UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal period ended September 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
COMMISSION FILE NUMBER 333-62236
TELECOM COMMUNICATIONS, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Indiana 35-2089848
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(State or other jurisdiction of (IRS Employer identification
incorporation or organization) No.)
827 S. Broadway, Los Angeles, CA 90014
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(Address of principal executive offices)
(213) 489-3486
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(Issuer's telephone number)
Securities registered under Section 12(b) of the Securities Exchange Act of
1934:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None None
Securities registered under Section 12(g) of the Securities Exchange Act of
1934: None; report is filed pursuant to section 15D
COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or an
amendment to this Form 10-KSB. []
State issuer's net revenues for its most recent fiscal year: $660,115
As of December 31, 2001, there were 10,050,000 common shares outstanding.
There is currently no market established for the Company's common stock.
Transitional Small Business Disclosure Format (check one): Yes [ ] No[X]
Number of shares of common stock outstanding as of December 31, 2002: 10,050,000
Number of shares of preferred stock outstanding as of December 31, 2001: None
PART I
Item 1. Business
Business Development
Telecom Communications Inc. was incorporated on January 6, 1997 in the State of
Indiana under the corporate name MAS Acquisition XXI Corp. Prior to December 21,
2000, we were a blank check company seeking a business combination with an
unidentified business. On December 21, 2000, we acquired Telecom Communications
of America which was a sole proprietorship doing business in Los Angeles,
California since August 15, 1995 and changed our name to Telecom Communications
Inc. In connection with this acquisition, Aaron Tsai, our former sole officer
and director was replaced by Telecom Communications of America's owners and
associates. We issued 9,000,000 shares of our common stock or 90% of our total
outstanding common shares after giving effect to the acquisition. MAS Capital
Inc. returned 7,272,400 shares of common stock for cancellation without any
consideration.
Our principal executive offices are located at 827 S. Broadway, Los Angeles, CA
90014. Our telephone number is (213) 489-3486.
Overview
Our main business is to provide low cost telephone calls over the Internet to
individuals and businesses. Our services enable our customers to make low cost
telephone calls over the Internet using the traditional telephone. In September
1999, we introduced a service that enables international and domestic calls to
be made over the Internet using traditional telephones. Long distance calls made
using our services are often substantially less expensive than long distance
calls routed over traditional voice network. Following illustrate a typical cost
for our customers. In summary, our cost of 9.5 cents per minute compared with 17
cents per minute using traditional phones taking in considerations for the
monthly basic service charges for the traditional phone services.
Illustration: (based on telephone services in our area)
Our cost per minute = 9.5
Traditional phone services cost per minute = 7 cents (without basic fees)
Assumptions: Residential long distance charge for the month is $10.78
For 154 minutes (domestic call). Customer is using plans such as MCI 7
cents anytime residential plan.
Additional costs for Traditional long distance charges:
MCI 7 Cents anytime residential plan $ 6.95
12% Federal Excise Tax 1.32
40% State & Local Taxes 4.36
.004% Federal, State & Local Surcharges 0.04
25% Federal Universal Service Fee 2.61
.23% CA High cost Fund-B Surcharges 0.25
.005% CA Universal Life Tel Service Surcharges 0.05
.003% CA Relay Service and Communication Device Fund 0.03
.006% CA 911 Local 0.07
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TOTAL $15.68
To calculate traditional phone cost, we took the traditional long distance
charges for the month of $10.78 plus the monthly fees of $15.68 and divide the
result by 154 minutes which gives 17 cents per minute.
$10.78 + $15.68 = $26.46 divided by 154 minutes = 17 cents.
In this illustration, our customers would save 7.5 cents per minute using our
services. The basic fees may very for different areas and we do not have that
information at this time. For International calls, you have a higher savings due
to higher tariff on traditional phone calls.
We intend to expand our business through acquisitions. Currently, we have one
telephone call center with one server located in Los Angeles, California
A total of 71% of our revenue has been generated from the sale of Lotto Tickets,
Bus Tokens, Bus Passes, Check Cashing and Money Gram products and 29% for
telecommunications business.
Telecom Communications Inc. is intended for people of all ages and income levels
who are interested in high quality telephone service at low rates. Typically,
however, Latin immigrants who are interested in contacting their friends and
relatives in their countries outside of the United States are the primary target
audience.
Industry Background
The Internet is experiencing unprecedented growth as a global medium for
communications and commerce. Internet telephony has emerged as a low cost
alternative to traditional long distance calls. Internet telephone calls are
less expensive than traditional domestic and international long distance calls
primarily because these calls are carried over the Internet and therefore bypass
a significant portion of local and international long distance tariffs. The fees
and tariffs that are eliminated for our services can be itemized as follows:
* Calling Plans Charge
* Carrier Access Charge
* Federal Excise Tax
* State and local Tax
* Federal, State and local surcharge
* Federal Universal Service fee
* California High Cost Fund-B surcharge
* California Universal Lifeline Telephone Service surcharge
* California Relay Service and Common Device fund
* California 911 Local charge
The technology by which Internet phone calls are made is also more
cost-effective than the technology by which traditional long distance calls are
made. The growth of Internet telephony has been limited to date due to poor
sound quality attributable to technological issues such as delays in packet
transmission and network capacity limitations. However, recent improvements in
packet-switching technology, new software algorithms and improved hardware have
substantially reduced delays in packet transmissions.
Products and Services
Presently, we have one telephone calling center located in Los Angeles,
California. This center has 6 phone booths each with its own traditional
telephone set, table and chair. Phone calls made from these booths are routed
through our computer server and Internet connection to a third party servers
which provide the interconnection to their established network which enables
telecommunications over Internet Protocol (IP) data networks using their
software, hardware and related components. The third party providing this
service is Inter-Tel.net, Inc. with whom Telecom has a contractual agreement.
We do not rely solely on customers visiting our telephone calling center. We
also have 24 phone lines attached to our server which enables customers
accessing our services using telephones away form our location by calling into
our telephone calling center. The 24 phone lines attached to our server allow 24
customers to call in at a given time. When one completes a call the phone line
frees up for another caller. In addition, the following products and services
are also offered at our telephone calling center:
* Money wiring service
* Check cashing
* Sales of Lotto tickets
* Automatic Telling Machine (ATM) * Faxing services * Sales of telephone
cards
Business Strategies
We hope to grow rapidly through franchising our existing operations and through
acquisitions. We have not made any specific business plan for franchising our
existing operations and we have no prior experience in franchising. Currently,
we do not have prospective franchisees or acquisition targets that are targeted
for acquisitions.
Key elements of the company's business strategy are:
* Acquiring and consolidating geographically disparate and usually smaller
independent Internet Telephone Service Providers.
* Developing and offering additional value-added products and services to
customers. For example, offering long distance international calls over the
Internet using cellular phones.
* Selling franchises of our telephone calling center concept throughout the West
Coast and in other areas of high concentration of immigrants.
* Building customer loyalty and gaining market share through brand recognition.
* Expansion of our sales and marketing operation.
Marketing Strategy
We currently market our products in several areas. Our marketing efforts include
newspaper advertisements and advertisements in publications that potential
customers from Latin American countries are likely to see. Other advertising
such as flyers targeting a particular market segment are developed to compliment
and expand the impact of our marketing program.
Our marketing strategy for the future will consist of using medias designed to
reach mass audiences such as audio spot advertisements, video clips and banner
advertising on the Internet as well as advertising targeted toward specific
markets using radio, television and other publications.
Competition
We have nearly two years of experience building and fine tuning Internet based
telephone call services using traditional telephones at a calling center
environment. We believe we have the ability to deploy information technology at
a faster rate and with fewer errors than new entrants into this field. We have
basic billing capabilities to accommodate the more complex commercial
transactions in which we intend to engage in the future. We already have in
place network management tools and a secure web site capable of taking new
account orders in real-time. With our billing package, we can bill customers for
their telephone calls at any interval that they desire. We can send out bills on
a weekly, bi-weekly or monthly basis. Many Commercial transactions need to be
billed differently. We use an internal billing system that was designed for our
telephony system. The transactions that we intend to bill for are charges that
would normally appear on the telephone bill. We will be offering long distance
telephone service to our commercial as well as our retail customers. We can bill
or transactions by time of day, date, even charge a surcharge on holidays.
We believe our competitive strength is the ability to build a bridge for a
segment of the urban population to access Internet based telephone communication
services. We also believe we can move faster than larger telephone companies in
identifying and taking advantage of market opportunities as Internet based
telephone communication services continues to evolve at a rapid pace.
Long Distance Market
The long distance telephony market and, in particular, the Internet telephony
market, is highly competitive. There are several large and numerous small
competitors and we expect to face continuing competition based on price and
service offerings from existing competitors and new market entrants in the
future. The principal competitive factors in the market include price, quality
of service, breadth of geographic presence, customer service, reliability,
network capacity and the availability of enhanced communications services. Our
competitors include AT&T, MCI WorldCom, Sprint, Net2Phone and other
telecommunications carriers.
Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. As a result, certain of these competitors may be able to adopt more
aggressive pricing policies, which could hinder our ability to market our
Internet telephony services.
Web-Based Internet Telephony Services
As consumers and telecommunications companies have grown to understand the
benefits that may be obtained from transmitting voice over the Internet, a
substantial number of companies have emerged to provide voice over the Internet.
In addition, companies currently in related markets have begun to provide voice
over the Internet services or adapt their products to enable voice over the
Internet services. These related companies may potentially migrate into the
Internet telephony market as direct competitors or could become competitors if
we move towards their current markets through our stated intention to grow by
acquisition.
Internet Telephony Service Providers
During the past several years, a number of companies have introduced services
that make Internet telephony services available to businesses and consumers.
AT&T Jens (a Japanese affiliate of AT&T), deltathree.com (a subsidiary of RSL
Communications), I-Link, iBasis (formerly known as VIP Calling), ICG
Communications, IPVoice.com, ITXC and OzEmail (which was acquired by MCI
WorldCom) provide a range of voice over the Internet services. These companies
offer PC-to-phone or phone-to-phone services, which could be adapted to provide
a similar service to the services we offer. Some, such as AT&T Jens and OzEmail,
offer these services within limited geographic areas.
Intellectual Property
We do not currently own or hold any patents, trademarks, licenses, franchises
concessions, royalty agreements or labor contracts.
Government Regulation
Regulation of Internet Access Service
We provide Internet access, in part, by using telecommunications services
provided by carriers. Terms, conditions and prices for telecommunications
service are subject to economic regulation by State and Federal agencies. We, as
an Internet Access Provider, are not currently subject to direct economic
regulation by the Federal Communications Commission (FCC) or any State
regulatory body other than the type and scope of regulation that is applicable
to businesses generally. We do not provide Internet access to Internet content.
We use the Internet to provide telecommunications services.
In April 1998 the FCC reaffirmed that Internet Access Providers should be
classified as unregulated "Information Service Providers" rather than regulated
"Telecommunication Providers" under the terms of the Federal Telecommunication
Act of 1996. As a result, we are not subject to Federal regulations that apply
to telephone companies and similar carriers simply because we provide our
services using telecommunications service provided by a third party carrier. To
date, no State has attempted to exercise economic regulations over Internet
Access Providers.
Governmental regulatory approaches and policies to Internet Access Providers and
others that use the Internet to facilitate Data and Communication Transmissions
are continuing to develop and in the future we could be exposed to regulation by
the FCC or other Federal agencies or by State regulatory agencies or bodies.
For example, the FCC has expressed an intention to consider whether to regulate
providers of voice and fax service that employ the Internet or Internet Packet
Switching as "Telecommunications Providers" even though Internet access itself
would not be regulated. The FCC is also considering whether providers of
Internet based telephone services should be required to contribute towards the
Universal Service Fund, which subsidizes telephone service for rural and
low-income consumers, or should pay carrier access charges on the same basis as
applicable to regulated telecommunications providers. Our business employs the
Internet Packet Switching to provide voice services. Phone calls are made
through our computer server and Internet connection to a third party server
which provides the interconnection to their established network which enables
telecommunications over Internet Protocol (IP) data networks using their
software, hardware, and related components.
Regulation of Internet Content
Due to the increase in popularity and use of the Internet by broad segments of
the population it is possible that laws and regulations may be adopted with
respect to web site content, privacy pricing, encryption standards, consumer
protection, electronic commerce, taxation, copyright infringement and other
intellectual property issues. We cannot predict the effect, if any, that any
future regulatory changes or developments may have on the demand for our access
to enhanced business service.
Employees
We believe that the success of our business will depend, in part, on our ability
to attract, retain and motivate highly qualified sales, technical and management
personnel, and upon the continued service of our senior management personnel. As
of the date of this registration statement, we have two full-time and three
part-time employees. Two full-time employees are responsible for management and
marketing; one part-time employee is responsible for book keeping and sales, two
other part-time employees are responsible for sales and other day-to-day
operations. The three part-time employees are sons and daughter of Mr. Tak
Hiromoto and Mrs. Elizabeth Hiromoto. We consider our employee relations to be
good and we have never experienced any work stoppages. We cannot assure you that
we will be able to successfully attract, retain and motivate a sufficient number
of qualified personnel to conduct our business in the future.
Item 2. Properties
Our present telephone calling center consists of an approximately 900 square
feet facility located on the first floor at 827 South Broadway, Los Angeles,
California. This facility not only hosts the telephone booths but also all
computer equipment, support staff and management employed by the company. The
initial lease was signed in August 1995 for six months with a rent of $1,200.00
per month. This lease has been subsequently extended and is due to expire
February 28, 2004 with the following rent payment schedule.
March 1, 2000 to February 28, 2001 $1,700.00 per month
March 1, 2001 to February 28, 2002 $1,800.00 per month
March 1, 2002 to February 28, 2003 $1,900.00 per month
March 1, 2003 to February 28, 2004 $2,000.00 per month
Item 3. Legal Proceedings
Mas Financial Corp and Aaron Tsai filed a claim against us in August, 2002 in
the Vanderburgh Circuit Court, County of Vanderburgh, State of Indiana alleging
breach of contract. The Company and its counsel believe that the claim is
without merit and immaterial, and are vigorously defending against this claim.
The company executed the Consulting Agreement in reliance upon the fraudulent
misrepresentations made by Mas Financial Corp. and its parties. The company is
seeking relief to rescind the Consulting Agreement and to have restored to us of
all sum paid by us to Mas parties as consideration under the Consulting
Agreement. We filed a counterclaim against Aaron Tsai for fraud and breach of
contract.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
No matter was submitted to a vote during the year.
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
Market Information
Our common stock is currently traded on a limited basis on the Over-the Counter
Bulletin Board under the symbol "TCOM". The quotation of our common stock on the
OTCBB does not assure that a meaningful, consistent and liquid trading market
currently exists. We cannot predict whether a more active market for our common
stock will develop in the future. In the absence of an active trading market: .
Investors may have difficulty buying and selling or obtaining market quotations;
.. Market visibility for our common stock may be limited; and . A lack of
visibility of our common stock may have a depressive effect on the market
Price for our common stock.
As of the date of this report , the number of holders of our common stock was
approximately 153.
Dividends
There are no present material restrictions that limit the ability of the Company
to pay dividends on common stock or that are likely to do so in the future. The
Company has not paid any dividends with respect to its common stock, and does
not intend to pay dividends in the foreseeable future.
Recent Sales of Unregistered Securities
Not Applicable.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This periodic report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
the financial condition, results of operations, business strategies, operating
efficiencies or synergies, competitive positions, growth opportunities for
existing products, plans and objectives of management. Statements in this
periodic report that are not historical facts are hereby identified as "forward-
looking statements" for the purpose of the safe harbor provided by Section 21E
of the Exchange Act and Section 27A of the Securities Act.
Item 6. Management's Discussion and Analysis
Selected Financial Data
For the years ended September 30, 2002 and 2001.
2001 2002
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Revenues $660,115 558,002
Net income 54,655 12,560
Net income per common share .01 .01
Weighted average common
shares outstanding 10,000,000 10,050,000
At September 30, 2002 and 2001
2001 2002
---- ----
Total assets $29,920 $37,905
Working capital (deficit) 8,894 33,873
Shareholders' equity (deficit) 29,920 37,905
No dividends have been declared or paid during the periods presented.
Results of Operations
For the Years Ended September 30, 2002 and 2001.
Sales
Revenues for the year ended September 30, 2002 were $558,002 versus $660,115 in
revenues for the year ended September 30, 2001, a decrease of $102,113 or 15%.
The company's focus on brand name recognition tends to have particularly heavy
customer service requirements. Because we anticipate growth in our subscriber
base, we provide discount to new subscribers and referral bonuses to existing
subscribers for their loyalty for referring new subscribers to the company. We
expect a reduction in revenue to be short term. We believe that establishing and
maintaining a brand and name recognition is critical for attracting and
expanding our targeted client base and that importance of reputation and name
recognition will increase as competition in the internet telephone market
increases. From time to time we have promotional prices to attract clients
through marketing which lead to a reduction in revenue. We expect our future
revenue from our VIOP will increase while other products will remain constant.
We plan to accelerate growth of sales in fiscal 2003 by increasing expenditures
on marketing, establishing more strategic relationships and growing public
awareness of our products and services.
Presently, the percentage of customers using our calling center versus using
services from their resident is approximately 45% versus 55%. We anticipate that
eventually 99% of calls will be made from our customers' residence due to the
convenience factor. The other 1% will be customers who have no phone in their
home. We sell prepaid cards to call from their residence.
The percentage of revenues will vary from day to day, month to month, year to
year. One month we may have a large jackpot in Lotto, the amount of Lotto
players will increase dramatically. Money wiring depends on economic conditions.
In good times, people send more often. In bad times, people send less often.
This is also true of check cashing, money order, and telecom, etc.
Income/Loss
Net income for the year ended September 30, 2002 was $12,560 as compared to a
net income of $54,655 in the comparable period in 2001, a decrease of $42,095 or
77 %. The decrease was primary attributable to an increase in general and
administrative expenses.
The Company expects to continue to remain profitable and increase its net income
over the next year. However, there can be no assurance that the Company's
profitability or revenue growth can be sustained in the future.
Expenses
Total expenses for the year ended September 30, 2002 were $98,916 versus $65,730
in the comparable year in 2001, an increase of $33,186 or 33%. This was
primarily attributable to an increase in general and administrative expenses for
the year. Printing and engraving expenses, legal fees and expenses, Auditors'
fees and expenses and Transfer Agent and registrar fees.
We anticipate incurring approximately the same amount of these expenses during
fiscal 2003.
We expect increases in certain expenses such as advertising through fiscal
2003 as the Company moves toward increasing development and marketing of our
products and services.
Cost of Sales
One of the largest factors in the variations in the cost of sales as a
percentage of net sales is the cost of products and services.
Cost of sales for the year ended September 30, 2002 was $442,492 versus $518,704
in the comparable period in 2001, a decrease of $76,212 or 14%. The decrease was
primarily attributable to a decreased in sales during the year of $558,002.
Impact of Inflation
We believe that inflation has had a negligible effect on operations during the
period. We believe that we can offset inflationary increases in the cost of
sales by increasing sales and improving operating efficiencies.
Trends, Events, and Uncertainties
Demand for the Company's products will be dependent on, among other things,
market acceptance of the Company's concept, the quality of its products and
general economic conditions, which are cyclical in nature. Inasmuch as a major
portion of the Company's activities is the receipt of revenues from the sales of
its products, the Company's business operations may be adversely affected by the
company's competitors and prolonged recessionary periods.
Liquidity and Capital Resources
For the Year Ended September 30, 2002 and 2001.
Cash flows provided by operations were $(4,434) for the year ended September 30,
2002 versus $75,681 in the comparable period in 2001. Cash flows from operating
activities were primarily attributable to the net income from operations and an
increase in accounts payable.
We have funded our cash needs from inception through September 30, 2000 with the
assistance of family members.
Management believes that we do not need any additional capital to continue our
current operations for the next 12 months. Our current business model should be
able to sustain itself as it has in the past two years if the current revenue
and cost structure remain at the similar level.
We will substantially rely on the existence of revenue from the product sales
and from the projected revenues for our services. We project that we will have
enough capital to fund our operations over the next 12 months.
On a long-term basis, liquidity is dependent on continuation and expansion of
operations, receipt of revenues, additional infusions of capital and debt
financing. We are considering launching a wide scale marketing and advertising
campaign. Our current available capital and revenues are not sufficient to fund
such a campaign. If we choose to launch such a campaign it well require
substantially more capital. If necessary, we plan to raise this capital through
an additional follow-on stock offering. The funds raised from this offering will
be used to develop and execute the marketing and advertising strategy, which may
include the use of television, radio, print and Internet advertising. However,
there can be no assurance that we will be able to obtain additional equity or
debt financing in the future, if at all. If we are unable to raise additional
capital, our growth potential will be adversely affected. Additionally, we will
have to significantly modify our plans. There are no lines of credit and capital
expenditures at this time.
Seven years after Congress passes a landmark law restructuring the phone
business, hope for the beleaguered telecommunications industry may lie less in
federal regulation than in two fast-growing technologies: wireless computer
network and Internet Telephony. Expert says wireless data network and Internet
Telephony could carry as much as 30% of domestic voice traffic and more than 50%
of international traffic within three to seven years.
Internet Telephony accounts for more than 10% of international voice traffic
with about 18 billion minutes at the end of 2001, according to research firm
Telegeography. These technologies don't require that a company have billions of
dollars in order to compete. With voice over IP, we only need to have one
hosting center for the entire U.S. We project that revenue for the Company's
VOIP will at least triple within two years after successful fund raising.
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report ...........................................F-2
Balance Sheet at September 30, 2001 & 2002 .............................F-3
Income Statement for the Year Ended September 30, 2001 & 2002 ..........F-4
Statements of Cash Flows for the Year Ended September
30, 2001 & 2002 .......................................................F-5
Statement of changes in Shareholders' Equity for the
Year Ended September 30, 2001 & 2002 ...................................F-6
Notes to The Financial Statements for the Year
Ended September 30, 2001 & 2002 ...................................... F-7
Item 7. Financial Statements
ROBERT G. ERCEK, CPA
1756 West Ave. J-12 #107
Lancaster, CA 93534 (661) 726-9448
INDEPENDENT AUDITORS' REPORT
November 6, 2002
Telecom Communications, Inc.
827 South Broadway
Los Angeles, CA 90014-3201
I have audited the Balance Sheet of Telecom Communications Inc as of
September 30, 2001 and 2002 and the related statements of income, cash flows,
and changes in equity for the respective twelve months then ended. These
financial statements are the responsibility of the management of the company. My
responsibility is to express an opinion on them based on my audit.
I conducted the audit in accordance with Generally Accepted Auditing Standards
as set forth by the American Institute of Certified Public Accountants. Those
standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as, evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
Based on the results of my audit, I believe the financial statements referred to
above presents fairly in all material respects, the financial position of
Telecom Communications, Inc. as of September 30, 2001 and 2002, the results of
its operations, cash flows, and changes in equity for the respective twelve
months then ended in conformity with generally accepted accounting principles.
Very truly yours,
Robert G. Ercek, CPA
F-2
TELECOM COMMUNICATIONS, INC.
BALANCE SHEET
SEPTEMBER 30, 2001 & 2002
ASSETS. . . . . . . . . . . . . . 2001 2002
- ---------------------------------
CURRENT ASSETS
Cash in Banks (Note 4). . . . . $ 25,920 $ 33,905
Inventory (Note 5). . . . . . . 4,000 4,000
---------- ----------
TOTAL CURRENT ASSETS. . . . . . . 29,920 $ 37,905
PROPERTY & EQUIPMENT
Equipment (Note 7). . . . . . . 7,450 7,450
Less: Accumulated Depreciation. (7,450) (7,450)
---------- ----------
NET PROPERTY & EQUIPMENT. . . . . 0 0
OTHER ASSETS. . . . . . . . . . . 0 0
---------- ----------
TOTAL OTHER ASSETS. . . . . . . . 0 0
TOTAL ASSETS. . . . . . . . . . . $ 29,920 $ 37,905
---------- ----------
LIABILITIES AND CAPITAL
- ---------------------------------
CURRENT LIABILITIES
Inc. Tax Payable (Note 14) . . $ 21,026 $ 4,032
---------- ----------
TOTAL CURRENT LIABILITIES . . . . 21,026 4,032
LONG TERM LIABILITIES . . . . . . 1,000 1,000
OFFICER'S LOAN ---------- ---------
TOTAL LONG TERM LIABILITIES. . 1,000 1,000
---------- ----------
x TOTAL LIABILITIES. . . . . . . 22,026 5,032
---------- ----------
CAPITAL STOCK
10M Shares Issued Par .001 . . 10,000 10,000
50,000 Shrs Issued @.50 . . 25,000
Additional Paid in Capital . . (55,761) (68,352)
Retained Earnings. . . . . . . 53,665 66,225
---------- ----------
TOTAL CAPITAL/EQUITY. . . . . . . 7,894 32,873
TOTAL LIAB. & CAPITAL/EQU.. . . $ 29,920 $37,905
---------- ----------
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-3
TELECOM COMMUNICATIONS, INC.
INCOME STATEMENTS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 & 2002
INCOME (Note 2). . . . . . . . . . . 2001 2002
- ------------------------------------- ---------------------------------------
Phone Calls. . . . . . . . . . . . $ $151,836 23.0% 163,867 29.3%
Lotto Tickets (Net). . . . . . . . 5,713 1.0 5,299 1.0
Bus Tokens Sold. . . . . . . . . . 441,297 66.9 367,520 66.0
Bus Passes Sold. . . . . . . . . . 43,018 6.5 6,488 1.1
Checks Cashed (Net). . . . . . . . 9,346 1.4 8,805 1.5
Money Grams (Net). . . . . . . . . 8,905 1.2 6,023 1.1
------------- --------
TOTAL INCOME. . . . . . . . . . . 660,115 100.0 558,002 100.0
------------- --------
COST OF GOODS SOLD
Phone Call Costs . . . . . . . . . 70,423 10.7 87,224 15.6
Bus Token Costs. . . . . . . . . . 406,965 61.7 349,053 62.6
Bus Pass Costs . . . . . . . . . . 41,316 6.3 6,215 1.1
------------- --------
TOTAL COST OF SALES. . . . . . . . 518,704 78.7 442,492 79.3
------------- --------
GROSS PROFIT . . . . . . . . . . . 141,411 21.3 115,510 20.7
------------- --------
EXPENSES
Gen. & Admin. Expenses. . . . . . 66,730 9.9 98,916 17.7
------------- --------
TOTAL G. & A. EXPEN. 66,730 9.9 98,916 17.7
- ------------------------------------- ------------- --------
OTHER INCOME (EXPENSES). . . . . . . 0 0
PRE-TAX INCOME . . . . . . . . . . . 74,681 11.4 16,594 3.0
------------- --------
INCOME TAX PROVISION
Fed. Inc. Tax Provision. . . . . . . 13,988 2.1 2,490 0.4
St. Inc. Tax Provision . . . . . . . 7,038 1.1 1,544 0.3
------------- --------
TOTAL INC. TAX PROV. . . . . . . . . 21,026 3.2 4,034 0.7
------------- --------
NET INCOME . . . . . . . . . . . . . . $ $ 53,655 8.2% 12,560 2.3%
------------- --------
EPS (10,050,000 SHRS). . . . . . . . $ .01 $ .01
------------- --------
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-4
TELECOM COMMUNICATIONS, INC.
STATEMENT OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 & 2002
2001 2002
---------- ---------
NET INCOME (LOSS). . . . . . . . . . . . . . $ 53,655 $12,560
Adjustment to Reconcile Net Income
To net cash used in Operating Activities:
Depreciation:. . . . . . . . . . . . . . . 0 0
Increase in Other Current Assets . . . . . 0 0
Increase in Other Assets . . . . . . . . . 0 0
Increase in Accounts Receivable. . . . . . 0 0
Increase in Accounts Payable . . . . . . . 22,026 (16,994)
---------- ---------
NET CASH FROM OPERATIONS . . . . . . . . . . 75,681 (4,434)
Cash Flows from Investing Activities . . . . 0 0
Changes in Capital Contributed. . . . . . . (52,204) (12,581)
Increase From Stock Issued
50,000 shrs @.50 per shr. 0 25,000
Cash Flows from Financing Activities:. . . 0 0
---------- ---------
NET INCREASE (DECREASE) IN CASH. . . . . . . 23,477 7,985
BEGINNING CASH BALANCES 10/01/00 & 01 . . . 2,443 25,920
---------- ---------
CASH AT SEPTEMBER 30, 2001 & 2002. . . . . . $ 25,920 33,905
---------- ---------
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-5
TELECOM COMMUNICATIONS, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS'S EQUITY
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 & 2002
2001 2002
------ -------------
Beginning Balance N/A 8,894
Income (Loss) For The Period . . . . . . . . . . . . 54,655 12,560
Less: Capital Reductions . . . . . . . . . . . . (52,204) (12,581)
Issuance of Capital Stock. . . . . . . . . . . . . . 10,000 25,000
Adjustments for Stock Issuance . . . . . . . . . . . (3,557) 0
------------ ----------
Balance at Year End . $ 8,894 $ 33,873
============ ==========
SEE INDEPENDENT AUDITOR'S REPORT
ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE STATEMENTS
F-6
NOTES TO THE FINANCIAL STATEMENTS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 and 2002
NOTE 1: ABOUT THE COMPANY
Telecom Communications of America was founded as a sole proprietorship in 1995
by Michelle Hiromoto with the assistance and management of her father Tak
Hiromoto. The purpose of the company was to provide low cost access to long
distance carriers for individuals needing to call Latin and South America. The
company operates on the Internet as opposed to using conventional long distance
carriers to facilitate lower costs that are passed on to the customers. Many of
the extra fees that are found in conventional long distance systems are avoided
this way. In addition the company also provides various services such as check
cashing, money wiring, the sale of bus tokens and passes, and tickets from
California Lottery known as Lotto.
NOTE 2. REVENUE RECOGNITION
SAB 101 identifies basic criteria that must be met for revenue recognition.
There must be the following items:
A. Persuasive evidence of an arrangement exists;
B. Delivery has occurred or service has been rendered.
C. The seller's price to the buyer is fixed or determinable;
D. Collectability is reasonably assured.
Except for check cashing, all transactions are done on a cash basis with fixed
prices made clear to the buyer prior to the transaction. All products are paid
for immediately upon receipt or completion of phone calls. All monies received
are not refundable. EITF 99-19 requires that sales recognized on a gross basis
be for an item or service where the merchant takes total risk for the product or
service as opposed to an agent relationship wherein earnings are simply a
commission received as a representative who bears no risk. Phone calls, Bus
Passes, and Tokens, are reported at gross while Lotto Tickets, Money Grams and
Check Cashing are reported at net. Checks cashed are limited to local
individuals known by the owners as local employees with two types of I.D.
required. On one occasion $5,000 worth of checks did bounce which were later
determined to be counterfeit.
This incident was isolated and has not been repeated because of the controls
being used. For this reason bad checks are minimal. All cashed checks are
deposited the same evening and clear the next day so there are no material
receivables. There is a fee of 1.7% of the amount cashed.
NOTE 3. ACCOUNTING METHOD
The company uses the accrual method of accounting.
NOTE 4. BANKING POLICY
Funds are kept in two banks so no more than $100,000 is in any one account.
NOTE 5. INVENTORY VALUATION
The average inventories on any given day are as follows:
Bus Passes $ 500
Bus Tokens 2,000
Lotto Scratcher 1,500
---------
Total $ 4,000
=========
NOTE 6. RECEIVABLES
There are no receivables as all business is done for cash. See Note 2.
NOTE 7. ASSETS
All capitalized assets are fully depreciated while new ones are currently being
leased.
NOTE 8. LIABILITIES
There are no loans outstanding and no material payables other than income taxes
accrued and $1,000 paid by Tak Hiromoto for services rendered by Herman alexis &
Co. See Note 14 and 15 &16 respectively.
NOTE 9. LOANS AND LEASES
Although no loans are outstanding, the Company does have a computer lease
requiring a monthly payment of $911.00. This lease is good thru July 1, 2003.
Although there is a purchase option at the end of the lease for $3,600 this is
not small enough to be considered a bargain purchase option, which would require
lease capitalization Statement No. 13 that requires capitalization and
depreciation of certain leases. No capitalization of the lease will be done. The
Company is also leasing its occupancy thru December 31, 2003. Both obligations
are broken down as follows:
Computer Lease
Balance on 07/01/2001 thru 09/30/2001 $ 2,733
Balance on 10/01/2001 thru 09/30/2002 10,932
Balance on 10/01/2002 thru 07/01/2003 8,199
-----------
Total $ 21,864
===========
Occupancy Lease
Balance on 07/01/2001 thru 09/30/2001 $ 5,400
Balance on 10/01/2001 thru 09/30/2002 22,300
Balance on 10/01/2002 thru 09/30/2003 23,500
Balance on 10/01/2003 thru 12/31/2003 6,000
-----------
Total $ 57,200
===========
NOTE 10. RELATED PARTY TRANSACTIONS
There have been no related party transactions.
NOTE 11. LITIGATION
Mas Financial Corp. and Aaron Tsai filed a lawsuit against the Company in
August, 2002 in the Vanderburgh County alleging breach of contract. The Comany
and its counsel believe that the suit is without merit and immaterial. The suit
is being strongly contested and counterclaim was filed on October 15, 2002
against Aaron Tsai alleging fraud and breach of contract.
NOTE 12. PRE-PAID ITEMS AND DEPOSITS
There are no large deposits on any assets or prepaid insurance.
NOTE 13. PAYROLL
Prior to incorporation there were no payrolls as ownership took draws as any
sole proprietorship does. After incorporation the officers will be paid as
professional, independent contractors. Therefore, there are no payroll tax
issues to be concerned about at this time.
NOTE 14. INCOME TAX PROVISION
Provision for income taxes is based on corporate rates for both state and
federal taxes. Corporate rates are used for the statements prior to
incorporation for consistency. The rates are calculated as follows:
Federal rates:
The first $50,000 @ 15% percent.
The next $25,000 @ 25% percent.
The balance @ 35% percent.
State rates:
California rate of 9.3%.
NOTE 15. INCORPORATION
On December 21, 2000, the Company was acquired by MAS Acquisition XXI Corp.
Following APB No. 16, this type of acquisition is commonly called a "reverse
merger" wherein the smaller private operating company, Telecom Communications of
America, merges into a non-operating shell corporation, MAS Acquisition XXI
Corp., which had no assets, resulting in the owner's/manager's, Tak Hiromoto
continuing to have effective operating control of the new combined company,
Telecom Communications, Inc. The shareholders of the former shell only continue
as passive investors. The accounting was accomplished by adjusting the balance
sheet into a corporate style as opposed to a sole proprietorship with simple
recognition of the assets and liabilities as they were in the former financial
statements of the sole proprietorship. The equity section is adjusted by taking
all owner's capital and reclassifying it as Additional Paid in Capital. The
Common Stock issued is recognized at its par value of .001 as per the offering
Ten million shares were issued totaling $10,000 but no cash was received. The
offsetting entry is to reduce Additional Paid in Capital by the $10,000. The
financial statements presented here represent the activities of the smaller
operating company.
As mentioned, ten million shares have been issued at a par value of .001. A
total of 100 million shares are authorized with 80 million as common shares and
20 million as preferred. The preferred stock will not be convertible so once
issued no dilution of Earnings Per Share will be needed. The company intends to
raise additional capital through the issuance of stock to enable it to expand.
Management estimates that $50,000 is needed to move forward the first year. Of
the ten million shares issued, nine million were issued to Tak Hiromoto. He then
transferred one million shares to Herman Alexis & Co., Inc. for assisting the
company. The remaining one million shares is broken down with 977,500 owned by
MAS Capital, Inc. and the remaining 22,400 owned by a large number of small
investors.
NOTE 16. INTRODUCTION TO MERGER
The joining of the companies was accomplished by an introduction to MAS
Acquisition XXI Corp. by Herman Alexis & Co., Inc. to the Hiromotos.
Neither party knew each other before this introduction.
NOTE 17. EARNINGS PER SHARE
The company calculates net income or Earnings per Share as required by SFAS No.
128. Earnings per share are calculated by dividing net income by the average
number of outstanding shares. No shares are convertible so dilution is not an
issue.
NOTE 18. DEFERRED TAXES
According to SFAS 109, the objectives of accounting for income taxes are to
recognize (a) the amount of taxes payable or refundable for a current year and
(b) deferred tax liabilities and assets for the future tax consequences of
events that have been recognized in an enterprise's financial statements or tax
returns. A deferred tax liability or asset is recognized for the estimated
future tax effects attributable to temporary differences and carry forwards.
Measurements of current and deferred tax liabilities and assets are based on
provisions of the enacted tax law. The effects of future changes in tax laws or
rates are not anticipated. If a tax deferral occurs, the measurement of deferred
tax assets is reduced, if necessary, by the amount of any tax benefits that,
based on available evidence, are not expected to be realized. At this time,
there are no such deferrals. See Note 14 for calculations of current tax year
liabilities based on existing rates.
NOTE 19. SEGMENT REPORTING
Currently the company reports only one segment on the financial statements, as
there is only one central location of business and not multiple locations or
departments. SFAS 131 defines an operating segment, in part, as a component of
an enterprise whose operating results are regularly reviewed by the chief
operating decision maker to make decisions about resources to be allocated to
the segment and assess its performance. The chief operating decision maker is
not necessarily a single person, but is a function that may be performed by
several persons.
NOTE 20. CONSULTING AGREEMENT WITH GREETREE FINANCIAL GROUP, INC.
Michael J. Bongiovanni: Mr. Bongiovanni is to receive a payment equal to $29,500
Payable in free-trading shares of the Company immediately filed under Form S-8
for his services associated with Telecom Communications Inc.'s SEC compliance,
beginning January 9, 2002 and ending June 30, 2002.
F-7
Item 8. Changes with and Disagreements with Accountants on Accounting and
Financial Disclosure
NONE.
Item 9. Directors and Executive Officers of the Registrant
Identification of Directors and Executive Officers
- --------------------------------------------------
The board of directors shall consist of not less than one member nor more than
five members. Each Director elected shall hold office until his successor is
elected and qualified at annual meeting of the shareholders. The following
persons are the Directors and Executive Officers of our Company.
Name Age Position(s)
----- --- -----------
Tak Hiromoto 62 President, CEO and Director
Elizabeth Hiromoto 52 Secretary, Treasurer and Director
Mervyn M. Dymally 75 Director
Mr. Tak Hiromoto has served as our President, Chief Executive Officer and
Director since December 2000 and has been a manager of Telecom Communications of
America from September 1995 to present. From March 1990 to December 1995, Mr.
Hiromoto served as President of Apro Inc., a Real Estate Management Company.
From 1982 to Present, Mr. Hiromoto served as Director of Alternative Energy
Resource Inc.
Mrs. Elizabeth Hiromoto has served as our Secretary, Treasurer and Director
since December 2000 and has been a manager of Telecom Communications of America
since from September 1995 to present. From March 1990 to December 1995, Mrs.
Hiromoto served as Secretary, Treasurer and Director of Apro Inc., a Real Estate
Management Company. Mrs. Hiromoto is a licensed Real Estate Broker. Mrs.
Hiromoto is the wife of Mr. Tak Hiromoto.
Mr. Mervyn M. Dymally has served as our Director since December 2000. Mr.
Dymally retired as a U.S. Congressman in 1992. He was an Assemblyman, Senator,
and Lieutenant Governor of the state of California. From 1992 to present, Mr.
Dymally is the President of Dymally International Group, Inc., a consulting and
financial advisory firm in the United States. Mr. Dynally has skills in the
areas of dispute resolutions and has successfully negotiated many peace
agreements. He serves as a honorary consul for the Republic of Benin in
California and is International Lobbyist for a number of countries including
many African states.
Term of Office
- --------------
The term of office of the current directors shall continue until new directors
are elected or appointed.
Employment Agreements
----------------------
The Company has entered into employment agreements with part-time employees. The
compensation of the employment will be determined at the later date. The
part-time employees have been working for no pay since January 2001, and will be
paid in free-trading common stock of the Company for their services filed under
Form S-8.
Family Relationships
- --------------------
Mrs. Hiromoto is the wife of Mr. Tak Hiromoto.
Involvement in Certain Legal Proceedings
- ----------------------------------------
Except as indicated below and to the knowledge of management, during the past
five years, no present or former director, person nominated to become a
director, executive officer, promoter or control person of the Company:
(1) Was a general partner or executive officer of any business by or against
which any bankruptcy petition was filed, whether at the time of such filing or
two years prior thereto;
(2) Was convicted in a criminal proceeding or named the subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; and
(4) Was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal or state authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activity;
(5) Was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Compliance with Section 16(a) of the Exchange Act
--------------------------------------------------
Number of Shares
Name and Address Beneficially Percent of
of Beneficial Owner Owned Class
-------------------------- -------------------- --------------
Tak Hiromoto (1) 8,000,000 80.00%
President, CEO and
Director
Mark H. Rhynes (2) 1,000,000 10.00%
(1) The address for Tak Hiromoto is c/o Telecom Communications Inc., 827 S.
Broadway, Los Angeles, CA 90014.
(2) The shares are held by Herman, Alexis & Co., Inc. Herman, Alexis & Co., Inc.
is controlled by Mark H. Rhynes. The address for Herman, Alexis & Co., Inc. and
Mark H. Rhynes is 555 West 5th Street, Floor 31, Los Angeles, CA 90013. Herman,
Alexis & Co., Inc. verbally agreed to lock-up its shares for a period of one
year from the date of this report.
Item 10. Executive Compensation
The following table sets forth in summary form the compensation received during
each of the Company's last three completed fiscal years by the President and
Secretary/ Treasurer of the Company.
Summary Compensation Table
Other
Name and. . Fiscal Other
Annual LTIP Stock
Position. . Year Salary Bonuses Compensation Awards Options Bonuses
- ----------- ------- ------------ ----------- ------- ------- --------
------- ------------ ----------- ------- ------- --------
Tak 2002 $ 5,000
Hiromoto, . 2001 $ 5,000 -0- -0- -0- -0-
President & 2000 N/A -0- -0- -0- -0-
Director. . 1999 N/A -0- -0- -0- -0-
- ----------- ------- ------------ ----------- ------- ------- --------
Elizabeth 2002 $ 20,000
Hiromoto, . 2001 $ 20,000 -0- -0- -0- -0-
Secretary,. 2000 N/A -0- -0- -0- -0-
Treas., Dir 1999 N/A -0- -0- -0- -0-
- ----------- ------- ------------ ----------- ------- ------- --------
Compensation of Directors
-------------------------
On January 3, 2001, the Board of Directors has instructed to issue Tak Hiromoto
and Elizabeth Hiromoto with restricted stock for their services.
Termination of Employment and Change of Control Arrangement
- -----------------------------------------------------------
There are no compensatory plans or arrangements, including payments to be
received from the Company, with respect to any person named in the Summary
Compensation Table set out above which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of such person's employment with the Company or its subsidiaries, or
any change in control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
Indemnification of Officers and Directors
- ---------------------------------------------
We indemnify to the fullest extent permitted by, and in the manner permissible
under the laws of the State of Indiana, any person made, or threatened to be
made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he/she is or was a
director or officer of our Company, or served any other enterprise as director,
officer or employee at our request. Our board of directors, in its discretion,
shall have the power on behalf of the Company to indemnify any person, other
than a director or officer, made a party to any action, suit or proceeding by
reason of the fact that he/she is or was our employee.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
The following Table sets forth the shares held by those persons who own more
than ten percent of Telecom Communication's common stock as of February 5, 2002,
based upon 10,000,000 shares outstanding.
Name and address of
Title of Class beneficial owner Number of shares Percent of class
--------------- ----------------- ------------------ ----------------
Common Tak Hiromoto 8,000,000 80%
827 S. Broadway
Los Angeles, CA 90014
Common Mark H. Rhynes 1,000,000 (2) 10%
555 W. 5th Street, Floor 31
Los Angeles, CA 90013
(2) The shares are held by Herman, Alexis & Co., Inc. Herman, Alexis & Co.,
Inc. is controlled by Mark H. Rhynes. Herman, Alexis & Co., Inc. verbally agreed
to lock-up its shares for a period of one year from the date of this report.
(b) Security Ownership of Management
The following table sets forth the shares held by Telecom Communications, Inc.'s
directors and officers as of February 5, 2002.
Common Tak Hiromoto 8,000,000 (1) 80%
827 S. Broadway
Los Angeles, CA 90014
Ownership of shares by directors and officers of Telecom Communications as a
group: 80%
(c) Changes in Control
We know of no contractual arrangements which may at a subsequent date result in
a change of control in the Company.
Item 12. Certain relationships and Related Transactions
Not Applicable.
Item 13. Exhibits and Reports on Form 8-K
(a) Financial Statements
1. The following financial statements of Telecom Communications are included in
Part II, Item 7: Independent Auditor's Report
Balance Sheet - September 30, 2002
Statements of Income - Years Ended
September 30, 2002and 2001
Statements of Cash Flows - Years Ended
September 30, 2002and 2001
Statements of Stockholders' Equity - Years Ended
September 30, 2002and 2001
Notes to Financial Statements
2. Exhibits
Exhibit Description of Exhibit
-------- ------------------------
1.1 Consulting Agreement between Telecom Communications Inc.
and GreenTree Financial Group ,Inc.
2.1 Inter-Tel.net Agreement
3. Articles of Incorporation as amended and bylaws are incorporated by reference
to Exhibit No. 3 of Form SB-2 as amended filed November 28, 2001.
23. Consent of Auditors
(b) Reports on Form 8-K
No Form 8-K was filed during the fourth quarter.
SIGNATURE PAGE FOLLOWS
----------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
TELECOM COMMUNICATIONS, INC.
Date: November 12, 2002 By: /s/ Tak Hiromoto
--------------------
Tak Hiromoto
CEO, President and Director
Date: November 12, 2002 By: /s/ Elizabeth Hiromoto
--------------------------
Elizabeth Hiromoto
Secretary , Treasurer and Director
FORM OF OFFICER'S CERTIFICATE
PURSUANT TO SECTION 302
-----------------------
The undersigned Chief Executive Officer of Telecom Communications, Inc.
hereby certifies that:
1. he has reviewed the report;
2. based on his knowledge, the report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by the
report;
3. based on his knowledge, the financial statements, and other
financial information included in the report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
issuer as of, and for, the periods presented in the report;
4. he and the other certifying officers:
a. are responsible for establishing and maintaining "disclosure
controls and procedures" (a newly-defined term reflecting the concept of
controls and procedures related to disclosure embodied in Section 302(a)(4) of
the Act) for the issuer;
b. have designed such disclosure controls and procedures to
ensure that material information is made known to them, particularly during the
period in which the periodic report is being prepared;
c. have evaluated the effectiveness of the issuer's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
the report; and
d. have presented in the report their conclusions about the
effectiveness of the disclosure controls and procedures based on the required
evaluation as of that date;
5. he and the other certifying officers have disclosed to the issuer's
auditors and to the audit committee of the board of directors (or persons
fulfilling the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls (a pre-existing term relating to internal controls regarding
financial reporting) which could adversely affect the issuer's ability to
record, process, summarize and report financial data and have identified for the
issuer's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the issuer's internal
controls; and
6. he and the other certifying officers have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
/S/ Tak Hiromoto January 31, 2003
------------------------------------
Tak Hiromoto, Chief Executive Officer and
Principle Accounting Officer
ROBERT G. ERCEK, CPA
1756 West Ave. J-12 #107
Lancaster, CA 93534 (661)-726-9448
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use of this Registration Statement on Form 10-KSB of my
report dated November 6, 2002 relating to the comparative financial statements
of Telecom Communications, Inc. as of September 30, 2001 and 2002 respectively.
Date January 10, 2003 _________________________________
Lancaster, California Robert G. Ercek,
Certified Public Accountant
Exhibit 1.1 GreenTree Financial Group, Inc.
CONSULTING SERVICES AGREEMENT
Agreement made as of the ninth day of January 2002 by and between the following
parties.Telecom Communications, Inc."Client", being a corporate entity,
maintaining its principal office at: 827 South Broadway-Los Angeles, California
90014. And GreenTree financial Group, Inc., "provider", a validly existing
Florida Corporation having its office at: 19425-G Liverpool Parkway
Cornelius, North Carolina 28031
Whereas, the parties mutually desire to enter into a formal business
relationship, do hereby agree that the following accurately reflects their
entire understanding.
In consideration of the covenants, terms and conditions herein stated, the
undersigned parties agree as follow:
1. Provider's Obligations.
1. 1.1 At all times for the duration of this Agreement the provider will
prepare the required quarterly SEC filings on Form 10-QSB, annual SEC
filing on Form 10-KSB,Form S-8, answer SEC compliance questions and
concerns and process EDGAR filings in accordance with SEC public record
requirements throughout and for the year 2002. these filings will be made
in accordance with the requirements of the Securities and Exchange
Commission. Arrangement will also include preparation of " management
discussion and analysis" (non-financial) part of the filing for Client.
Please note that there is currently one form 10-KSB as of September 30,
2001 and one 10-QSB for the quarter ended December 31, 2001 which have not
been filed and thus will require Provider to perform back-work services in
addition to the forward performing services mentioned above.
2. Clients Obligations. At all times for the duration of this Agreement and on a
timely basis, Client shall:
2.1 Provide all non-confidential documentation and information, which may
be required for the provider to perform the requisite services;
2.2 Arrange to participate in meetings and discussions with qualified
securities attorneys and or other professionals introduced by Provider.
2.3 Negotiate in good faith with all third party potential professionals,
and aforementioned authorities used by Provider.
2.4 Provide all documentation to the Provider that may be required to
prepare the necessary 15C-211 statement so as to effectuate trading on
Over the Counter bulletin Board.
2.5 All of the costs for filing fees, and legal fees are incorporated
within the fee discussed below.
3. Provider's Fees. For its aforementioned services to client which were
brought about through the effort of Provider, the Provider shall be entitled to,
and shall be paid the following terms:
3.1 Fees For services. A payment equal to Fifty-Nine Thousand($59,000)
dollars payable in free-trading shares to the company immediately
filed under Form S-8 that also covers expenses associated with
Client's SEC compliance Services. Client agree to make up for any
increases in market price in Excess of twenty-percent for the same
period above. Payment will occur as Follows:
50% with the signing of this agreement(due to the back work in Section
1.1 above and the time it will take for the company to begin trading
on the OTCBB),16.67% in each of the following quarters thereafter.
4.Miscellaneous.
4.1 The parties specifically acknowledge that:
a) Provider makes no representation that it is duly licensed
securities Broker/dealer, investment banking firm or
attorney.
b) Provider is not required to provide any services that are
exclusive To licensed securities broker/dealers, investment
bankers or attorneys.
4.2 Non circumvent Agreement. Client agrees that all third parties
introduced to it by the Provider represent significant efforts and
working relationships that are unique to, and part of, the work
product of the Provider. Therefore, without the prior specific written
consent of the Provider. Client agrees to refrain from conducting
direct or indirect Business dealings of any kind, with any third party
so introduced by Provider, for a period of two years from the initial
introductions made. In the event of a violation of this provision,
Provider shall be entitled to obtain, on an EX PARTE application,
appropriate injunctive relief, from any court of competent
jurisdiction, together with and including all remedies available at
law. This provision shall survive the remaining obligations and
performance due hereunder.
4.3 Exclusive Agreement. This Agreement supersedes any and all prior oral
or written agreements, which provided for Provider's performance on
behalf of Client.
4.4 Guarantee of Performance. Telecom communications, Inc., by
authorization of its board of directors, does herby execute this
Agreement in the capacity of joint and several guarantor of the
performance by Telecom Communications, Inc. of all of its duties,
obligations and responsibility As herein above stated.
4.5 Assignability and Unenforceability. This Agreement or the rights,
duties and or obligations hereunder may not be assigned by either
party without the express written consent of the other. The
unenforceability of any one or more provisions hereof shall not
invalidate any of the other provisions. This Agreement shall remain
valid until 30 day written notice to the Contrary is provided by one
party to the other.
4.6 Counterparts and Facsimile Signatures.
This Agreement may be executed in one or more counterparts, each of
which Shall represent a biding obligation upon the executing
respectively. The facsimile signature of either or both parties shall
constitute original signatures for the purposes of this Agreement and
shall be as biding upon the parties as such.
4.7 Caption. The paragraph captions are for descriptive purposes only and
shall have no effect with regard to the content to the validity of the
content thereof.
4.8 Controlling Law. This Agreement shall be construed in accordance with
the the Law of State of Florida.
In Witness Whereof, the parties have executed this Agreement on the date first
above written.
------------------------ -----------------------
Tak Hiromoto, President Michael J. Bongiovanni,
Telecom communications, Inc. CPA, President
GreenTree Financial Group, Inc.
Inter-Tel.net Network Agreement
INTER-TEL.NET NETWORK AGREEMENT
This Agreement is made and entered into this --- day of ---, --- between:
-------------------- ------------------------
(hereinafter referred to as "Customer") and Inter-Tel.net, Inc., a Nevada
corporation with offices at 120 N. 44th Street, Suite 200, Phoenix, Arizona,
85034-1822, U.S.A. ("Inter-Tel").
Whereas, Inter-Tel has established a network which enables telecommunications
over Internet Protocol ("IP") data networks, ("Inter-Tel.net") with
Inter-Tel.net software, hardware and related components, and
Whereas Customer desires to interconnect into Inter-Tel.net with its own network
for the provision of services to the general public; and
Whereas, both parties desire to reduce to writing their agreement for the
interconnection of each party's Servers into the Network.
Now, therefore, in consideration of the mutual covenants hereunder, the parties
hereto agree as follows:
1.0 APPOINTMENT AS INTER-TEL.NET PROVIDER
Inter-Tel hereby authorizes the Customer to interconnect with the
Inter-Tel.net network enabling the customer to transmit IP data network traffic;
subject to the terms and provisions of this Agreement.
1.2 DEFINITIONS
1.2.1 Agreement - "Agreement" shall mean this Network Agreement, including
the attached Schedules.
1.2.2 Confidential Information - "Confidential Information" shall mean
information belonging to either party and delivered to the other Party which is
deemed proprietary and confidential and belonging to the Party delivering the
Confidential Information. In the event confidential information is required to
be disclosed pursuant to a court order is required by any governmental authority
or agency, prompt written notice of such order or requirement shall be given to
the disclosing party and the receiving party shall fully cooperate with the
disclosing party, using its best efforts to maintain the confidentiality of the
information, including but not limited to, seeking protective orders from the
court or governmental authority.
1.2.3 Customer Network - "Customer Network" shall mean the IP data network
constructed, owned and/or operated by Customer.
1.2.4 Inter-Tel.net - "Inter-Tel.net" shall mean the Internet Protocol (IP)
data network constructed, owned, and operated by Inter-Tel.net, Inc.
1.2.5 Local Exchange Carrier - Company certified to provide public switched
telephone network (PSTN) services. Both incumbent and the emerging competitive
LECs are included.
1.2.6 NPA/NXX NPA refers to the area code and NPA/NXX refers to the area
code and prefix (the first six (6) digits) in the long distance dialing
sequence.
1.2.7 Planned Service Outage - "Planned Service Outage" shall mean any
Service Outage caused by scheduled maintenance or planned enhancements or
upgrades to the Network.
1.2.8 Point-Of-Presence - (POP), - The physical location where the
Inter-Tel.net Network interfaces with the customer or a local access vendor.
1.2.9 Public Switched Telephone Network - The public network operated by
common carriers for switched telephone services.
1.2.10 Regional He - I Operative Companies (RBOCs) - The regional operating
companies formed at divestiture from AT&T, to provide local access to the
public,
1.2.11 Service Interconnection Date The later of the date requested in the
Service request by Customer or the date that Service has been installed and
tested by Customer use.
1.2.12 Service Outage - Shall mean a degradation in Service well below the
industry standards, occurring in Inter-Tel.net's network, excluding: (i) Planned
Service Outages; or, (ii) periods of degradation due to causes beyond the
reasonable control of Inter-Tel.net.
1.2.13 Service Re-quest - Shall mean an order for Service transmitted to
Inter-Tel.net via facsimile, online, or mail. Service requests will be remitted
in accordance with Inter-Tel,net order format.
2.0 FEES
Both parties acknowledge and agree for the payment of fees by the party
incurring same including origination, termination, settlement and other provider
fees as set forth on Schedule A attached hereto and made, a part hereof for all
purposes. Customer agrees that Inter-Tel shall have the right to amend the fees
set forth on Schedule A with thirty (30) day's notice.
3.0 SERVICE
3.1 Network Coverage - Inter-Tel.net shall add to or delete from network
coverage, NPA's or NPAs/NXXs and/or other usage designations, at its sole
discretion. Data may be passed by Inter-Tel.net for termination through
Inter-Tel.net, or through the network of the Local Exchange Carrier ("LEC(s)")
serving the area in which the data is to be terminated, or through long distance
carriers.
3.2 Prices, Volume and Term Discounts, Service Availability - Usage,
recurring charges, volume discounts, installation and change order charges,
minimum. use commitments, and service availability for such Services are listed
oil Schedule A.
3.3 Operations Support - Customer agrees to provide seven (7) day,
twenty-four (24) hours a day support for their network.
4.0 FORMAT
All data passed between the parties shall be 'in format compatible with and
approved in advance by Inter-Tel.
5.0 UPDATED USAGE ESTIMATES
Customer shall provide monthly updates, 30 days in advance in the format
which will include usage estimates or information which may impact established
trends in usage patterns. Customer acknowledges and agrees that any significant
increases in usage not forecasted by the Customer may jeopardize the ability of
Inter-Tel.net to meet the demand.
6.0 NETWORK BLOCKING CAPABILITY
Based on the Customer submitted estimates of monthly minutes of use and
busy hour minutes of capacity measurements for each terminating location,
Inter-Tel shall have reasonable blocking ability for excess usage above
maximums, or at its discretion. switch out the excess minutes over the PSTN at
the agreed prices in Schedule A. Customer shall have responsibility to provide
an updated usage. forecast with each Service Request.
7.0 NETWORK MANAGEMENT CONTROLS
When call volumes increase substantially and facility augments cannot be
accommodated in a timely manner, Inter-Tel.net may invoke network management
controls to reduce the probability of excessive network congestion. Substantial
call volume increases are changes which exceed the recorded busy day, busy hour
minutes of capacity for the preceding 60 day, seasonally adjusted period. For
new Service Requests, the estimated busy day, busy hour minutes will be the
basis for identifying substantial call volumes.
8.0 NETWORK CONNECTION
8.1 All connections to Inter-Tel.net are made through dedicated data
connections between the Customer POP and Inter-Tel.net with sufficient bandwidth
to insure call quality. All facilities will be designed using standard usage
engineering principles.
8.2 in order to insure call quality, the end to end turnaround time as
measured by the industry standard ping should not exceed 100 milliseconds.
8.3 Customer agrees that all Vocal'Net servers shall be covered under "a
software maintenance agreement with Inter-Tel to insure that all updates,
upgrades and maintenance are consistent with Inter-Tel.net standards.
9.0 INSTALLATION, SUPPORT AND MAINTENANCE OF SERVERS
Unless otherwise contracted with Inter-Tel, Customer agrees that it shall
be responsible for the installation, support and maintenance of all customer
owned Servers and related products including, but not limited to, the fees and
rental charges for collocation space and provision of dedicated lines and
circuits necessary for the interconnection of the Customer network and related
equipment and services into Inter-Tel.net up to and including the interface
interconnection point. Customer further acknowledges appointment of Inter-Tel as
agent as set forth on Schedule B, to obtain for Customer any dedicated line
services as are agreed by the parties to be necessary for the installation.
support and maintenance of the Customer's Servers with the Network,
9.1 Service Outage - In the event a service outage occurs within
Inter-Tel.net. Inter-Tel shall act promptly to repair the outage. Customer shall
be relieved of minimum purchase requirements in a pro-rata fashion determined by
the length of the service outage. In the event a service outage occurs within
the Customer Network, customer shall act promptly to repair the outage.
9.2 Planned Service Outage - Customer shall, when practical, be notified at
least five (5) days in advance of any Planned Service Outage.
10.0 USAGE MEASUREMENT
10.1 Start of Usage Measurement -For all originating usage, measurement
will commence when Inter-Tel.net sends the first supervisory signal, and answer
supervision is received by Inter-Tel.net from the terminating end user,
indicating that the termination end user has answered.
10.2 Termination Of Usage Measurement - For all terminating usage,
measurement will end when Inter-Tel.net receives disconnect supervision from the
terminating end LEC switch and when the appropriate IP call control release
messages is received or sent by Inter-Tel.net.
11.0 TERM AND TERMINATION
This agreement shall be in effect for a period of one (1) year from the
date hereof, and shall continue automatically for one year periods thereafter
unless and until terminated by either party giving the other not less than sixty
(60) days written notice before the expiration date, In the event of a breach of
contract, this agreement shall be terminated by ten (10) days written notice by
one party to the other and failure to cure a breach of any provision of this
Agreement by such party: or in the event either party ceases to function as a
going business, becomes insolvent, commits an act of bankruptcy, is adjudged a
bankrupt, makes a general assignment for the benefit of creditors, or if a
receiver is appointed for all or substantially all of its property. At the
termination of any service or of this Agreement, the Parties will, within five
(5) business days, disconnect the interconnection circuit(s) provided between
the parties.
12.0 PAYMENT AND REVIEW PROCESS
12.1 Payment Due Date - Customer agrees to pay all charges as set forth on
Schedule A.
12.2 Disputes - Customer shall have 60 days from invoice date to dispute
any Charges in writing. Written disputes should be addressed to the Vice
President, Finance and sent by registered mail or courier (such as Federal
Express or United Parcel Service). All charges, whether or not disputed in
writing, and received by the due date, are considered payable. The Parties shall
provide one another with reasonably requested information for invoice validation
including, but not limited to, the number of minutes of use.
12.3 Review Process - Inter-Tel.net will review any amounts disputed in
writing within (30) business days after receipt of the written dispute. If
Inter-Tel.net determines that the Customer was billed in error, a credit for the
amount billed incorrectly will appear or the next invoice, If the Customer does
not agree with Inter-Tel.net's assessment, both -parties agree to resolution
through binding arbitration within thirty (30) days of Inter-Tel.net's
determination that the bill was issued properly
12.4 Arbitration - Notwithstanding anything to the contrary herein, any
dispute arising pursuant to or in any way related to this Agreement or the
transactions contemplated hereby shall be settled by arbitration a' a mutually
agreed upon location in Phoenix, Arizona; provided, however. that nothing in
this Section shall restrict the right of either party to apply to a court of
competent jurisdiction for emergency relief pending final determination of a
claim by arbitration in accordance with this Section. All arbitration shall be
conducted in accordance with the rules and regulations of the American
Arbitration Association, in force at the time of any such dispute, by a panel of
three (3) arbitrators, one (1) selected by Inter-Tel.net, one (1) selected by
Customer, and the third (3rd) selected by the other two (2) arbitrators. Each
party shall pay its own expenses associated with such arbitration, including the
expenses of any arbitrator selected by such party and 50% of the expenses of the
third arbitrator. The decision of the arbitrators, based upon written findings
of fact and conclusions of law, shall be binding upon the parties; and judgment
in accordance with that decision may be entered in any court having jurisdiction
thereof. In no event shall the arbitrators be authorized to grant any punitive,
incidental or consequential damages of any nature or kind whatsoever.
12.5 Suspension of Service - If customer does not make payment,
Inter-Tel.net may suspend or cancel Service and terminate this Agreement after
Inter-Tel.net has given Customer written notice and ten (10) days to cure the
nonpayment.
12.6 Monthly Purchase Minimums - Customer agrees to pay the greater of
actual usage, or minimum usage which is computed by multiplying the total
estimated usage times the billing rate for such usage on Schedule A.
12.7 Billing Increments - Billing increments will be as set forth on
Schedule A.
13.0 EQUIPMENT AND INSTALLATION
13.1 Intel-Tel.net shall provide, maintain, repair, operate and control
the. Inter-Tel.net owned facilities necessary for service up to the
interconnection point where the Customer network interfaces with Inter-Tel.net,
13.2 'Neither Party shall adjust, align, or attempt to repair, the other
Party's equipment except as expressly agreed to in advance in writing by the
other Party. 'Neither Party's equipment shall be removed or relocated by the
other Party.
14.0 WARRANTIES AND NETWORK STANDARDS
14.1 Each party represents and warrants to the other Party that it has the
right to provide the service specified herein, and that it is an entity, duly
organized, validly existing and in good standing under the laws of its origin,
with all requisite power to enter into and perform its obligations under this
Agreement in accordance with its terms.
14.2 Inter-Tel.net represents and warrants to Customer that all service
rendered by it hereunder shall be designed, produced, installed, furnished and
in all aspects provided and maintained in conformance and compliance with
applicable federal, state and local laws, administrative and regulatory
requirements and any other authorities having jurisdiction over the subject
matter of this Agreement that were in effect at the time of such design.
14.3 Inter-Tel represents and warrants to Customer that it shall at all
times, comply with then current industry standards. The parties agree that if
any party, in its sole reasonable discretion, determines that an emergency
action is necessary to protect its own Network, the party may block any signals
being transmitted over its Network by the other party whose signals do not meet
the specifications included herein. The parties further agree that none of their
respective obligations to one another under this Agreement shall be affected by
any such blockage except that the party affected by such blockage shall be
relieved of all obligations to make payments for charges relating to such
service only during the period of time of such blockage and that no party shall
have any obligation to the other party for any claim, judgment or liability
resulting from such blockage.
14.4 THERE ARE NO AGREEMENTS, WARRANTIES OR REPRESENTATIONS, EXPRESSED OR
IMPLIED EITHER IN FACT OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE OR USE, EXCEPT THOSE EXPRESSLY SET FORTH HEREIN.
15.0 WARRANTY AND INDEMNIFICATION BY CUSTOMER.
Customer warrants and agrees that all equipment owned and operated by
Customer and interconnected with Inter-Tel.net shall be compatible with
Inter-tel.net and in compliance with any specific standards that may be
additionally set forth on Schedule A. Customer further agrees to be responsible
for any upgrades or enhancements necessary For its network to remain compatible
with the Inter-Tel.net Network. Customer further warrants and agrees, that if
Inter-Tel terminates usage over the network- of Customer, that Customer will
install and maintain all I of Customer's network in accordance with industry
standards for IP network usage in order to insure the quality of transmission
usage equal to that of Inter-Tel.net.
16.0 CONFIDENTIAL OBLIGATION
16.1 Neither party hereto shall disclose any confidential information
("Confidential Information") received from the other party nor use such
information for purposes other than performance of this Agreement without
getting prior written consent from the other party. The Confidential Information
shall be the information (i) disclosed in writing and marked "Confidential", and
(ii) if disclosed verbally, shall be confirmed in writing within seven (7) days
following such disclosure, and (iii) any information contained in this Agreement
and Schedules.
16.2 The following information shall not be regarded as the
Confidential
Information:
(i) information which, at the time of disclosure hereunder. was or
thereafter becomes in the public domain through no willfulness or
misconduct of the recipient;
(ii) information which, prior to disclosure hereunder, was already in the
recipient's possession either without limitation on disclosure
to others or subsequently becoming free of such limitation-, (iii)
information obtained by the recipient from a third party having an
independent right to disclose this information; or (iv) information
which is independently developed by the recipient.
16.3 Information shall not be deemed confidential in the following cases:
the information was previously known to the receiving party free of any
obligation to keep it confidential at the time of its disclosures by the
disclosing party; the information is or became publicly known through no
wrongful act of the disclosing party; the information is rightfully received by
the receiving party from a third party having no direct or indirect and/or
confidential obligation to the disclosing party with respect to such
information; the information is disclosed by the disclosing party to the public,
or the information is independently developed by an employee, agent or
contractor of the receiving party.
17.0 INDEMNITIES
Each Party agrees to indemnify, defend and hold harmless the other Party
from and against; (i) claims for libel, slander, infringement of copyright or
unauthorized use of trademark, trade name-, or service mark arising out of the
indemnifying Party's use or provision of Service; (ii) claims for patent
infringement arising from the use of the facilities or equipment supplied by the
indemnifying Party's combining or connecting facilities to use Inter-Tel.net;
(iii) claims of third parties for damages and/or personal injuries arising out
of the negligence or willful act or omission of the indemnifying Party or its
agents, servants, employees, contractors representatives; and (iv) claims of
third parties. including patrons or Customers of the indemnifying Party, arising
out of, resulting from, or related to the indemnifying Party's resale or
attempted resale of the Service(s) under this Agreement.
18.0 SURVIVAL CLAUSES
The provisions of Paragraph 15, 16, and 17 shall -survive the termination
or expiration of this Agreement.
19.0 DEFAULT
19.1 A Party shall be deemed in default of this Agreement upon the
occurrence of any one or more of the following events: (i) the filing of
bankruptcy or making a general assignment for the benefit of creditors which is
not dismissed or set aside within sixty (60) days of filing, (ii) a Party
violates any applicable laws, statutes, ordinances, codes or other legal
requirements with respect to the Service and such violation(s) are not remedied
within ten (10) business days after written notice thereof, or (iii) a Party
fails to perform its obligations under this Agreement and such nonperformance is
not remedied within ten (10) days in the case of payment obligations and
otherwise within thirty (30) days after notice thereof.
19.2 Inter-Tel shall grant customer thirty (30) days after any written
notice of default herein required other than payment obligations, to cure any
default. Should Customer fail to cure the default within the time, Inter-Tel
shall be entitled to suspend Service and/or terminate this Agreement. Should
Inter-Tel terminate this Agreement due to default by Customer, all amounts owned
Inter-Tel shall become immediately due and payable.
19.3 A party shall be deemed to be in default if, without thirty (30) days
written notice, any act or failure to act by the party with respect to its
network causes or allows to be caused a cessation of operations of that network
in such a manner that the other Party can-not terminate usage over the
defaulting party's network for a period in excess of twelve (12) hours. In such
event, the defaulting party ,shall be responsible for the non defaulting party's
losses to the extent necessary to terminate such usage over any other viable
transmission means for said thirty day period.
20.0 AMENDMENT
No amendment of this Agreement shall bind either party hereto unless
reduced to writing and signed by authorized representatives of the respective
parties.
21.0 LIMITATION OF LIABILITY
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY, OR TO ANY OTHER ENTITY OR
INDIVIDUAL, FOR INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTIAL OR PUNITIVE
DAMAGES OF ANY KIND OR NATURE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS
OR REVENUES, REGARDLESS 01, THE FORESEEABILITY THEREOF.
Customer acknowledges and agrees that any product; hardware or software may
or may not have been approved for sale or use in foreign countries. The Customer
agrees that any use or resale of the product into a foreign country could
require regulatory approval of such country. Customer accepts full
responsibility for complying with any and all of such requirements or
regulations for such product(s) prior to distribution or use. Customer further
agrees to indemnify and hold harmless Inter-Tel from and against all claims,
liability, damages and expenses arising from any failure of Customer to obtain
required approvals and/or to comply with any and all such regulations prior to
distribution or use in a foreign country,
22.0 ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between the
parties hereto relative to the subject matter hereof and there are no
understandings, agreements, conditions or representations, oral or written,
expressed or implied, with reference to the subject matter hereof that are not
merged herein or superseded hereby.
23.0 JURISDICTION AND VENUE
This Agreement shall be construed and enforced in accordance with the laws
of the State of Arizona. Should a dispute occur between the parties hereto
arising out of or in relation to implementation of this Agreement, the parties
hereto agree that venue of the dispute shall be in Maricopa County, Arizona and
that substantive and personal jurisdiction shall exist over the parties by
virtue of the fact that payments are due in Phoenix, Arizona.
24.0 FORCE MAJEURE
Except as to the payment of monies pursuant to this Agreement, each party
to this Agreement shall be excused from performance hereunder for any Period of
time and to tile extent that it is prevented from performing any of its
obligations pursuant hereto, in whole or in part, as a result of delays caused
by the other party or by an act of God, fire, explosion. transportation
contingencies, unusually severe weather, quarantine, restriction, epidemic,
natural catastrophe, war, civil disturbance, acts of the government of the
United States or of any State or governmental agency or official thereof, court
order, labor dispute or shortage, third-party nonperformance, or other cause,
events or circumstances beyond its reasonable control, and such nonperformance
shall not be a default under this Agreement nor a ground for termination of this
Agreement as long as the excused party makes reasonable efforts to remedy, if
and to the extent reasonably possible, the cause for such nonperformance.
25.0 TAXES
Each Party shall be fully responsible for the payment of any and all ad
valorem, property franchise, gross receipts, excise, access, bypass, sales or
other local, state or federal taxes or charges applicable to property owned by
it and for taxes on its net income. Customer agrees to any sales, use, gross
receipts. excise, access, bypass or other local, state and federal taxes or
charges applicable to the provisioning or sale of the. Service provided by
Inter-Tel,net. Any taxes to be paid by Customer shall be separately stated on
the invoice. Prices shall not include any taxes for which Customer has furnished
a valid exemption certificate
26.0 REGULATIONS
Each Party represents that it is not aware of any facts that would justify
a complaint to the Federal Communications Commission or any state regulatory
authority concerning the prices, terms or conditions of the transactions
contemplated by this Agreement. The Parties also agree that in the event a
decision by a telecommunications regulatory authority A the federal, state, or
local level necessitates modifications in this Agreement, the Parties will
negotiate in good faith to modify this Agreement in light of such decision.
27.0 MISCELLANEOUS
27.1 This Agreement does not appoint either Party as the agent or legal
representative of the other Party and does not create a partnership or joint
venture between Customer and Inter-Tel.net. Neither Party shall have any
authority to make any agreement for or bind the other Party in any manner
Whatsoever except as set forth on Schedule B. This Agreement confers no rights
of any kind upon any third party.
27.2 The failure of either Party to give notice of default or to enforce or
insist upon compliance with any of the terms of conditions of this Agreement
shall not be considered the waiver of any other term or condition, or of future
compliance of the terms of this Agreement,
27.3 If any part of any provision of this Agreement or any other agreement,
document or writing given pursuant to or in connection with this Agreement shall
be invalid or unenforceable under applicable law, such part shall be ineffective
to the extent of such invalidity only, without in any way affecting the
remaining parts or provisions of this Agreement.
27.4 Inter-Tel.net may terminate this Agreement without liability if; (i)
the facilities used to provide Service are taken by exercise of condemnation or
eminent domain; or (ii) the Inter-Tel.net facilities shall, in Inter-Tel. net's
reasonable judgment, be made inoperable and beyond economically or
technologically feasible repair.
27.5 Acceptance of this Agreement is contingent upon signature by a
representative of Inter-Tel duly authorized to execute this Agreement.
27.6 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and when taken together shall constitute one
document.
27.7 In the event that suit is brought and an attorney is retained by
either Party to enforce the terms of this Agreement or to collect any money as
due. hereunder or to collect any money damages for breach hereof, the prevailing
party shall be entitled to recover, in addition to any other remedy, the
reimbursement for reasonable attorney's fees, court costs, costs of
investigations and other related expenses incurred in connection therewith.
27.8 The parties agree not to disclose any of the items and conditions of
this Agreement without the express written consent of the other party, except as
may be required by law or governmental rule or regulations. or to establish
either party's rights under this Agreement, provided, however, that if one party
seeks to disclose for reasons not requiring the other party's consent, that
party will limit the disclosure to the extent required, will allow the other
party to review the information disclosed and will apply where available, for
confidentiality, protective orders and the like. Any review under this paragraph
will not be construed to make the reviewing party responsible for the content of
any disclosure,
28.0 ASSIGNMENT
The Customer may not assign this Agreement without the prior written
consent of Inter- which shall not be reasonably withheld. Any such assignment of
this Agreement by Customer without consent shall be null and void.
29.0 NOTICES
Notices under this Agreement shall be in writing and delivered by certified
mail, return receipt requested, to the persons whose names and business
addresses appear below and such notice shall be effective on the date of
receipt, or refusal of delivery, by the receiving Party.
If so Inter-Tel.net (except billing disputes)
Attention: President
INTER-TEL.NET
120 North 44th Street
Suite #200
Phoenix, AZ 85034-1822
Billing Disputes:
Attention: Vice President, Finance
INTER-TEL.NET
120 N. 44th Street
Suite #200
Phoenix, AZ 85034-1822
If to Customer:
----------------------
----------------------
----------------------
Service Request or Modifications or Cancellations:
Attention: Director, Customer Service
INTER-TEL.NET
120 N. 44th Street
Suite #200
Phoenix, AZ 85034-1822
30.0 FINAL AGREEMENT
This Agreement sets forth the entire understanding of the parties and
supersedes any and all prior agreements, arrangements or understanding related
to the Services described herein, and no representation, promise, inducement or
statement of intention has been made by either party, which is not. embodied
herein. Inter-Tel shall not be bound by any agent's or employee's
representations, promises or inducements not set forth herein,
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duty authorized representatives on the day and year first above written
INTER-TEL.NET, INC. TELECOM COMMUNICATIONS OF AMERICA
---------------------------------
Customer
By: Craig Steen or Ross McAlpine By: Michele Hiromoto
---------------------------- -------------------------
Signed: Signed: /s/ Michele Hiromoto
Its: VP of Sales or President Its:
---------------------------- -------------------------