CONTENTS
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS -
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF CASH FLOWS 4
STATEMENT OF STOCKHOLDERS' EQUITY 5
NOTES TO FINANCIAL STATEMENTS 6
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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To the Board of Directors and Stockholders
Tel-One, Inc.
Tampa, Florida
We have audited the accompanying balance sheet of Tel-One, Inc. (a development
stage Company), as of November 30, 2000, and the related statements of
operations, cash flows and stockholders' equity for the period from November 3,
2000 (date of inception) to November 30, 2000. 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.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all
material respects, the financial position of Tel-One, Inc. at November 30, 2000
and the result of its operations and its cash flows for the period then ended
in conformity with generally accepted accounting principles.
As discussed in Note A, the Company has been in the development stage since its
inception on November 3, 2000. Realization of a major portion of the assets is
dependent upon the Company's 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.
BAUMANN, RAYMONDO & COMPANY, P.A.
Tampa, Florida
November 20, 2000
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<TABLE>
<CAPTION>
TEL-ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
NOVEMBER 30, 2000
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,000
Contract receivable, current portion 176,393
Deferred offering costs 8,550
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Total current assets 185,943
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OTHER ASSETS
Contract receivable, long-term portion 185,626
Organization costs, net of accumulated amortization 2,458
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188,084
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TOTAL ASSETS $ 374,027
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 8,550
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Total current liabilities 8,550
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STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 100,000,000 shares
authorized, 10,000,000 shares issued and outstanding 1,000
Paid-in capital 365,594
Deficit accumulated during the development stage (1,117)
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Total stockholders' equity 365,477
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LIABILITIES AND STOCKHOLDERS' EQUITY $ 374,027
==================
</TABLE>
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The accompanying notes are an integral part
of this financial statement.
2
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<TABLE>
<CAPTION>
TEL-ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
NOVEMBER 3, 2000 (INCEPTION) TO NOVEMBER 30, 2000
<S> <C>
REVENUE $ -
OPERATING EXPENSES
Accounting fees 1,075
Amortization 42
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TOTAL OPERATING EXPENSES 1,117
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NET LOSS $ (1,117)
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EARNINGS PER COMMON SHARE
Basic $ NIL
==============
Fully diluted $ NIL
==============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING #REF!
==============
</TABLE>
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The accompanying notes are an integral part
of this financial statement.
3
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<TABLE>
<CAPTION>
TEL-ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
NOVEMBER 3, 2000 (INCEPTION) TO NOVEMBER 30, 2000
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,117)
Adjustments to reconcile net loss to cash used in
operating activities:
Amortization 42
Decrease (increase) in current assets:
Deferred offering costs (8,550)
Increase (decrease) in current liabilities
Accounts payable 8,550
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Total adjustments 42
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Net cash (used) in operating activities (1,075)
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CASH FLOWS FROM FINANCING ACTIVITIES
Contributed capital 2,075
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Net cash provided by financing activities 2,075
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NET INCREASE IN CASH 1,000
CASH, BEGINNING OF PERIOD -
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CASH, END OF PERIOD $ 1,000
==============
</TABLE>
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The accompanying notes are an integral part
of this financial statement.
4
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<TABLE>
<CAPTION>
TEL-ONE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
NOVEMBER 3, 2000 (INCEPTION) TO NOVEMBER 30, 2000
ACCUMULATED
DEFICIT
DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------------ ----------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, NOVEMBER 3, 2000
(INCEPTION) - $ - $ - $ - $ -
Issuance of common stock to
G.L.C. Cara, Inc. in exchange
for organization efforts 2,500,000 250 1,000 - 1,250
Issuance of common stock to
S.E.B. Capital, Inc. in ex-
change for organization efforts 2,500,000 250 1,000 - 1,250
Issuance of common stock to
Telecom Response, Inc. in
exchange for contract rights 5,000,000 500 361,519 - 362,019
Capital contribution by
W. Kris Brown - - 1,000 - 1,000
Capital contribution by
George Carapella - - 1,075 - 1,075
Net loss during period - - (1,117) (1,117)
------------ ----------- ----------- ---------------- -----------
BALANCE, NOVEMBER 30, 2000 10,000,000 $ 1,000 $ 365,594 $ (1,117) $ 365,477
============ =========== =========== ================ ===========
</TABLE>
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The accompanying notes are an intergral part
of these financial statements.
5
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TEL-ONE, INC.
(A DEVELOPMENT STAGE TEL-ONE)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
----------------------
Tel-One, Inc., a Florida corporation organized on November 3, 2000, ("Tel-One"),
is a development stage company, and as such has devoted most of its efforts
since inception to developing its business plan, issuing common stock, raising
capital, establishing its accounting systems and other administrative functions.
Tel-One's strategy is to provide quick, efficient and affordable project
management and technical services on complex telephony projects and plans, such
as product evaluations, systems and network design, project implementation,
onsite installation services, database design and input, testing and quality
assurance primarily to Fortune 2000 companies throughout the country.
Cash and Cash Equivalents
----------------------------
For purposes of the statement of cash flows, Tel-One considers amounts held by
financial institutions and short term investments with an original maturity of
90 days or less to be cash and cash equivalents.
Organization Costs
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Organization costs, consisting of legal expenses relating the Tel-One's
organization, are amortized over 60 months.
Use of Estimates
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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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Advertising Costs
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Advertising costs, except for costs associated with direct-response advertising,
are charged to operations when incurred. The costs of direct-response
advertising are capitalized and amortized over the period during which future
benefits are expected to be received.
Income Taxes
-------------
Tel-One records its federal and state tax liability in accordance with Financial
Accounting Standards Board Statement No. 109 "Accounting for Income Taxes".
The deferred taxes payable are recorded for temporary differences between the
recognition of income and expenses for tax and financial reporting purposes,
using current tax rates.
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TEL-ONE, INC.
(A DEVELOPMENT STAGE TEL-ONE)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes (Continued)
--------------------------
Deferred assets and liabilities represent the future tax consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.
Since its inception, Tel-One has an accumulated loss of $1,117 for income tax
purposes, which can be used to offset future taxable income through 2015. The
potential tax benefit of this loss is as follows:
Future tax benefit $ 360
Valuation allowance ( 360)
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Future tax benefit $ -
=================
As of November 30, 2000, no deferred tax assets or liabilities are recorded in
the accompanying financial statements.
Concentration of Credit Risk
-------------------------------
Financial instruments, which potentially expose Tel-One to concentrations of
credit risk, as defined by FASB Statement No. 105, Disclosure of Information
about Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentration of Credit Risk, consist principally of contract
receivable.
Tel-One purchased the rights to the contract receivable, net of cost, derived
from the fulfillment of services and product delivery required by contract
requirements to the State of Florida Government Centrex Contract. Tel-One is
exposes to credit risk relating to the fulfillment and collection on this
contract. Generally, contract with governmental entities have low credit risk
characteristics.
Earnings per Share
--------------------
On March 3, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, "Earnings Per Share", which provides for
the calculation of Basic and Diluted earnings per share. Basic earnings per
share includes no dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of the entity.
Tel-One adopted this pronouncement during the period and as such reported the
basic earnings per share, based on the weighted average number of shares
outstanding, and the fully diluted earnings per share on the as though the
1,000,000 common shares being registered by Tel-One were outstanding.
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TEL-ONE, INC.
(A DEVELOPMENT STAGE TEL-ONE)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
NOTE B - CONTRACT RECEIVABLE
On November 7, 2000, Tel-One issued 5,000,000 shares of its $.0001 par value
common stock to Telecom Response, Inc., an unrelated entity, in exchange for the
rights to the contract receivable, net of cost, derived from the fulfillment of
services and product delivery required by contract requirements to the State of
Florida Government Centrex Contract identified as contract number 730-030-99-1.
This contract commenced August 4, 1998 by and between the State of Florida and
Telecom Response, Inc., and has an initial term expiration date of January 1,
2003.
The value of the contract rights was negotiated between the management of both
companies. Essentially, the value was determined based on the present value of
the projected income stream, net of cost, expected to be received by Tel-One.
In connection with this transaction, George Carapella resigned as president of
Tel-One, and Alan Lipstein resigned as secretary and director of Tel-One, and W.
Kris Brown and Chuck Williams, president and vice-president strategic
planning/finance of Telecom Response, Inc. respectively were elected president
and secretary of Tel-One.
NOTE C - STOCK REGISTRATION
Tel-One is in the process of filing a registration statement with the Securities
and Exchange Commission to register 1,000,000 shares of its $.0001 par value
common stock, and to register 3,000,000 shares in behalf of its shareholders.
In connection with this registration, Tel-One incurred deferred offering costs
of $8,550 consisting of legal expenses and costs.
NOTE D - STOCK ISSUANCES
On November 3, 2000, 2,500,00 shares of Tel-One's $.0001 par value common stock
were issued to G.L.C. Cara, Inc. in exchange for organizational efforts valued
at $1,250.
On November 3, 2000, 2,500,000 shares of its $.001 par value common stock were
issued to S.E.B. Capital, Inc. in exchange for organizational efforts valued at
$1,250.
On November 7, 2000, 5,000,000 shares of its $.001 par value common stock were
issued to Telecom Response, Inc., an unrelated entity, in exchange for the
rights to the contract receivable, net of costs, derived from the fulfillment of
services and product delivery required by contract requirements to the State of
Florida Government Centrex Contract. The value of the 5,000,000 shares issued
were determined based on the present value of the projected cash flow stream,
net of costs, expected to be received by Tel-One.
On December 17, 2000, Telecom Response distributed the 5,000,000 shares of
Tel-One as a stock dividend to its shareholders, including 4,077,000 to W. Kris
Brown, its current president.
NOTE E - RELATED PARTY TRANSACTIONS
On November 3, 2000, 2,500,00 shares of Tel-One's $.0001 par value common stock
were issued to G.L.C. Cara, Inc. in exchange for organizational efforts valued
at $1,250. GLC Cara, Inc. is owned by George Carapella, Tel-One's director and
other member of his immediate family.
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TEL-ONE, INC.
(A DEVELOPMENT STAGE TEL-ONE)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2000
On November 3, 2000, 2,500,000 shares of its $.001 par value common stock were
issued to S.E.B. Capital, Inc. in exchange for organizational efforts valued at
$1,250. S.E.B. Capital, Inc. is owned by the immediate family of one of
Tel-One's former directors.
On November 14, 2000 and November 17, 2000 two of Tel-One's stockholders
contributed $1,000 and $1,075 respectively, as additional capital.
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9
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