,000
<P>
September 30, 1999 0 19,000,000 0 0
<P>
September 30, 1999 272 5,168,000,000
=====================================================================
WEIGHTED SHARES 19,000,000
<P>
</TABLE>
<P>
<TABLE>
i-TELECO.COM, INC.
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES
FROM INCEPTION THROUGH SEPTEMBER 30, 2000
<S> <C> <C> <C> <C>
INCREASE DAYS SHARE
DATE DECREASE OUTSTANDING OUTSTANDING DAYS
-----------------------------------------------------------------------------------------
December 16, 1998 0 19,000,000 15 285,000,000
<P>
December 31, 1998 0 19,000,000 365 6,935,000,000
<P>
December 31, 1999 0 19,000,000 274 5,206,000,000
<P>
September 30, 2000 0 19,000,000 0 0
<P>
September 30, 2000 654 12,426,000,000
=================================
WEIGHTED SHARES 19,000,000
<P>
</TABLE>
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------------------
<P>
ORGANIZATION
<P>
i-Teleco.com, Inc. ("the Company"), formerly MasterTel
Communications Corp., a wholly owned subsidiary of i-
Incubator.com, Inc. ("Incubator"), formerly known as Master
Communications Corp., was incorporated on December 16, 1998,
under the laws of the state of Florida. The Company's
operations have been devoted primarily to structuring and
positioning itself to take advantage of opportunities
available in the internet industry. The Company intends to
grow through internal development, strategic alliances and
acquisitions of existing businesses. The Company has the
authority to issue 50,000,000 shares of common stock and
intends to position itself to take advantage of
opportunities available in the telecommunications industry.
The Company is a development stage company and has had
limited activity.
<P>
MANAGEMENT DECISION NOT TO CONSOLIDATE
<P>
Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority Owned Subsidiaries",
encourages the use of consolidated financial statements
between a parent company and its subsidiaries unless:
<P>
a. Control is likely to be temporary,
b. Control does not rest with the majority
owner(s), or
c. Minority shareholders have certain approval or
veto rights that allow them to exercise
significant control over major management
decisions in the ordinary course of business.
<P>
The management of Incubator intends to spin off the Company
and believes that its control is temporary. Therefore,
management believes that separate financial statements are
appropriate and properly reflect current operating results.
<P>
USE OF ESTIMATES
<P>
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the
financial statements and for the reporting period.
Accordingly, actual results could differ from those
estimates.
<P>
CASH AND CASH EQUIVALENTS
<P>
For purposes of reporting cash flows, the Company considers
all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------
<P>
CARRYING VALUES
<P>
The Company reviews the carrying values of its long-lived
and identifiable intangible assets for possible impairment.
Whenever events or changes in circumstances indicate that
the carrying amount of assets may not be recoverable, the
Company will reduce the carrying value of the assets and
charge operations in the period the impairment occurs.
<P>
INCOME TAXES
<P>
The Company utilizes SFAS No. 109, "Accounting for Income
Taxes", which requires the recognition of deferred tax
assets and liabilities for the expected future tax
consequences of events that have been included in financial
statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in
future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at
each period end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to
the amount expected to be realized. The accompanying
financial statements have no provisions for deferred tax
assets or liabilities because the deferred tax allowance
offsets the deferred tax asset in its entirety.
<P>
NET LOSS PER SHARE
<P>
The Company has adopted SFAS No. 128 "Earnings Per Share".
Basic loss per share is computed by dividing the loss
available to common shareholders by the weighted-average
number of common shares outstanding. Diluted loss per share
is computed in a manner similar to the basic loss per share,
except that the weighted-average number of shares
outstanding is increased to include all common shares,
including those with the potential to be issued by virtue of
warrants, options, convertible debt and other such
convertible instruments. Diluted earnings per share
contemplates a complete conversion to common shares of all
convertible instruments, only if they are dilutive in nature
with regards to earnings per share. Since the Company has
incurred net losses since its inception and there are no
convertible instruments, basic loss per share and diluted
loss per share are the same.
<P>
FAIR VALUE OF FINANCIAL INSTRUMENTS
<P>
SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments" requires the disclosure of the fair value of
financial instruments. The Company's management, using
available market information and other valuation methods,
has determined the estimated fair value amounts of its
financial instruments. However, considerable judgment is
required to interpret market data in developing estimates of
fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Company could
realize in a current market exchange.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
--------------------------------------------------------
<P>
STOCK COMPENSATION
<P>
The Company has adopted SFAS No. 123 "Accounting for Stock-
Based Compensation." SFAS No. 123 encourages the use of the
fair market method to account for transactions involving
stock based compensation that are entered into for fiscal
years beginning after December 15, 1995. Under the fair
value method, the issuance of equity instruments to non-
employees in exchange for goods or services should be
accounted for based on the fair value of the goods or
services received or the fair value of the income
instruments issued, whichever is more reliably measured.
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
---------------------------------------------------------
<P>
In June, 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income". This SFAS requires companies to classify items of
other comprehensive income by their nature in financial
statements and display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a
statement of financial position. SFAS No. 130 is effective
for financial statements issued for fiscal years beginning
after December 15, 1997. Management believes that SFAS No.
130 does not affect the Company's financial statements.
<P>
In June, 1997, the FASB issued SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information".
This SFAS established additional standards for segment
reporting in financial statements and is effective for
financial statements issued for fiscal years beginning after
December 15, 1997. Management believes that SFAS No. 131
does not affect the Company's financial statements.
<P>
In April, 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-5,
"Reporting for Costs of Start-Up Activities" ("SOP 98-5").
Pursuant to this statement, the Company is required to
expense all start-up costs related to new operations.
<P>
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", is effective for financial statements
issued for fiscal years beginning after June 15, 1999. SFAS
No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities. Management believes that SFAS No. 133 does not
affect the Company's financial statements.
<P>
SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for
Sale by Mortgage Banking Enterprises", is effective for
financial statements issued in the first fiscal quarter
beginning after December 15, 1998. This SFAS does not
affect the Company's financial statements.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
SEPTEMBER 30, 2000
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
(CONT'D)
----------------------------------------------------------
<P>
SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections", is effective for financial
statements issued for fiscal years beginning February, 1999.
This SFAS does not affect the Company's financial
statements.
<P>
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING
CONCERN MATTERS
------------------------------------------------------
<P>
The Company's initial activities have been devoted to
developing a business plan, negotiating contracts and
raising capital for future operations and administrative
functions.
<P>
The ability of the Company to achieve its business
objectives is contingent upon its success in raising
additional capital until such time as adequate revenues are
realized from operations.
<P>
The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal
course of business. As shown in the financial statements,
development stage losses from December 16, 1998 (inception)
to September 30, 2000 aggregated ($193,246). The Company's
cash flow requirements during this period have been met by
contributions of capital and debt financing. No assurance
can be given that these sources of financing will continue
to be available. If the Company is unable to generate
profits, or unable to obtain additional funds for its
working capital needs, it may have to cease operations.
<P>
The financial statements do not include any adjustments
relating to the recoverability and classification of assets
or liabilities that might be necessary should the Company be
unable to continue as a going concern.
<P>
NOTE 4 - DEFERRED INCOME TAXES
----------------------------------
<P>
The Company has a carry-forward loss for income tax purposes
of $193,246 that may be offset against future taxable
income. The carry-forward loss expires at various times
through the year 2019. Due to the uncertainty regarding the
success of future operations, management has valued the
deferred tax asset allowance at 100% of the related deferred
tax asset. The deferred tax asset and valuation allowance
as of September 30, 2000 and December 31, 1999 were as
follows:
<TABLE>
<S> <C> <C>
2000 1999
----------------------------------------
Deferred tax assets arising $ 29,000 $ 1,150
<P>
Less: Valuation allowance (29,000) (1,150)
<P>
Net Deferred Tax Asset $ 0 $ 0
</TABLE>
<P>
NOTE 5 - ACCRUED EXPENSES
<P>
Accrued expenses at September 30, 2000 and December 31,
1999 were as follows:
<TABLE>
<S> <C> <C>
2000 1999
Accrued professional fees $ 7,000 $ 3,500
Accrued interest 21 0
Accrued payroll tax 24,218 0
--------------------------------------
Total accrued liabilities $ 31,239 $ 3,500
</TABLE>
<P>
NOTE 6 - NOTES PAYABLE
<P>
Notes payable at September 30, 2000 and December 31,
1999 were as follows:
<TABLE>
<S> <C> <C>
2000 1999
Note payable to Ostonian
Securities Ltd. (a related party),
8.25% per annum dated September 30, 2000,
unsecured. Due on demand no later
than September 10, 2001. $ 5,000 $ 0
<P>
Accrued interest 21 0
--------------------------------
Total Note Payable $ 5,021 $ 0
</TABLE>
<P>
NOTE 7 - LOANS AND ADVANCES - RELATED PARTY
------------------------------------------------
<P>
The Company has received funds from i-Incubator.com, Inc. to
meet various working capital requirements. These loans and
advances total $82,365, are non-interest bearing, and due on
demand.
<P>
On September 1, 2000, the Company entered into an agreement
with Michael D. Farkas, a related party, to purchase a
domain name, i-Teleco.com, for $50,000.
<P>
On October 5, 2000, the Company entered into an agreement
with Envitro.com, Inc., a related party, to design and
construct a web page for $18,537.50.
<P>
NOTE 8 - RELATED PARTY TRANSACTIONS
------------------------------------------
<P>
On March 1, 2000 the Company agreed to reimburse Atlas
Equity Group, Inc., a related party, $159.85 per month (on a
month-to-month basis) for the use of a laptop computer.
Atlas Equity Group, Inc. is owned by Michael D. Farkas.
<P>
NOTE 9 - STOCKHOLDERS' EQUITY
------------------------------------
<P>
On December 16 1998, the Company issued 1,000 restricted
common shares to Incubator, in consideration for management
services valued at $100. Incubator is deemed to be a
founder and affiliate of the Company.
<P>
NOTE 10 - SUBSEQUENT EVENTS
---------------------------------
<P>
On May 18, 2000, the Company authorized a 19,000:1 forward
split of the Company's outstanding common stock $.0001 par
value. This transaction has been given retroactive effect
to December 16, 1998. After the split there were 19,000,000
restricted shares issued and outstanding with a par value of
$.0001.
<P>
On October 3, 2000 the Company executed a note payable to
Ostonian Securities Ltd., the principal sum of $3,750 at a
rate of 8.25% per annum. The entire principal amount and
accrued interest in due and payable on October 2, 2001.
<P>
On October 13, 2000 the Company executed a note payable to
Ostonian Securities Ltd., the principal sum of $4,500 at a
rate of 8.25% per annum. The entire principal amount and
accrued interest in due and payable on October 12, 2001.
<P>
On October 25, 2000, the Company executed a note payable to
Atlas Equity Group, Inc., a related party, the principal sum
of $3,000 at a rate of 10% per annum. The entire principal
amount and accrued interest in due and payable on January
24, 2001.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
TABLE OF CONTENTS
<P>
INDEPENDENT AUDITORS' REPORT 1
<P>
BALANCE SHEETS 2
<P>
STATEMENT OF OPERATIONS 3
<P>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 4
<P>
STATEMENT OF CASH FLOWS 5-6
<P>
NOTES TO FINANCIAL STATEMENTS 7-13
<P>
INDEPENDENT AUDITORS' REPORT
<P>
To the Stockholder and
Board of Directors
i-Teleco.com, Inc.
(a development stage company)
Miami, Florida
<P>
We have audited the accompanying balance sheets of i-
Teleco.com, Inc., formerly MasterTel Communications Corp. (a
development stage company), as of December 31, 1999 and
December 31, 1998 and the related statements of operations,
changes in stockholder's equity (deficit) and cash flows for
the year ended December 31, 1999 and for the periods
December 16, 1998 (inception) to December 31, 1998 and
December 16, 1998 (inception) through December 31, 1999.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
<P>
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audits 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 the
audits provide a reasonable basis for our opinion.
<P>
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of i-Teleco.com, Inc. as of December 31, 1999 and
December 31, 1998, and the results of its operations and its
cash flows for the years then ended, and for the cumulative
period December 16, 1998 (inception) to December 31, 1999 in
conformity with generally accepted accounting principles.
<P>
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As
discussed in Note 3 to the financial statements, the Company
is a development stage company. The realization of its
assets is dependent upon its ability to meet its future
financing requirements, and the success of future
operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The
financial statements do not include any adjustments that
might result from this uncertainty.
<P>
Berenfeld, Spritzer, Shechter and Sheer
Miami, Florida
September 18, 2000
<P>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
BALANCE SHEETS
<P>
ASSETS
<S> <C> <C>
DECEMBER 31, DECEMBER 31,
1999 1998
---------------------------------
CURRENT ASSETS:
<P>
Cash $ 51 $ 0
---------------------------------
TOTAL ASSETS $ 51 $ 0
<P> =================================
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
<P>
CURRENT LIABILITIES:
<P>
Accrued expenses payable 3,500 0
Due to affiliate - related parties 4,100 0
----------------------------------------------------------
Total Current Liabilities 7,600 0
<P>
STOCKHOLDER'S EQUITY (DEFICIT):
<P>
Common Stock, $.0001 par value,
50,000,000 shares authorized,
1,000 shares issued and
outstanding respectively 1 1
Additional paid-in capital 99 99
Deficit accumulated during
the development stage (7,649) (100)
----------------------------------------------------------
Total Stockholder's Equity
(Deficit) (7,549) 0
----------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY (DEFICIT)$ $ 51 $ 0
==========================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED DECEMBER 16, 1998 DECEMBER 16, 1998
DECEMBER 31, DECEMBER 31, (INCEPTION) TO
1999 1998 DECEMBER 31, 1999
-------------------------------------------------------------
DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
-------------------------------------------------------------
DEVELOPMENT STAGE EXPENSES:
Accounting 2,500 0 5,000
Amortization 0 100 100
Bank charges 30 0 30
Legal fees 1,000 1,000
Licenses and taxes 4,019 0 4,019
------------------------------------------------------------
Total development stage expenses 7,549 100 7,649
------------------------------------------------------------
DEFICIT ACCUMULATED DURING
THE DEVELOPMENT STAGE $ (7,549) $ (100) $ (7,649)
=============================================================
LOSS PER SHARE:
Basic $ (7.5490) (0) $ (7.6590)
=============================================================
Diluted N/A N/A N/A
=============================================================
<P>
Weighted-average of common
shares outstanding 1,000 1,000 1,000
=============================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
<P>
FOR THE PERIOD DECEMBER 16, 1998 (INCEPTION) TO DECEMBER 31, 1999
<S> <C> <C> <C> <C> <C>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
-----------------------------------------------------------------
Balance, December 16, 1998
(inception) 0 $ 0 $ 0 $ 0 $ 0
<P>
Common stock issued to related
party for management
services 1,000 1 99 0 100
<P>
Deficit accumulated during the
development stage for the
period December 16, 1998
(inception)
to December 31, 1998 0 0 0 (100) (100)
-----------------------------------------------------------------
Balance,
December 31, 1998 1,000 1 99 (100) 0
<P>
Deficit accumulated during the
development stage for the year
ended December 31, 1999 0 0 0 (7,549) (7,549)
-----------------------------------------------------------------
Balance,
December 31, 1999 1,000 $ 1 $ 99 $(7,649) $(7,549)
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
<TABLE>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
INCREASE (DECREASE) IN CASH
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED DECEMBER 16, 1998 DECEMBER 16, 1998
DECEMBER 31, DECEMBER 31, (INCEPTION) TO
1999 1998 DECEMBER 31, 1999
-------------------------------------------------------------
OPERATING ACTIVITIES:
<P>
Deficit accumulated during the
development stage $ (7,549) $ (100) $ (7,649)
<P>
Adjustments to reconcile net loss to
net cash used by operations:
Amortization 0 100 100
Increase (Decrease) in
accrued interest expenses 3,500 0 3,500
--------------------------------------------------------------
Net Cash Used for
Operating Activities (4,049) 0 (4,049)
--------------------------------------------------------------
INVESTING ACTIVITIES:
Due to affiliate -related party 4,100 0 4,100
--------------------------------------------------------------
Net Cash Used for
Investing Activities 4,100 0 4,100
--------------------------------------------------------------
FINANCING ACTIVITIES:
Net Cash Provided by
Financing Activities 0 0 0
--------------------------------------------------------------
INCREASE IN CASH 51 0 51
--------------------------------------------------------------
CASH, BEGINNING OF PERIOD 0 0 0
--------------------------------------------------------------
CASH, END OF PERIOD $ 51 $ 0 $ 51
==============================================================
<P>
The accompanying notes are an integral part of these financial statements
</TABLE>
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
STATEMENTS OF CASH FLOWS
<P>
FOR THE YEARS ENDED DECEMBER 31, 1999
AND 1998 AND FOR THE
CUMULATIVE PERIOD DECEMBER 16, 1998 (INCEPTION)
TO DECEMBER 31, 1999
<P>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<P>
During the year ended December 31, 1999 and for the
cumulative period December 16, 1998 (inception) to December
31, 1999, the Company did not pay any interest.
<P>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
<P>
The Company entered into the following non-cash
transaction:
<P>
During the period ended December 31, 1998, the Company
issued 1,000 shares of common stock in consideration of
management services to I-Incubator.com, Inc. formerly known
as Master Communications, Corp. The transaction was valued
at $100. (see note 7).
<P>
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-----------------------------------------------------------
<P>
ORGANIZATION
<P>
i-Teleco.com, Inc. ("the Company"), formerly MasterTel
Communications Corp., a wholly owned subsidiary of i-
Incubator.com, Inc. ("Incubator"), formerly known as Master
Communications Corp., was incorporated on December 16, 1998,
under the laws of the State of Florida. The Company's
operations have been devoted primarily to structuring and
positioning itself to take advantage of opportunities
available in the internet industry. The Company intends to
grow through internal development, strategic alliances and
acquisitions of existing business. The Company has the
authority to issue 50,000,000 shares of common stock and
intends to position itself to take advantage of
opportunities available in the telecommunications industry.
The Company is a development stage company and has had
limited activity.
<P>
MANAGEMENT DECISION NOT TO CONSOLIDATE
<P>
Statement of Financial Accounting Standards ("SFAS") No. 94,
"Consolidation of All Majority Owned Subsidiaries",
encourages the use of consolidated financial statements
between a parent company and its subsidiaries unless:
<P>
a. Control is likely to be temporary,
b. Control does not rest with the majority
owner(s), or
c. Minority shareholders have certain approval or
veto rights that allow them to exercise
significant control over major management
decisions in the ordinary course of business.
<P>
The management of Incubator intends to spin off the Company
and believes that its control is temporary. Therefore,
management believes that separate financial statements are
appropriate and properly reflect current operating results.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-----------------------------------------------------------
<P>
USE OF ESTIMATES
<P>
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the
financial statements and for the reporting period.
Accordingly, actual results could differ from those
estimates.
<P>
CASH AND CASH EQUIVALENTS
<P>
For purposes of reporting cash flows, the Company considers
all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
<P>
CARRYING VALUES
<P>
The Company reviews the carrying values of its long-lived
and identifiable intangible assets for possible impairment.
Whenever events or changes in circumstances indicate that
the carrying amount of assets may not be recoverable, the
Company will reduce the carrying value of the assets and
charge operations in the period the impairment occurs.
<P>
INCOME TAXES
<P>
The Company utilizes SFAS No. 109, "Accounting for Income
Taxes", which requires the recognition of deferred tax
assets and liabilities for the expected future tax
consequences of events that have been included in financial
statements or tax returns. Under this method, deferred
income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at
each period end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 1 - NATURE OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONT'D)
-----------------------------------------------------------
<P>
INCOME TAXES (CONT'D)
<P>
necessary to reduce deferred tax assets to the amount
expected to be realized. The accompanying financial
statements have no provisions for deferred tax assets or
liabilities because the deferred tax allowance offsets the
deferred tax asset in its entirety.
<P>
NET LOSS PER SHARE
<P>
The Company has adopted SFAS No. 128 "Earnings Per Share".
Basic loss per share is computed by dividing the loss
available to common shareholders by the weighted-average
number of common shares outstanding. Diluted loss per share
is computed in a manner similar to the basic loss per share,
except that the weighted-average number of shares
outstanding is increased to include all common shares,
including those with the potential to be issued by virtue of
warrants, options, convertible debt and other such
convertible instruments. Diluted earnings per share
contemplates a complete conversion to common shares of all
convertible instruments, only if they are dilutive in nature
with regards to earnings per share. Since the Company has
incurred net losses since its inception and there are no
convertible instruments, basic loss per share and diluted
loss per share are the same.
<P>
FAIR VALUE OF FINANCIAL INSTRUMENTS
<P>
SFAS No. 107 "Disclosures about Fair Value of Financial
Instruments" requires the disclosure of the fair value of
financial instruments. The Company's management, using
available market information and other valuation methods,
has determined the estimated fair value amounts of its
financial instruments. However, considerable judgment is
required to interpret market data in developing estimates of
fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts the Company could
realize in a current market exchange.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
---------------------------------------------------
<P>
In June, 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 130, "Reporting Comprehensive
Income". This SFAS requires companies to classify items of
other comprehensive income by their nature in financial
statements and display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a
statement of financial position. SFAS No. 130 is effective
for financial statements issued for fiscal years beginning
after December 15, 1997. Management believes that SFAS No.
130 does not affect the Company's financial statements.
<P>
In June, 1997, the FASB issued SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information".
This SFAS established additional standards for segment
reporting in financial statements and is effective for
financial statements issued for fiscal years beginning after
December 15, 1997. Management believes that SFAS No. 131
does not affect the Company's financial statements.
<P>
In April, 1998, the American Institute of Certified Public
Accountants issued Statement of Position No. 98-5,
"Reporting for Costs of Start-Up Activities" ("SOP 98-5").
Pursuant to this statement, the Company is required to
expense all start-up costs related to new operations.
<P>
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", is effective for financial statements
issued for fiscal years beginning after June 15, 1999. SFAS
No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities. Management believes that SFAS No. 133 does not
affect the Company's financial statements.
<P>
SFAS No. 134, "Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for
Sale by Mortgage Banking Enterprises", is effective for
financial statements issued in the first fiscal quarter
beginning after December 15, 1998. This SFAS does not
affect the Company's financial statements.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONT'D)
-----------------------------------------------------------
<P>
SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections", is effective for financial
statements issued for fiscal years beginning February, 1999.
This SFAS does not affect the Company's financial
statements.
<P>
NOTE 3 - DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN
MATTERS
---------------------------------------------------------
<P>
The Company's initial activities have been devoted to
developing a business plan, negotiating contracts and
raising capital for future operations and administrative
functions.
<P>
The ability of the Company to achieve its business
objectives is contingent upon its success in raising
additional capital until such time as adequate revenues are
realized from operations.
<P>
The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal
course of business. As shown in the financial statements,
development stage losses from December 16, 1998 (inception)
to December 31, 1999 aggregated ($7,649). The Company's
cash flow requirements during this period have been met by
contributions of capital and debt financing. No assurance
can be given that these sources of financing will continue
to be available. If the Company is unable to generate
profits, or unable to obtain additional funds for its
working capital needs, it may have to cease operations.
<P>
The financial statements do not include any adjustments
relating to the recoverability and classification of assets
or liabilities that might be necessary should the Company be
unable to continue as a going concern.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 4 - DEFERRED INCOME TAXES
------------------------------------
<P>
The Company has a carry-forward loss for income tax purposes
of $7,649 that may be offset against future taxable income.
The carry-forward loss expires at various times through the
year 2019. Due to the uncertainty regarding the success of
future operations, management has valued the deferred tax
asset allowance at 100% of the related deferred tax asset.
The deferred tax asset and valuation allowance as of
December 31, 1999 were as follows:
<TABLE>
<S> <C>
1999
----------------------------------------
Deferred tax assets arising $ 1,150
<P>
Less: Valuation allowance (1,150)
----------------------------------------
Net Deferred Tax Asset $ 0
========================================
</TABLE>
<P>
NOTE 5 - ACCRUED EXPENSES
-----------------------------
<P>
Accrued expenses at December 31, 1999 are as follows:
<P>
Accrued accounting fees $ 2,500
Accrued legal fees 1,000
-----------
Total $ 3,500
===========
<P>
NOTE 6 - DUE TO AFFILIATE - RELATED PARTY
----------------------------------------------
<P>
As of December 31, 1999, the Company borrowed $4,100 from
Incubator, its parent company. The loan is unsecured and
non-interest bearing.
<P>
i-TELECO.COM, INC.
<P>
(A DEVELOPMENT STAGE COMPANY)
<P>
NOTES TO FINANCIAL STATEMENTS
<P>
DECEMBER 31, 1999
<P>
NOTE 7 - STOCKHOLDERS' EQUITY
-------------------------------
<P>
On December 16 1998, the Company issued 1,000 restricted
common shares to Incubator, in consideration for management
services valued at $100. Incubator is deemed to be a
founder and affiliate of the Company.
<P>
PART III
<P>
Item 1. Index to Exhibits
<P>
Exhibit Number Description
<P>
Exhibit 3(i) Articles of Incorporation,
Amended Articles of Incorporation
and Restated Articles of
Corporation
<P>
Exhibit 3(ii) By-laws
<P>
Signatures
<P>
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement
to be signed on its behalf by the undersigned, thereunto
duly authorized.
<P>
I-TELECO.COM, INC.
<P>
/s/ Jamee M. Kalimi
----------------------------
By: JAMEE M. KALIMI
Title: President and Director
<P>
Date: November 30, 2000
