U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
                                   -----------

(Mark One)
(X)  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 2003

(    ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
     1934 (No Fee Required) For the transition period from ______ to _____

                         Commission File Number 0-28330
                                                -------

                             TVC TELECOM INCORPORATED
          -----------------------------------------------------------
          (Name of small business issuer as specified in its charter)

            NEVADA                                   95-4561156
--------------------------------          ---------------------------------
(State or other jurisdiction of           (IRS Employer Identification No.)
 incorporation or organization)

3550 BISCAYNE BLVD STE 704 Miami FL                                    33137
----------------------------------------                             ----------
(Address of principal executive offices)                             (Zip Code)

      (305) 572-0575                                      (305) 572-0576
---------------------------                          ---------------------------
(Issuer's telephone number)                          (Issuer's facsimile number)

Securities registered under Section 12 (b) of the Exchange Act:

                                                Name of each exchange on which
Title of each class                             registered
--------------------                            -------------------------------
      None                                                 None

Securities registered under Section 12(g) of the Exchange Act:
                Common stock,  par value $.001
---------------------------------------------------------------
                       (Title of Class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15 (d) of the  Exchange Act 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. [ ] <PAGE>


State issuer's  revenues for its most recent fiscal year.  $6,095,728

State the  aggregate  market  value of the voting  stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act).  Note: If
determining whether a person is an affiliate will involve an unreasonable effort
and expense,  the issuer may calculate the aggregate  market value of the common
equity held by  non-affiliates  on the basis of reasonable  assumptions,  if the
assumptions are stated.  The aggregate  market value of the voting stock held by
non-affiliates of the Company as of March 30, 2004 was: $1,661,982.

                (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the  latest  practicable  date.  Common  Stock,$.001  par  value;
156,175,141 shares as of March 30, 2004.

                      DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and identify the part of the Form 10-KSB (e.g. Part I, Part II,  etc.)into which
the document is incorporated  (1)any annual report to security holders;  (2) any
proxy or information  statement;  and (3) any prospectus  filed pursuant to Rule
424(b) or (c) of the  Securities  Act of 1933  ("Securities  Act").  The  listed
documents should be clearly described for  identification  purposes (e.g. annual
report to security holders for fiscal year ended December 24, 1990).

                      Documents incorporated by reference:

     Document                                  Item (s) Into Which Incorporated
  -------------                                --------------------------------
      None

Transitional Small Business Disclosure Format  (Check one) :  Yes [ ]  No [X]


                                       2
<PAGE>



                            TVC TELECOM INCORPORATED

                                  Form 10-KSB

Table of Contents

Part I.                                                              Page No.
                                                                     --------

   Item 1.         Description of Business                                  4
   Item 2.         Description of Property                                  9
   Item 3.         Legal proceedings                                        9
   Item 4.         Submission of matters to vote of security holders        9

Part II.
   Item 5.         Market for registrants' common equity and related        9
                   stockholder matters
   Item 6.         Management's discussion and analysis of financial       11
                   condition and results of operations
   Item 7.         Financial statements                                    21
                   (see table of contents, page 21)
   Item 8.         Changes in and disagreements with accountants on
                           Accounting and Financial Disclosure             45
   Item 8A.                Controls and procedures                         45

Part III.
   Item 9.         Directors and executive officers of the registrant      45
   Item 10.        Executive compensation                                  46
   Item 11.        Security ownership of certain beneficial owners and     49
                   management
   Item 12.        Certain relationships and related transactions          50
   Item 13.        Exhibits and reports on Form 8-K                        51
   Item 14.        Principal accounting fees and services                  52





                                       3
<PAGE>

                                     PART I

Introductory Statement
----------------------

Except for  historical  information  contained  herein,  the  statements in this
report (including without limitation,  statements indicating that the registrant
"expects",  "estimates",  "anticipates",   "believes",  "plans",  "projects"  or
"intends" and all other statements concerning future financial results,  product
offerings  or other  events  that  have not yet  occurred)  are  forward-looking
statements  that are made pursuant to the safe harbor  provisions of the Private
Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange  Act"), and Section 27A of the Securities
Act of 1933, as amended.  Forward-looking  statements  involve known and unknown
factors, risks and uncertainties,  and actual results may differ materially from
forecasted results.  Those factors, risks and uncertainties include, but are not
limited to:

         -    our  ability to  effectively  manage its various  businesses  in a
              rapidly changing environment;
         -    the timing of new product introductions;
         -    retail  acceptance  of our  products;
         -    our ability to adapt and expand its product offerings;
         -    the cost of,  and  demand  for,  customer  service  and  technical
              support; - price pressures in the competitive environment;
         -    the consummation of possible acquisitions; and
         -    our ability to  integrate  acquired  operations  into our existing
              business and manage growth.

Additional  information on these and other risk factors are included under "Risk
Factors" and elsewhere in this Form 10-KSB.

ITEM 1.  DESCRIPTION OF BUSINESS

                               BACKGROUND
General

Our company, TVC Telecom  Incorporated fka Talk Visual Corporation  (referred to
herein as "we" or "the  Company"),  is a  provider  of voice  telecommunications
services to key  business  and consumer  market  segments in the United  States.
These market segments  consist of multiple  sub-segments  of underserved  ethnic
markets  which  include the Latin  American  expatriate  business  and  consumer
communities.  We  generate  sales  through a variety of means  including  direct
sales, internet marketing and agent partnerships.

The  principal   services  that  we  provide  through  our  Sales  Division  are
international and domestic long distance  services,  domestic toll-free services
and various  pre-paid  services.  Our Sales  Division,  in conjunction  with our
finance and accounting department, has developed systems, processes,  procedures
and rate  tables  to resell  international  and  domestic  long  distance  voice
services to business and residential clients.

Based on recent  changes  within the  telecommunications  industry  and previous
investment,  we believe  that we will be able to continue  to generate  sales by
providing both cost-competitive pricing and superior quality service to business
customers  through our Sales Division on a cost effective basis.  This is due to
several factors.  First, the capital  expenditure  required to efficiently run a
telephony network has greatly decreased due to excess equipment available in the
market.  Second,  the systems  currently  installed  by the Company or generally
available allow the Company to operate extremely efficiently.  Third, our volume
of voice  minutes  allows for  effective  negotiations  with  suppliers on voice
product  pricing.  Finally,  management  believes that we are well positioned to
generate  high  growth in sales as a  successful  commercial  telecommunications
sales operation.
                                       4
<PAGE>

We were  organized as a Florida  corporation in 1998 and merged with Talk Visual
Corporation (formerly Legacy Software,  Inc.), a Delaware corporation,  pursuant
to a  merger  agreement  in  1999.  As part of the  merger,  we  became a Nevada
corporation.  Our  principal  executive  office  is  located  at  3550  Biscayne
Boulevard,  Suites 704,  705 and 706,  Miami,  Florida  33137 and our  telephone
number is (305) 572-0575.


Overview
--------

Our first  products and services  offered in 1999 were the sale of  videocalling
services and the resale of videocalling equipment.  During 2000, we expanded our
videocalling network internationally,  increased the number of shops we operated
to 4 and increased our customer base and product offering  primarily through the
acquisition of 11 telephone  call shops in the greater New York City/New  Jersey
area. During 2001, 2002, and 2003, we closed or sold our call shops operating in
the New York City/New Jersey area (our Retail Operations Division), discontinued
our agreements with our international  videocalling  partners and began to focus
heavily  on the Latin  expatriate  community's  requirements  for  business  and
residential  telecommunication  services.  In 2003,  we  expanded  our  focus to
include  multiple  ethnic markets while reducing the overall  operating costs of
the Company including the sale of our Retail Operations Division.


Sales Division
--------------

Our Sales  Division  consists of a Direct  Sales Group and a Dealer Sales Group.
Each sales group  represents  specific  products and target  markets  within the
telecommunications  market. Our network design allows us to provide domestic and
international  long  distance  service  to  businesses,   residential  accounts,
independent  call  shops and resale  carriers  for use of our  service  anywhere
within the continental United States. Descriptions of the Direct Sales Group and
the Dealer Sales Group are as follows:

         o    Direct Sales:  Sales are generated by an internal sales force that
              sells  directly  to  businesses,  residential  customers  and call
              shops.  This group  consists of individual  employees with monthly
              sales  targets  who  are  compensated  with  a  base  salary  plus
              commission.   New  customer  sales  are  generated  through  "cold
              calling"  efforts,  direct  marketing,  trade  shows and  existing
              client  referrals.  The  primary  service  sold  is  domestic  and
              international  long  distance,  with  specific  focus on  business
              customers  with  substantial   international  traffic  and  ethnic
              residential customers.  Additionally, our Direct Sales force sells
              our EZ-Global Call and Pre-Paid services.

         o    Dealer Sales: Dealers are independent  contractors that provide us
              with a low-cost,  professional  and highly  effective sales force.
              These  contractors have industry  background and existing customer
              bases.  Dealers receive  commissions based on revenue generated by
              customers   obtained  for  us  by  the  dealer.  The  dealers  are
              geographically  dispersed  within our sales  regions and typically
              focus  on  residential   customers  and  small  and   medium-sized
              businesses. The services sold to their clients consist of domestic
              and international long distance and EZ-Global Call.

Services offered through our Direct Sales and Dealer Sales Groups include:

         o    International and Domestic Long Distance,
         o    Domestic Toll-Free Services, and
         o    Domestic  Cellular and Residential  Pre-Paid  Services  (EZ-Global
              Call).
                                       5
<PAGE>

In 2004, our Sales Division will introduce several new products including

         o    Favorite country calling plans
         o    International Toll-Free capability

MANAGEMENT INFORMATION AND BILLING SYSTEMS
------------------------------------------

As the volume of minutes  carried over our network grows, it is necessary for us
to  upgrade,  modify and  enhance  our  ability  to  produce a larger  volume of
accurate  billing   statements,   traffic   management   reports  and  financial
statements. Our continuing growth and success depend upon our ability to do this
in a cost effective and timely manner.  To accomplish this task, we are focusing
our efforts on streamlining  and automating our in-house  processes for customer
billing,  provisioning,  network  troubleshooting and account  management.  As a
result of "off the shelf"  software tools  available in today's  marketplace and
the low cost of capital  expenditure  required for these activities,  we believe
that our ability to maintain financial reporting and billing systems is adequate
to meet our needs in the short term.

SALES, MARKETING AND DISTRIBUTION
---------------------------------

Our  agreement  with  a  major  carrier  provides  us  with  national  transport
capability and enables us to transport calls from any  origination  point in the
continental  United States via Pseudo CIC (Carrier  Interexchange  Code), to our
switch in Miami.  This transport  method  substantially  enhances our ability to
expand our  geographic  sales  market and  acquire new call shop,  business  and
residential  customers.  We have created new competitive rate plans for business
and  residential  customers  to help us compete in a highly  competitive  market
while securing adequate margins.

Our current and potential target markets are outlined below:

         o    Business:  Our business  marketing  targets small and medium-sized
              businesses with significant  international  long distance traffic.
              We believe that  businesses  will  continue to be attracted to our
              services due to our  competitive  pricing,  quality  international
              routes, simplified billing and multilingual customer service.

         o    Residential:  Our residential  marketing  strategy  targets ethnic
              residential   customers  who  generate  high   international  long
              distance traffic.  We believe these customers are attracted to our
              residential service because of significant price savings,  quality
              international routes,  easy-to-understand billing and multilingual
              customer service.

         o    Call Shops:  Our call shop marketing  strategy targets retail call
              shop locations and money transfer  companies  located primarily in
              the ethnic communities of South Florida,  New York and New Jersey.
              We believe  these  customers  will continue to be attracted to our
              specialized call shop service because of our competitive  pricing,
              quality  routes,  multilingual  staff,  market  understanding  and
              reputation within this specialized area.

         o    Wireless:  Our wireless  marketing targets personal wireless users
              and small and medium-sized businesses that make international long
              distance calls from their wireless  phones.  We believe  customers
              will  continue  to use  and be  attracted  to our  service  due to
              significant price savings per minute, convenience, ease of use and
              access,  quality  international  routes and multilingual  customer
              service.
                                       6
<PAGE>

         o    Our  Carrier  Sales  focuses on a small  number of  customers  who
              currently  resell  international  long distance  services  through
              switchless  methods  and  have the need  for  quality  routes  and
              competitive  international  pricing  to  reduce  their  underlying
              costs.  Our network design and transport  agreement give resellers
              the ability to access our switch  directly,  purchase  minutes and
              utilize our network and rates.

         o    Our Web Sales and  internet  partnerships  give us the  ability to
              reach  customers  in areas where we do not have a direct or dealer
              sales presence. Our Web Sales Group offers customers the option of
              accessing  the  Company  and  our  services  via a new  web  site.
              Ordering  via a web site is a low cost method of  acquisition  and
              offers an easy,  informative  and  convenient way for existing and
              potential customers to order our products and services.

         o    Our Paired City  partnership  gives us the ability to cross-market
              our   services   with  a  partner   in  Mexico  on  a   geographic
              market-by-market   basis.   We  believe   working  with  potential
              customers in their home city as well as their location  within the
              United States will give us a significant advantage over most other
              U.S. companies.

CUSTOMERS
---------

Sales Division - Our Sales Division targets  business and residential  customers
with high volume traffic to international destinations.  These customers include
call  shops  in  specific  markets  as  well  as  international  businesses  and
residential  accounts.  We believe that businesses and residential accounts will
continue to be attracted  to our  services due to the quality and price  savings
that we offer over our competition.

For the year ended  December 31, 2003,  our sales  totaled  $6,095,728,  serving
approximately 6,200 customers.

COMPETITION
-----------

The  international  market  for  telecommunications  is highly  competitive  and
subject to factors such as regulatory change, new technological advances and the
sales plans of several large  industry  carriers.  Many of our  competitors  are
significantly  larger  than  us  and  have  significantly  greater  network  and
financial resources than we do.

Additionally,   as   deregulation   continues   within  the  United  States  and
internationally,  we will face  competition  from the  regional  Bell  operating
companies  as well as foreign  entrants  into the U.S.  marketplace.  The United
States  marketplace is the most  competitive and deregulated  telecommunications
market in the world,  with  competition  based  primarily  on price and  network
quality.  AT&T is the largest supplier of long distance,  with  MCI/WorldCom and
Sprint being the next largest  carriers.  We also face  competition from smaller
companies who target the same type of customers we do. This type of  competition
can be from  small  companies  with a switch or from  switchless  resellers  who
purchase minutes from larger carriers.

                                       7
<PAGE>


Our ability to compete also depends in part on a number of  competitive  factors
out of our  control,  including  our ability to hire and retain  employees,  the
development  by others of products and services  that are  competitive  with our
products and services,  the price at which others offer comparable  products and
services and the extent of our  competitors'  responsiveness  to customer needs.
There  can be no  assurance  that  we  will  be  able  to  continue  to  compete
successfully with our existing competitors or with new competitors.

GOVERNMENT REGULATION
---------------------

As a telecommunications company, we are subject to varying degrees of regulation
wherever we provide services.  Such regulations can and do differ  significantly
from  jurisdiction  to  jurisdiction.  There  can be no  assurance  that  future
regulatory,  judicial and legislative  changes will not have a material  adverse
effect on the Company.

Regulation of the  telecommunications  industry is constantly  changing.  We are
unable to predict what new  regulations  the Federal  Communications  Commission
("FCC") and other regulatory agencies will enact that may affect us. Although we
believe  that  present   regulatory   decisions   are  directed  at   increasing
deregulation   and  will   create   opportunities   for  new   entrants  in  the
telecommunications service industry, there can be no assurance that they will be
implemented in a manner that would benefit us.

Within the United  States,  our  services are subject to the  provisions  of the
Communications  Act  of  1934,  FCC  regulations  thereunder,  as  well  as  the
applicable  laws and  regulations  of the  various  states and state  regulatory
commissions.

As a non-dominant  carrier required to obtain authority under Section 214 of the
Communications  Act,  we must comply with the  requirements  of common  carriage
under the Communications  Act. These requirements  include the filing of tariffs
containing rates, the offering of service on a non-discriminatory  basis at just
and  reasonable  rates,  and obtaining FCC approval  prior to any  assignment of
authorizations or any transfer of control of the Company. We are not required to
obtain  specific  prior FCC approval to initiate or expand  domestic  interstate
services.

Our costs of providing long distance services will be affected by changes in the
access charge rates imposed by incumbent local exchange carriers for origination
and  termination  of calls  over  local  facilities.  The FCC has  significantly
revised  its  access  charge  rules in recent  years to permit  incumbent  local
exchange  carriers  greater pricing  flexibility  and relaxed  regulation of new
switched  access  services in those markets  where there are other  providers of
access  services.  The FCC recently  granted  local  exchange  carriers  pricing
flexibility.  As such, the carriers may offer volume  discounts that may benefit
larger long distance carriers.

Our  intrastate  long distance  operations are subject to various state laws and
regulations,  including, in most jurisdictions,  certification and tariff filing
requirements.  Some states also require the filing of periodic reports,  payment
of various  fees and  surcharges,  and  compliance  with service  standards  and
consumer  protection rules.  State requirements may also require various pricing
and asset sale or financing approval. Certificates of authority can generally be
conditioned,  modified,  canceled,  terminated,  or revoked by state  regulatory
authorities for failure to comply with state law and/or the rules,  regulations,
and policies of the state regulatory authorities.

                                       8
<PAGE>

REAL ESTATE OPERATIONS
----------------------

During  2003  we  continued  to  operate  certain  real  estate  in  Sacramento,
California.  On February 26, 2003, we completed the sale and  disposition of our
property in Sacramento.

EMPLOYEES
---------

As of  December  31,  2003,  we had a total of 14  full-time  employees  and two
part-time  employees.  Our employees are not covered by a collective  bargaining
agreement  and we have  experienced  no work  stoppages.  We  believe  that  our
relationship with our employees is good.

ITEM 2. DESCRIPTION OF PROPERTY

We lease  space at our  principal  headquarters  in  Miami,  Florida.  The Miami
location serves as the core sales,  support and marketing facility  headquarters
for our executive,  engineering,  sales,  human resources and finance personnel.
The following is a listing of the significant leased facilities:

         Location                      Square Footage       Expiration Date
--------------------------------       --------------       ---------------

Miami, Florida - Headquarters              5,702             June 30, 2007


Management  believes  it  carries  sufficient  and  adequate  insurance  on  its
headquarters.

ITEM 3. LEGAL PROCEEDINGS

We are not  currently  involved  in any  litigation  that is  expected to have a
material adverse effect on our business or financial  position.  There can be no
assurance,  however,  that third parties will not assert  infringement  or other
claims against us in the future which,  regardless of the outcome, could have an
adverse  impact on us as a result of  defense  costs,  diversion  of  management
resources and other factors.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year covered by this report.

                                    PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common  stock is traded on the OTC  Bulletin  Board  market under the symbol
TVCE.  Prior to May 14, 1996,  there was no public trading market for our common
stock.  After we began public  trading on May 14, 1996, and until April 7, 1999,
our common stock was quoted on the Nasdaq SmallCap  Market(SM)  under the symbol
LGCY (from May 14, 1996  through  February  28,  1999) and under the symbol TVCP
(from March 1, 1999 through April 7, 1999).  The following  table sets forth the
range of high and low closing bid prices for each period  indicated  as reported
by Pink Sheets LLC (formerly the National Quotation Bureau, LLC):

                                       9
<PAGE>
Price Range for Common Stock
----------------------------

YEAR ENDED DECEMBER 31, 2002         High               Low
                                    ------             ------
   First Quarter                    $0.0390            $0.0120
   Second Quarter                    0.0300             0.0110
   Third Quarter                     0.0145             0.0095
   Fourth Quarter                    0.0165             0.0090

YEAR ENDED DECEMBER 31, 2003         High               Low
                                    ------             ------
   First Quarter                    $0.013             $0.0077
   Second Quarter                    0.0155             0.0105
   Third Quarter                     0.036              0.011
   Fourth Quarter                    0.026              0.016

YEAR ENDING DECEMBER 31, 2004        High                Low
                                    ------             ------
   First Quarter
     (through March 30,2004)        $0.027             $0.016

The Closing bid price of our common stock on the OTC  Bulletin  Board was $0.021
on March 30, 2004.

The quotations  noted above,  with respect to  transactions  on the OTC Bulletin
Board,  represent  prices  between  dealers and do not include  retail  markups,
markdowns or commissions.

HOLDERS
-------

As of March  30,  2004,  there  were  156,175,141  shares  of our  common  stock
outstanding, representing approximately 9,100 beneficial holders.

TRANSFER AGENT AND REGISTRAR
----------------------------
The Nevada  Agency and Trust  Company,  Suite 880,  Valley Bank  Plaza,  50 West
Liberty,  Reno,  NV 89501,  is the Transfer  Agent and  Registrar for our common
stock.

DIVIDENDS
---------
We have not paid any cash  dividends on our common  stock to date.  We currently
anticipate  that we will  retain all  future  earnings,  if any,  for use in the
business and do not anticipate paying any cash dividends on our capital stock in
the  foreseeable  future.  In  addition,  the payment of cash  dividends  may be
limited by financing agreements we may enter into in the future.

Sale and Issuance of Unregistered Securities
--------------------------------------------

We have issued and sold unregistered securities during 2002 as set forth below.

Between January 11, 2002 and February 12, 2002, we sold 2,320,754  shares of our
common stock to Evertrend  Holdings Limited  ("Evertrend")at an average purchase
price of $0.0269 per share pursuant to a common stock purchase agreement between
us and Evertrend. Ladenburg Thalmann & Co., Inc. received $5,000.00 in placement
fees and Evertrend received a warrant to purchase 1,160,377 shares of our common
stock at an exercise  price of $0.0269  exercisable  through  March 15, 2002, in
connection  with this  transaction.  We paid $1,000 in escrow fees in connection
with this transaction. These securities were issued in a transaction exempt from
registration  under the  Securities  Act of 1933 in  reliance  on  Section  4(2)
thereof.
                                       10
<PAGE>

We have  issued and sold  unregistered  securities  during  2002 and 2003 as set
forth below. An underwriter was not utilized in any of these  transactions.  The
recipients of  securities in each  transaction  represented  their  intention to
acquire the securities without a view to distribution. All the issued securities
were restricted  securities  under Rule 144 or Regulation S under the Securities
Act of 1933, and appropriate  restrictive legends were affixed to the securities
in each transaction.

In December 2002, the Company  issued  3,183,400  shares of its common stock for
services comprised of the following:  2,000,000 issued shares in connection with
the  extension of the 9% mortgage  note that should have been issued at the time
of  the  original  loan   consummation   in  1999,   500,000  shares  issued  as
compensation,  350,000  shares  issued to  individuals  serving  on our Board of
Directors as director's fees and 333,400 shares issued for consulting services.

In December  2002,  the Company  returned  to treasury  3,675,000  shares of its
common stock.  The Company had requested the return of 3,175,000 shares from Mr.
Michael Zwebner, our former Chairman,  because the consideration for such shares
was never  received.  The Board  voted in  December  2002 to cancel the  500,000
shares that had been awarded to Mr. Pedro  Sanchez,  the Company's  former chief
technical officer.

On June 16, 2003, the Company issued  4,000,000  shares of its common stock into
escrow in exchange for $40,000 in escrow pursuant to a termination and severance
agreement with Mr. Zwebner.

On  August  13,  2003,  in  accordance  with  its  agreement  with  non-employee
directors,  the Company issued 450,000 shares of its common stock and recorded a
non-cash compensation expense in the amount of $11,250.

In the third  quarter of 2003,  in  connection  with the  exercise  of a warrant
issued in September of 2002, the Company issued  2,000,000  shares of its common
stock in exchange for a note receivable of $2,000.

On November 18, 2003, the Company sold  1,000,000  shares of its common stock to
Rodney W. Sturm for $18,000.

Other Matters
-------------

On February 5, 2001, our Board of Directors  authorized a one-for-three  reverse
split  of  our  common  stock,  effective  at the  discretion  and  judgment  of
Management.  On  August  12,  2002,  the  Company's  shareholders'  approved  an
amendment to the Company's by-laws allowing management to effect a reverse split
of the Company's Common Stock if and when it is deemed appropriate.  As of March
30, 2004,  management has not and currently does not have any plans to implement
a reverse split.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

We were organized as Legacy Software,  Inc. ("Legacy") in California in December
1989, as a successor to a partnership formed in 1986, reincorporated in Delaware
in March  1996,  and  reincorporated  in Nevada in June 1999.  We  completed  an
initial public offering of 1,150,000 shares of our common stock, par value $.001
per share,  in May 1996.  In September  1998,  we effected a one for three (1:3)
reverse split of our common stock. From our inception until October 1998, Legacy
primarily developed and sold educational  entertainment  software.  On September
14, 1998, Legacy had ceased developing and marketing software products and began
focusing on the business  activities  of Videocall.  On March 1, 1999,  Legacy's
name was changed to Talk Visual Corporation.

                                       11
<PAGE>

Prior to August 24, 1999, we were  considered a development  stage  company.  On
August 24, 1999,  we launched our  telecommunications  services  through  wholly
owned retail stores in the United  States and joint venture  partners in Europe,
Israel, Canada, Asia and South America.

In July 2000, we purchased through a wholly owned  subsidiary,  the assets of 11
retail  telephone  call shop stores  operating in the New York  City/New  Jersey
market.

In 2002, among other things, the Company:

         o    Focused on delivering  telecommunication services to the market in
              key areas such as South Florida, New York and Los Angeles;

         o    Purchased a telecommunication switch and peripheral equipment, and
              installed  SS7  capability  at  our   headquarters   in  Miami  to
              effectively and efficiently deliver telecommunication  services to
              our existing and future customers;

         o    Began  targeting  key business and  residential  customers  with a
              heavy concentration of telecommunication  traffic to key countries
              in Latin America;

         o    Completed the  implementation of our new billing and switch system
              which  allows  us  to  more  efficiently  add  new  customers  and
              effectively invoice our growing customer base, and

         o    Increased  our  customer  base of  residential,  business and call
              shops to approximately to 2,600.

2003 Highlight Summary

While the economy showed signs of  improvement  during 2003, the year was one in
which the TVC management team continued to take a number of steps to improve the
overall performance of the Company.  To this end,  improvements were made to the
Company's infrastructure  (network,  information systems, etc), the organization
was realigned,  and greater  operational  focus was placed on the core (business
and residential)  markets.  In addition,  sales and marketing  efforts were more
directly  focused on underserved  markets where the customers  have  significant
demand for long distance calling, especially international calling.

During 2003, the Company

         o    Began more  aggressively  growing the core  business  and consumer
              sectors  while  reducing  reliance  on the  higher  risk call shop
              market.

         o    Consistent  with the  aforementioned  strategy,  sold  the  retail
              operations  in New  York  and New  Jersey  while  keeping  the new
              purchaser as a major customer.

         o    Conducted   extensive  reviews  of  the  key  customer   impacting
              processes  (billing,  customer  service,  provisioning,  etc)  and
              identified  opportunities to improve  productivity,  reduce costs,
              and realign resources.

         o    Continued to grow the agent sales channel.

         o    Improved  the overall cash  position of the Company by  converting
              assets on the balance sheet to cash for use as working capital.

         o    Improved  billing  functionality  and  flexibility  with an eye to
              future service offerings and billing options.

                                       12
<PAGE>
         o    Initiated and completed all  activities  associated  with changing
              the  Company's  name - an  action  taken  to  better  reflect  the
              modified business focus.

         o    Launched   a  sales  and   marketing   campaign   in  new   venues
              (publications,  exhibitions,  conferences, etc) that reflected the
              new business strategy.

         o    Enhanced the security of the network.

         o    Initiated new bill payment options.

         o    Began a major overhaul of its web site.

The Company believes that the actions taken and the accomplishments  achieved in
2003 provide a springboard  for continued  improvement  in  performance.  During
2004, the Company plans to

         o    Continue  special  promotions  for the  residential  and  business
              markets

         o    Introduce  new offers and service  enhancements  that focus on (1)
              businesses  "expanding  their  reach"  and  service  areas and (2)
              allowing  residential  customers to "stay connected" wherever they
              are.

         o    Aggressively act on its partnership with a Mexican partner as well
              as with  some US  companies  to begin  offering  customized  phone
              service to the large  group of Mexican  migrant  workers  that are
              located in multiple small markets around the US.

         o    Add network  capacity  and  redundancy  to its key  markets  while
              implementing  its own CIC code for use in late 2004 or early 2005.
              These actions will increase the Company's ability to compete while
              increasing control over its own network.

         o    Add  interactive  features and functions to the web site that will
              allow  customers  and agents to view  on-line  information,  place
              orders, etc.

         o    Continue   expanding   its   geographic   reach  by  adding  sales
              representatives and agents.

         o    Continue  improving  its  processes  to  appropriately  manage the
              increase in the customer base.

While  taking  these  actions to increase  the core  business,  the Company will
continue to manage the  revenue  stream  from the retail  call shop  market.  In
addition,  the Company  will  consider  opportunities  that  create  synergy and
expansion of its business or result in immediate returns for its shareholders.

Currently,  revenues  consist of the  reselling  of long  distance  services  to
business and residential customers, and call shops in several major markets.

RESULTS OF OPERATIONS

Fiscal Year Ended  December 31, 2003 compared to Fiscal Year Ended  December 31,
2002
--------------------------------------------------------------------------------
Revenue  decreased  $1.3  million or 17.7% to $6.1  million  for the year ending
December 31, 2003, from $7.4 million for the year ending December 31, 2002. This
decrease is  attributable  to the sale of the stores in the New York/New  Jersey
area.
                                       13
<PAGE>

Cost of Sales  decreased  $1.0  million  or 19.8% to $4.2  million  for the year
ending  December  31, 2003,  from $5.2 million for the year ending  December 31,
2002.  This decrease is directly  attributable  to the sale of the stores in the
New York/New Jersey area.

Gross  Profit  decreased  $0.28  million  to $1.9  million  for the year  ending
December  31,  2003,  from a gross  profit of $2.2  million  for the year ending
December 31, 2002. As a percentage of revenue,  gross profit increased to 31.12%
for the year ending  December 31, 2003 from 29.39% for the year ending  December
31, 2002.

Selling,  General &  Administrative  (SG&A)  expenses as a percentage of revenue
increased to 50.0% for the year ending December 31, 2003,  compared to 49.4% for
the year  ending  December  31,  2002.  The  amount  of SG&A  expenses  incurred
decreased  $0.61  million or 16.6% to $3.1 million for the year ending  December
31,  2003,  from $3.7 million for the year ending  December 31, 2002.  The major
elements of our SG&A were as follows:
                                                    2003             2002
                                                ----------       ----------
            Salaries and benefits               $1,135,112       $1,455,069
            Travel                                  49,183           90,668
            Office, computer and maintenance       413,652          616,175
            Rents, licenses and other expenses     391,033          564,522
            Consultants                            346,705          315,370
            Legal and other professional           142,524          131,200
            Marketing and public relations         572,153          486,366
                                                 ---------      -----------
                      Total                     $3,050,362       $3,659,370
                                                 =========      ===========

Salaries  and  benefits  decreased as a result of the sale of nine stores in the
New York City/New Jersey area. Additionally,  ancillary expenses incurred by the
stores, such as rent,  decreased in 2003 over 2002. Other expenses decreased due
to cost reduction measures implemented by new management in 2002.

Depreciation and Amortization expenses decreased $0.05 million or 15.6% to $0.27
million for the year ending  December 31, 2003,  from $0.32 million for the year
ending  December 31,  2002.  This  decrease is primarily  due to the disposal of
property and equipment in connection with the sale of unprofitable stores.

Loss from  Operations  decreased  $0.38 million or 21.0% to $1.4 million for the
year ending  December 31, 2003,  from $1.8 million for the year ending  December
31, 2002 due to the operational cost reductions.

Other  (Expenses)  Income  increased  $0.84  million or 1245% to other income of
$0.90  million for the year ended  December 31, 2003,  from $67,000 for the year
ended  December  31,  2002.  Included  in other  income for 2003 was a gain from
vendor  settlements of $1.15 million and a gain on the sale of securities in the
amount of $0.05 million.

Loss from Discontinued  Operations  decreased $0.91 million to $0.05 million for
the year  ending  December  31,  2003 from  $0.96  million  for the year  ending
December 31, 2002. The loss from  discontinued  operations is due to the sale of
the Company's property in Sacramento,  California.  The Sacramento  property was
sold on February 26, 2003.

Net Loss  applicable to Common Shares  decreased  $2.47 million or 81.5% to $.56
million for the year ending  December 31, 2003,  from $3.03 million for the year
ended December 31, 2002  primarily due to cost  reduction  activities and vendor
settlements.

                                       14
<PAGE>

At December  31,  2003,  the Company  had federal and state net  operating  loss
carryforwards of approximately  $25,000,000,  available to offset taxable income
expiring  at  various  times  through  the year 2018 The Tax  Reform Act of 1986
contains  provisions  which limit the federal net operating  loss  carryforwards
available  to be used in any  given  year in the event of  certain  occurrences,
which include significant ownership changes.

Fiscal Year Ended  December 31, 2002 compared to Fiscal Year Ended  December 31,
2001
--------------------------------------------------------------------------------
Revenue  increased  $2.2  million or 42.0% to $7.4  million  for the year ending
December 31, 2002, from $5.2 million for the year ending December 31, 2001. This
increase is attributable to the growth of the Company's  telecommunication sales
in Miami and New York in the residential and business sectors.

Cost of Sales  increased  $1.56  million or 42.5% to $5.23  million for the year
ending  December 31, 2002,  from $3.67 million for the year ending  December 31,
2001.  This increase is directly  attributable to the increase in traffic volume
in 2002 over 2001.

Gross  Profit  increased  $0.63  million to $2.18  million  for the year  ending
December  31,  2002,  from a gross  profit of $1.55  million for the year ending
December 31, 2001. This increase is due to the changes  discussed in Revenue and
Cost of Sales.

Selling,  General &  Administrative  (SG&A)  expenses as a percentage of revenue
decreased to 49.4% for the year ending December 31, 2002,  compared to 90.0% for
the year ending  December 31, 2001.  The total amount of SG&A expenses  incurred
decreased $1.0 million or 22.1% to $3.7 million for the year ending December 31,
2002,  from $4.7  million  for the year  ending  December  31,  2001.  The major
elements of our SG&A were as follows:

                                                  2002             2001
                                               ---------        ---------
          Salaries and benefits               $1,455,069       $2,354,824
          Travel                                  90,668          182,295
          Office, computer and maintenance       616,175          618,476
          Rents, licenses and other expenses     564,522          715,316
          Consultants                            315,370          270,452
          Legal and other professional           131,200          216,360
          Marketing and public relations         486,366          338,934
                                               ---------      -----------
                     Total                    $3,659,370       $4,696,657
                                               =========      ===========

Salaries and benefits decreased as a result of the sale of two stores in the New
York City/New  Jersey area and the closing of all other locations other than the
Miami  headquarters.  Additionally,  ancillary  expenses incurred by the stores,
such as rent,  decreased in 2002 over 2001. Other expenses decreased due to cost
reduction measures implemented by new management in 2002.

Depreciation and Amortization expenses decreased $0.13 million or 29.8% to $0.32
million for the year ending  December 31, 2002,  from $0.45 million for the year
ending  December  31,  2001.  This  decrease is  primarily  due to the change in
amortization  of  goodwill  in  accordance  with  SFAS  No.  142 and the sale of
unprofitable stores.

Loss from  Operations  decreased  $2.2  million or 54.7% to $1.8 million for the
year ending  December 31, 2002,  from $4.0 million for the year ending  December
31, 2001 due to the increases in revenue and operational cost reductions.

                                       15
<PAGE>

Other Income  (Expenses)  increased  $1.6 million or 104.3% to $0.07 million net
other income for the year ending  December 31, 2002,  from net other expenses of
$1.6 million for the year ending  December 31, 2001.  Included in other expenses
for 2001 was a  write-down  of equity  securities  of $963,000 and a loss on the
disposal of equipment in the amount of $577,000.

Loss from Discontinued  Operations  decreased $2.17 million to $0.96 million for
the year  ending  December  31,  2002 from  $3.13  million  for the year  ending
December 31, 2001. The loss from  discontinued  operations is due to the sale of
the  Company's  property  in  Toronto,  Canada,  and  the  proposed  sale of the
Company's  property  in  Sacramento,  California.  The  loss on the  sale of the
Toronto property and the impairment loss on the Sacramento  property in 2001 was
$493,000  and  $2,581,000,  respectively.  The  Sacramento  property was sold on
February 26, 2003.

Net Loss  applicable to Common Shares  decreased $5.65 million or 65.1% to $3.03
million for the year ending  December 31, 2002,  from $8.68 million for the year
ended  December 31, 2001,  primarily due to increased  revenues,  cost reduction
activities,  elimination of equity security write downs, and equipment  disposal
loss.

LIQUIDITY AND CAPITAL RESOURCES

As of  December  31,  2003,  we had  $25,251  of cash on hand.  We will  require
continued  revenue and timely  collection of receivables  to finance  continuing
revenue growth, new product introduction and other activities.  The Company will
require  outside  financing  in the  first  half  of 2004  if its  results  from
operations are insufficient to meet its cash flow requirements.

Net cash outflows from operating  activities  were $1,320,907 for the year ended
December 31,  2003,  and  $469,799  for the year ended  December  31, 2002.  The
increase in net outflows  resulted from the  settlement of much of the Company's
outstanding  payables in 2003. The net cash outflow from operating activities of
$1,320,907 for 2003 was comprised primarily of the net loss of $562,195 adjusted
for non-cash  items from  continuing  operations in the amount of $609,610,  and
changes in current assets and current liabilities totaling $149,102.

Cash inflows from investing activities of $2,071,488 for the year ended December
31, 2003 resulted primarily from the sale of discontinued operations aggregating
$1,012,363, the sale of the Retail Operations Division for $210,000 and the sale
of securities totaling $840,446.

Net cash used in financing  activities  was  $829,431 in 2003.  These funds were
obtained from the acquisition of new debt instruments in the amount of $200,247,
and the  proceeds of common  stock  transactions  consisting  of $20,000.  These
amounts were offset by payments on debt totaling $1,049,678.

As reflected in the accompanying financial statements,  the Company has incurred
significant  net losses since  inception and expects to continue to incur losses
and have negative working capital through 2004. Although the Company expects its
cash flow from  operations to improve,  there can be no assurance that this will
occur.  Until the Company  generates  positive  cash flow,  the Company  will be
dependent on improving results from ongoing operations,  and, in its absence, an
infusion of debt or sale of equity.

Subsequent to December 31, 2003,  the Company has received all amounts owed from
a former  officer,  has  experienced an  improvement in monthly  revenue and has
entered into a commitment with a major  shareholder for a secured line of credit
in the amount of $500,000.

Based upon the above events and  management's  projected  operations and related
cash flows,  it believes  that there will be  sufficient  cash flows to meet the
needs of the Company for 2004.

                                       16
<PAGE>
CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Cash Equivalents
----------------

The Company considers all highly liquid investments with original  maturities of
three months or less to be cash equivalents.

Concentrations of Credit Risk
-----------------------------

Financial instruments which potentially subject the Company to concentrations of
credit risk consist  principally  of cash and  temporary  cash  investments.  At
times, cash balances held at financial  institutions were in excess of federally
insured  limits.   The  Company  places  its  temporary  cash  investments  with
high-credit, quality financial institutions and, by policy, limits the amount of
credit  exposure  to any one  financial  institution.  The  Company  believes no
significant  concentration  of credit  risk  exists  with  respect to these cash
investments.

Property and Equipment
----------------------

Property and equipment is recorded at cost.  Expenditures for major improvements
and additions are charged to the asset accounts while replacements,  maintenance
and repairs  which do not improve or extend the lives of the  respective  assets
are charged to expense currently.

Depreciation   of  property  and   equipment  and   amortization   of  leasehold
improvements are computed using the straight-line  method at various rates based
on the estimated useful lives of the assets, which range from 5 to 31 years.

Income Taxes
------------

The Company  accounts  for income  taxes  according  to  Statement  of Financial
Accounting Standards No. 109, which requires a liability approach to calculating
deferred income taxes.  Under this method,  the Company  records  deferred taxes
based on temporary differences between the tax bases of the Company's assets and
liabilities  and their  financial  reporting  bases.  A valuation  allowance  is
established when it is more likely than not that some or all of the deferred tax
assets will not be realized.

Revenue Recognition
-------------------

Revenue is recognized upon completion of the service.

Loss Per Share
--------------

SFAS No. 128,  Earnings  Per Share  requires  presentation  of basic and diluted
earnings  per share.  Basic  earnings  per share is  calculated  on the weighted

                                       17
<PAGE>

average  number of shares  outstanding  and diluted EPS  includes  the effect of
dilutive outstanding options and warrants. For the years ended December 31, 2003
and 2002,  no effect was given to  outstanding  options and  warrants  since the
effect would have been anti-dilutive.

Stock Based Compensation
------------------------

The Company accounts for its stock option awards under the intrinsic value based
method of accounting  prescribed by Accounting  Principles Board Opinion No. 25,
"Accounting  for Stock Issued to  Employees."  Under the  intrinsic  value based
method,  compensation  cost is the excess, if any, of the quoted market price of
the stock at grant date or other  measurement  date over the amount an  employee
must pay to acquire the stock.  The Company makes pro forma  disclosures  of net
income and earnings  per share as if the fair value based  method of  accounting
had been  applied as  required  by SFAS No.  123,  "Accounting  for  Stock-Based
Compensation."

Recent Accounting Pronouncements
--------------------------------

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards  ("SFAS") No. 143 which requires entities to
record the fair value of a liability for an asset  retirement  obligation in the
period in which it is incurred  and a  corresponding  increase  in the  carrying
amount of the related long-lived asset. Subsequently,  the asset retirement cost
should be allocated to expense using a systematic  and rational  method over its
useful life. SFAS No. 143 is effective for fiscal years beginning after June 15,
2002.  Adoption of SFAS No. 143 did not have a material  impact on the Company's
financial statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal  Activities.  This statement addresses accounting and reporting
for costs  associated with exit or disposal  activities and nullifies EITF Issue
No. 94-3. This statement is effective for exit or disposal costs initiated after
December 31, 2002, with early adoption encouraged. Adoption of Statement 146 did
not have a material impact on the Company's consolidated financial statements.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure"- an amendment of FASB Statement No. 123.
This statement provides alternative methods of transition for a voluntary change
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  SFAS No. 148 amends the  disclosure  requirements  of SFAS 123 to
require  disclosures in both annual and interim  financial  statements about the
method of accounting for stock-based employee compensation and the effect of the
method on reported results.

The Company  adopted the  disclosure-only  provisions  of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based  Compensation," ("SFAS
123").  The Company has elected to continue using  Accounting  Principles  Board
Opinion No. 25,  "Accounting  for Stock Issued to Employees"  in accounting  for
employee stock options.

Accordingly,  compensation  expense for options granted to employees is recorded
to the extent the market  value of the  underlying  stock  exceeds the  exercise
price at the date of grant.  For the years ended  December  31, 2003 and 2002 no
compensation was recorded.  Compensation cost determined based on the fair value
at the grant  date for awards in the years  ended  December  31,  2003 and 2002,
consistent  with the provisions of SFAS 123, would not have a material effect on
the Company's net loss and loss per share.

                                       18
<PAGE>

In  January  2003,  the FASB  issued  FASB  Interpretation  No.  46 ("FIN  46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. On October 9, 2003
the FASB  issued  FASB  Staff  Position  No. FIN 46-6,  "Effective  Date of FASB
Interpretation  No. 46,  Consolidation  of Variable  Interest  Entities,"  which
defers the  implementation  date for public  entities that hold an interest in a
variable  interest entity or potential  variable  interest entity from the first
fiscal year or interim  period  beginning  after June 15, 2003 to the end of the
first  interim or annual period  ending after  December 15, 2003.  This deferral
applies only if 1) the variable  interest  entity was created before February 1,
2003 and 2) the public entity has not issued financial statements reporting that
variable  interest  entity in  accordance  with FIN 46,  other than  disclosures
required by paragraph 26 of FIN 46. In December 2003, the FASB issued a revision
to FIN 46 ("FIN 46R"),  which clarifies and interprets certain provisions of FIN
46, without  changing the basic  accounting model of FIN 46. The adoption of FIN
46 and FIN 46R did not have a  material  impact  on the  Company's  consolidated
financial  position,  liquidity,  or results of operations.The  adoption of this
statement  did  not  have  a  material  effect  on  the  consolidated  financial
statements of the Company.

In April 2003, the FASB issued SFAS No. 149, which amends SFAS 133,  "Accounting
for Derivative  Instruments and Hedging  Activities".  The primary focus of this
Statement  is to amend  and  clarify  financial  accounting  and  reporting  for
derivative  instruments.  This Statement is effective for contracts entered into
or modified after  September 30, 2003.  Adoption of SFAS No. 149, did not have a
material impact on the Company's financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  For Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity".  SFAS No. 150
changes the accounting for certain financial instruments with characteristics of
both liabilities and equity that, under previous  pronouncements,  issuers could
account for as equity.  The new  accounting  guidance  contained in SFAS No. 150
requires that those  instruments  be classified  as  liabilities  in the balance
sheet.

SFAS No. 150 affects the  issuer's  accounting  for three types of  freestanding
financial  instruments.  One type is mandatorily  redeemable  shares,  which the
issuing company is obligated to buy back in exchange for cash or other assets. A
second type includes put options and forward purchase contracts,  which involves
instruments  that do or may require the issuer to buy back some of its shares in
exchange  for cash or other  assets.  The  third  type of  instruments  that are
liabilities  under this  Statement  are  obligations  that can be  settled  with
shares,  the monetary value of which is fixed, tied solely or predominantly to a
variable  such as a market  index,  or  varies  inversely  with the value of the
issuers' shares. SFAS No. 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety.

Most of the  provisions  of  SFAS  No.  150 are  consistent  with  the  existing
definition  of  liabilities  in FASB  Concepts  Statement  No. 6,  "Elements  of
Financial Statements". The remaining provisions of this Statement are consistent
with the  FASB's  proposal  to  revise  that  definition  to  encompass  certain
obligations  that a  reporting  entity  can or must  settle by  issuing  its own
shares. This Statement shall be effective for financial instruments entered into
or modified after May 31, 2003 and otherwise shall be effective at the beginning
of the first interim period beginning after June 15, 2003.  Adoption of SFAS No.
150 did not have a material impact on the Company's financial statements.

                                       19
<PAGE>

RISK FACTORS

As of  December  31,  2003 we have  not  generated  operating  profits.  We will
continue to be  dependent  on our retail and  telecommunication  product  sales,
collection  of all  receivables  as well as short and long term  borrowings  for
working capital needs, until the operating  activities  generate sufficient cash
flow to fund our needs.  There is no assurance  of  profitability  and,  even if
achieved,  that such  profitability  will be consistent on a quarterly or annual
basis.  We may  need to raise  additional  funds  to fund  our  working  capital
deficit,   to  pursue   additional   acquisitions,   to  undertake  new  product
development,  or if we experience operating losses that exceed expectations.  If
we raise  additional  funds  through the issuance of equity or debt  securities,
these securities may have rights,  preferences or privileges  senior to those of
the rights of our common stock, and our  stockholders may experience  additional
dilution.  We cannot be certain that  additional  financing will be available on
favorable terms when required,  or at all. There is no assurance that sources of
funds from debt or equity will be available.

We have pursued, are currently pursuing and expect, in the future to pursue, the
development  of  new   technologies   and  businesses   internally  and  through
acquisitions  and  combinations  which  involve   significant  risks.  Any  such
acquisition  or  combination  may involve,  among other things,  the issuance of
equity securities, the payment of cash, the incurrence of contingent liabilities
and the  amortization  of  expenses  related to  goodwill  and other  intangible
assets, and transaction costs, which have adversely  affected,  or may adversely
affect, our business' results of operations and financial condition. Our ability
to integrate and organize any new businesses and/or products, whether internally
developed  or obtained  by  acquisition  or  combination,  will  likely  require
significant expansion of our operations. There is no assurance that we will have
or be able to obtain the  necessary  resources  to  satisfactorily  effect  such
expansion,  and the failure to do so could have a material adverse effect on our
business,  financial  condition and results of operations.  In addition,  future
acquisitions  and or  combinations  by the Company involve risks of, among other
things,  entering  markets  or  segments  in which we have no or  limited  prior
experience,  the potential loss of key employees of the acquired  company and/or
difficulty,  delay or failure in the integration of the operations,  management,
personnel  and business of any such new business with our business and operating
and financial difficulties of any new or newly combined operations, any of which
could have a materially adverse effect on our business,  financial condition and
results of operations.  Moreover, there can be no assurance that the anticipated
benefits of any specific acquisition or of any internally developed new business
segment or business combination will be realized.


                                       20
<PAGE>

Item 7.  Financial statements and supplementary data
         -------------------------------------------



                                   Contents



Report of Independent Auditors.........................................      22

Consolidated Balance Sheet.............................................   23-24

Consolidated Statements of Operations..................................      25

Consolidated Statements of Stockholders' Equity (Deficiency in Assets).   26-27

Consolidated Statements of Cash Flows..................................   28-29

Notes to Consolidated Financial Statements.............................   30-44













                                       21
<PAGE>

Report of Independent Auditors


To the Stockholders of
TVC Telecom Incorporated
Miami, Florida


We have  audited  the  accompanying  consolidated  balance  sheet of TVC Telecom
Incorporated  and  Subsidiaries  as  of  December  31,  2003,  and  the  related
consolidated  statements of  operations,  stockholders'  equity  (deficiency  in
assets)  and cash flows for each of the two years in the period  ended  December
31, 2003. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of TVC
Telecom  Incorporated  and Subsidiaries as of December 31, 2003, and the results
of their operations and their cash flows for each of the two years in the period
ended  December 31, 2003, in conformity  with  accounting  principles  generally
accepted in the United States of America.

As more fully  described  in Note 2 to the  consolidated  financial  statements,
there are certain liquidity matters  concerning the Company.  Management's plans
with regard to these liquidity matters are also discussed in Note 2.

/s/ Kaufman Rossin & Co., P.A.
----------------------------------
    Kaufman Rossin & Co., P.A.


    Miami, Florida
    February 24, 2004,  except for Notes 2 and 17, as to which the date is April
    12, 2004

                                       22
<PAGE>


                    TVC TELECOM INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2003


                                     ASSETS
                                     ------


CURRENT ASSETS
   Cash                                                          $    25,251
   Accounts receivable, net of allowance
    for doubtful accounts of $137,506                                408,042
   Due from former officer                                           188,570
   Other current assets                                               11,204
                                                                  ----------
   Total current assets                                              633,067

PROPERTY AND EQUIPMENT, net                                          402,901

OTHER ASSETS                                                          63,833
                                                                  ----------
   TOTAL ASSETS                                                  $ 1,099,801
                                                                  ==========


                 See notes to consolidated financial statements.







                                       23
<PAGE>



                    TVC TELECOM INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (continued)

                                DECEMBER 31, 2003


                      LIABILITIES AND DEFICIENCY IN ASSETS
                      ------------------------------------


CURRENT LIABILITIES
   Accounts payable                                              $   959,238
   Accrued liabilities                                               786,546
   Notes payable                                                     169,312
   Other current liabilities                                          22,805
                                                                  ----------
    Total current liabilities                                      1,937,901

LONG-TERM DEBT                                                       225,950
                                                                  ----------
   TOTAL LIABILITIES                                               2,163,851
                                                                  ----------

COMMITMENTS AND CONTINGENCIES

DEFICIENCY IN ASSETS
   Series A Convertible  redeemable  preferred stock,
    par value $.001 per share, 25,000,000 shares authorized;
    none issued or outstanding

   Common  Stock,  par value  $.001 per share,  500,000,000
    shares  authorized; 156,175,141 shares issued
    and outstanding                                                  156,175
   Common Stock Subscribed                                           (40,000)
   Common Stock To Be Issued                                          49,222
   Additional paid in capital                                     24,103,863
   Accumulated deficit                                           (25,333,310)
                                                                  ----------
   DEFICIENCY IN ASSETS                                           (1,064,050)
                                                                  ----------
    TOTAL                                                        $ 1,099,801
                                                                  ==========


                  See notes to consolidated financial statements.


                                       24
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                    YEARS ENDED DECEMBER 31,
                                                ------------------------------
                                                    2003                2002
                                                -----------         ----------

REVENUE
  Telecommunication sales and services           $6,095,728         $7,409,593

COSTS OF SALES AND SERVICES                       4,198,701          5,232,052
                                                -----------         ----------
GROSS PROFIT                                      1,897,027          2,177,541
                                                -----------         ----------
OPERATING EXPENSES
  Selling, general and administrative             3,050,362          3,659,370
  Depreciation and amortization                     266,040            315,142
                                                -----------         ----------
Total operating expenses                          3,316,402          3,974,512
                                                -----------         ----------
LOSS FROM OPERATIONS                             (1,419,375)        (1,796,971)
                                                -----------         ----------
OTHER INCOME (EXPENSE)
  Interest expense, net                             (14,201)           (59,140)
  Non Cash Stock Compensation                      (104,472)              --
  Vendor Settlements                              1,152,770               --
  Loss on disposal of property and equipment        (79,931)            (4,996)
  Gain on Sale of Securities                         47,242               --
  Other income                                         --              131,647
  Goodwill impairment                               (93,707)              --
                                                -----------        -----------
Total other income (expenses)                       907,701             67,511
                                                -----------        -----------
LOSS FROM CONTINUING OPERATIONS                    (511,674)        (1,729,460)

LOSS FROM DISCONTINUED OPERATIONS                   (50,521)          (962,406)
                                                -----------        -----------
LOSS BEFORE CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE                                (562,195)        (2,691,866)

CUMULATIVE EFFECT OF ACCOUNTING
  CHANGE (GOODWILL IMPAIRMENT)                         --             (339,208)
                                                -----------        -----------
NET LOSS                                        $  (562,195)       $(3,031,074)
                                                ===========        ===========


NET LOSS PER COMMON SHARE - BASIC AND DILUTED
  CONTINUING OPERATIONS                         $    (0.003)       $    (0.012)

  DISCONTINUED OPERATIONS                            (0.001)            (0.006)

  CUMULATIVE EFFECT OF ACCOUNTING CHANGE               --               (0.002)
                                                -----------        -----------
  NET LOSS                                      $    (0.004)       $    (0.020)
                                                ===========        ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD                   151,905,963        148,825,179
                                                ===========        ===========

                 See notes to consolidated financial statements

                                       25
<PAGE>
<TABLE>
<CAPTION>
                    TVC Telecom Incorporated and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                             (Deficiency in Assets)
                     Years Ended December 31, 2003 and 2002
                                  (split table)
Total
Additional Stockholders' Equity

                                                          Common Shares
                                                          -------------               Stock           Stock        Paid In
                                                       Shares         Amount        Subscribed     to be Issued     Capital
                                                   ------------    ------------    ------------    ------------   ------------


<S>                                                 <C>            <C>              <C>             <C>          <C>
 Balance December 31, 2001                          136,895,987    $    136,896            --              --     $ 23,959,558

 Year Ended December 31, 2002:
  Common shares issued to former officers
                                                                     10,000,000          10,000            --             --
  Sales of common stock
                                                                      2,320,754           2,321            --             --
  Common Shares issued for services
                                                                      2,333,400           2,333            --             --
  Common Shares issued to directors
                                                        850,000             850            --              --            7,650
  Common Shares to former officers
    - cancelled                                      (3,675,000)         (3,675)           --              --            3,675

  Net Loss                                                 --              --              --              --             --

                                                   ------------    ------------    ------------    ------------   ------------
 Balance December 31, 2002                          148,725,141    $    148,725            --              --     $ 24,036,063


Year Ended December 31, 2003:

Issuance of shares to former officer                  4,000,000           4,000         (40,000)           --           40,000

Issuance of shares to directors                         450,000             450            --              --           10,800

Exercise of warrants at $0.001 per share              2,000,000           2,000            --              --             --

Sale of Common Stock                                  1,000,000           1,000            --              --           17,000

2,461,124 Shares authorized to be issued in 2004
to officers                                                --              --              --            49,222           --

Net Loss                                                   --              --              --              --             --

                                                   ------------    ------------    ------------    ------------   ------------
 Balance December 31, 2003                          156,175,141    $    156,175    $    (40,000)   $     49,222   $ 24,103,863
                                                   ============    ============    ============    ============   ============
</TABLE>

                 See notes to consolidated financial statements

                                       26
<PAGE>

                    TVC Telecom Incorporated and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                             (Deficiency in Assets)
                     Years Ended December 31, 2003 and 2002
                            (split table, continued)
Total
Additional Stockholders' Equity


                                                   Accumulated     (Deficiency
                                                      Deficit       in Assets)
                                                  ------------    ------------


 Balance December 31, 2001                        $(21,740,041)      2,356,413

 Year Ended December 31, 2002:
  Common shares issued to former officers
                                                          --              --
  Sales of common stock
                                                          --            56,500
  Common Shares issued for services
                                                          --            23,334
  Common Shares issued to directors
                                                          --             8,500
  Common Shares to former officers
    - cancelled                                           --              --

  Net Loss                                          (3,031,074)     (3,031,074)

                                                  ------------    ------------
 Balance December 31, 2002                        $(24,771,115)   $   (586,327)


Year Ended December 31, 2003:

Issuance of shares to former officer                      --             4,000

Issuance of shares to directors                           --            11,250

Exercise of warrants at $0.001 per share                  --             2,000

Sale of Common Stock                                      --            18,000

2,461,124 Shares authorized to be issued in 2004
to officers                                               --            49,222

Net Loss                                              (562,195)       (562,195)

                                                  ------------    ------------
 Balance December 31, 2003                        $(25,333,310)   $ (1,064,050)
                                                  ============    ============
(split table concluded)

                 See notes to consolidated financial statements


                                       27
<PAGE>
<TABLE>
<CAPTION>
                    TVC TELECOM INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                                            YEAR ENDED DECEMBER 31,
                                                          --------------------------
                                                              2003            2002
                                                          -----------    -----------

Cash Flows From Operating Activities:
<S>                                                       <C>            <C>
Net Loss                                                  $  (562,195)   $(3,031,074)

Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization                               266,040        315,142
  Impairment of goodwill                                       93,707        339,208
  Vendor settlements                                       (1,152,770)          --
  Impairment of assets held for sale                             --          759,998
  Provision for uncollectible accounts receivable              46,252        169,379
  Gain on Sale of Securities                                  (47,242)          --
  Write down of investments                                      --           30,159
  Loss on disposal of property and equipment                   79,931          4,996
  Issuance of common stock in exchange
    for services and obligations                              104,472         31,834
  Reduction of note payable                                      --         (150,000)

Increase (decrease) in cash from changes in:
  Accounts receivable                                         (54,099)      (207,580)
  Other current assets                                        117,832           --
  Other assets                                                 50,471        (15,632)
  Accounts payable                                           (428,993)     1,046,232
  Accrued liabilities                                         192,255        228,135
  Other current liabilities                                   (26,568)          --
  Other liabilities                                              --            9,404
                                                          -----------    -----------
    Net Cash used in Operating Activities                  (1,320,907)      (469,799)
                                                          -----------    -----------
Cash Flows From Investing Activities:

  Purchase of property and equipment                           (7,959)      (213,963)
  Proceeds from sales of call shops                           210,000         35,000
  Proceeds from sale of discontinued operations             1,012,363           --
  Proceeds from sale of securities                            840,446           --
  Payments of deposits                                           --          (35,091)
  Collections on loan from former officer                      16,638           --
                                                          -----------    -----------
    Net Cash provided by (used in) Investing Activities     2,071,488       (214,054)
                                                          -----------    -----------
</TABLE>


               See notes to consolidated financial statements

                                       28
<PAGE>
<TABLE>
<CAPTION>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (continued)


                                                           YEAR ENDED DECEMBER 31,
                                                           -----------------------
                                                             2003           2002
                                                           ---------      ---------

Cash Flows from Financing Activities:
<S>                                                       <C>             <C>
  Borrowings on debt                                         200,247        500,000
  Payments on notes payable and long-term debt            (1,049,678)       (92,474)
  Net proceeds from common stock transactions                 20,000         56,500
                                                           ---------      ---------
    Net Cash provided by (used in) Financing Activities     (829,431)       464,026
                                                           ---------      ---------

Decrease in cash                                             (78,850)      (219,827)
Cash at beginning of period                                  104,101        323,928
                                                           ---------     ----------
Cash at end of period                                     $   25,251     $  104,101
                                                           =========     ==========

Supplemental disclosure of cash flow information:

a. Cash paid during the period for:

       Interest, excluding discontinued operations        $   22,408     $   10,561
                                                           ---------     ----------
       Income taxes, excluding discontinued operations    $     -        $    3,228
                                                           ---------     ----------
</TABLE>
b. Noncash investing and financing transactions:


For the year ended December 31, 2002


Issuance  of  3,183,400  shares of common  stock for  services  in the amount of
$31,834 comprised of the following:  $20,000 in connection with the extension of
a mortgage note, $5,000 for compensation,  $3,500 for director's fees and $3,334
for consulting services.

For the year ended December 31, 2003

Issuance  of  2,450,000  shares of common  stock for  services  in the amount of
$11,250.

As of December 31, 2003 two officers of the Company have earned 2,461,124 shares
of common  stock to be issued in 2004.  The  Company has  recognized  $49,222 of
compensation expense related to these shares.

On May 16,  2003,  the Company  sold a former  officer  4,000,000  shares of its
common stock for $40,000 in exchange for a reduction in a note  receivable.  The
Company recognized $44,000 of compensation expense related to these shares.

            See notes to consolidated financial statements

                                       29
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation
----------------------

The  consolidated  financial  statements  include  the  accounts  of TVC Telecom
Incorporated  (Parent) and its wholly-owned  subsidiaries,  Sacramento  Results,
Inc.  (Sacramento)  and Mundo  Express of NY, Ltd.  (Mundo)  (collectively  "the
Company").  All significant  intercompany  balances and  transactions  have been
eliminated in consolidation.

Description of Business
-----------------------

The Company is a provider  of voice  telecommunication  services to  underserved
ethnic business and consumer market segments throughout the United States.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

The allowance for doubtful accounts is an estimate which is established  through
charges to earnings for estimated  uncollectible amounts.  Management's judgment
in  determining  the adequacy of the  allowance  is based upon several  factors,
which  include,  but are not limited  to, the nature and volume of the  accounts
receivable,  review of problem or non-performing  receivables,  and management's
judgment  with respect to current  economic  conditions  and their impact on the
receivable balances.  Based on these factors, it is reasonably possible that the
Company's  estimate of the allowance for doubtful  accounts  could change in the
near term.

The Company has recorded a deferred  tax asset of  approximately  $9,500,000  at
December  31,  2003,  which  is  completely  offset  by a  valuation  allowance.
Realization  of the deferred tax asset is  dependent  on  generating  sufficient
taxable  income in the future.  The amount of the deferred tax asset  considered
realizable  could change in the near term if estimates of future  taxable income
are modified.

Cash
----

From  time  to  time,  the  Company   maintains  cash  balances  with  financial
institutions in excess of federally insured limits.


                                       30
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable
----------------
Accounts receivable are  uncollateralized  customer obligations due under normal
trade  terms.  The  carrying  amount of  accounts  receivable  are reduced by an
allowance that reflects  management's best estimate of the amounts that will not
be collected.

Property and Equipment
----------------------

Property and equipment is recorded at cost.  Expenditures for major improvements
and additions are charged to the asset accounts while replacements,  maintenance
and repairs  which do not improve or extend the lives of the  respective  assets
are charged to expense currently.

Depreciation and Amortization
-----------------------------

Depreciation   of  property  and   equipment  and   amortization   of  leasehold
improvements are computed using the straight-line  method at various rates based
on the estimated useful lives of the assets, which range from 5 to 31 years.

Income Taxes
------------

The Company  accounts  for income  taxes  according  to  Statement  of Financial
Accounting Standards No. 109, which requires a liability approach to calculating
deferred income taxes.  Under this method,  the Company  records  deferred taxes
based on temporary differences between the tax bases of the Company's assets and
liabilities  and their  financial  reporting  bases.  A valuation  allowance  is
established when it is more likely than not that some or all of the deferred tax
assets will not be realized.

Marketable Securities
--------------------

The Company accounts for marketable securities in accordance with the provisions
of SFAS  No.  115,  "Accounting  for  Certain  Investments  in Debt  and  Equity
Securities."

Under SFAS No. 115,  debt  securities  and equity  securities  that have readily
determinable fair values are to be classified in three categories:

       Held to maturity - the  positive  intent and ability to hold to maturity.
       Amounts are reported at amortized  cost,  adjusted  for  amortization  of
       premiums and accretion of discounts.

       Trading  securities - bought  principally for purposes of selling them in
       the near term.  Amounts are reported at fair value, with unrealized gains
       and losses included in earnings.

       Available  for  sale - not  classified  in one of the  above  categories.
       Amounts  are  reported at fair value,  with  unrealized  gains and losses
       excluded  from  earnings  and  reported  separately  as  a  component  of
       shareholders' equity.

                                       31
<PAGE>


                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


Revenue Recognition
-------------------

Revenue is recognized upon completion of the service.


Earnings (Loss) Per Share
-------------------------

SFAS No. 128,  Earnings  Per Share  requires  presentation  of basic and diluted
earnings  per share.  Basic  earnings  per share is  calculated  on the weighted
average  number of shares  outstanding  and diluted EPS  includes  the effect of
dilutive outstanding options and warrants. For the years ended December 31, 2003
and 2002,  no effect was given to  outstanding  options and  warrants  since the
effect would have been  anti-dilutive.  Securities that could potentially dilute
earnings  per share in the future that were not included in the  computation  of
diluted loss per share are discussed in Notes 13 and 14.

Advertising Costs
-----------------

Advertising  costs are  expensed as incurred.  For the years ended  December 31,
2003  and  2002,   advertising   expense   amounted  to  $34,016  and   $13,309,
respectively.

Goodwill
--------

Goodwill  is  deemed  to have an  indefinite  life and is  subject  to an annual
impairment test.

Segment Information
-------------------

SFAS  No.  131,   Disclosure   about  Segments  of  an  Enterprise  and  Related
Information, requires public companies to report selected segment information in
its financial  reports to  shareholders.  The Company has determined that it has
only one reportable  segment which is providing  telecommunication  services for
its retail and sales divisions.

Fair Value of Financial Instruments
-----------------------------------

The fair  value of notes  payable  are  estimated  using  discounted  cash  flow
analysis based on the Company's incremental borrowing rates for similar types of
borrowing  arrangements.  At December 31, 2003, the fair values  approximate the
carrying value.


                                       32
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


New Accounting Pronouncements and Interpretations
-------------------------------------------------

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards  ("SFAS") No. 143 which requires entities to
record the fair value of a liability for an asset  retirement  obligation in the
period in which it is incurred  and a  corresponding  increase  in the  carrying
amount of the related long-lived asset. Subsequently,  the asset retirement cost
should be allocated to expense using a systematic  and rational  method over its
useful life. SFAS No. 143 is effective for fiscal years beginning after June 15,
2002.  Adoption of SFAS No. 143 did not have a material  impact on the Company's
financial statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal  Activities.  This statement addresses accounting and reporting
for costs  associated with exit or disposal  activities and nullifies EITF Issue
No. 94-3. This statement is effective for exit or disposal costs initiated after
December 31, 2002, with early adoption  encouraged.  Adoption of this statement,
did not have a material impact on the consolidated  financial  statements of the
Company.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition and Disclosure"- an amendment of FASB Statement No. 123.
This statement provides alternative methods of transition for a voluntary change
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  SFAS No. 148 amends the  disclosure  requirements  of SFAS 123 to
require  disclosures in both annual and interim  financial  statements about the
method of accounting for stock-based employee compensation and the effect of the
method on reported results.

The Company  adopted the  disclosure-only  provisions  of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based  Compensation," ("SFAS
123").  The Company has elected to continue using  Accounting  Principles  Board
Opinion No. 25,  "Accounting  for Stock Issued to Employees"  in accounting  for
employee stock options.

Accordingly,  compensation  expense for options granted to employees is recorded
to the extent the market  value of the  underlying  stock  exceeds the  exercise
price at the date of grant.  For the years ended  December  31, 2003 and 2002 no
compensation was recorded.  Compensation cost determined based on the fair value
at the grant  date for awards in the years  ended  December  31,  2003 and 2002,
consistent  with the provisions of SFAS 123, would not have a material effect on
the Company's net loss and loss per share.

In  January  2003,  the FASB  issued  FASB  Interpretation  No.  46 ("FIN  46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. On October 9, 2003
the FASB  issued  FASB  Staff  Position  No. FIN 46-6,  "Effective  Date of FASB
Interpretation  No. 46,  Consolidation  of Variable  Interest  Entities,"  which
defers the  implementation  date for public  entities that hold an interest in a
variable  interest entity or potential  variable  interest entity from the first
fiscal year or interim period

                                       33
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


New Accounting Pronouncements and Interpretations (Continued)
-------------------------------------------------------------

beginning  after June 15, 2003 to the end of the first  interim or annual period
ending after  December 15, 2003.  This deferral  applies only if 1) the variable
interest entity was created before February 1, 2003 and 2) the public entity has
not issued  financial  statements  reporting  that variable  interest  entity in
accordance with FIN 46, other than  disclosures  required by paragraph 26 of FIN
46. In December  2003,  the FASB issued a revision to FIN 46 ("FIN 46R"),  which
clarifies and  interprets  certain  provisions of FIN 46,  without  changing the
basic  accounting  model of FIN 46. The  adoption  of FIN 46 and FIN 46R did not
have  a  material  impact  on the  Company's  consolidated  financial  position,
liquidity, or results of operations.

In April 2003, the FASB issued SFAS No. 149, which amends SFAS 133,  "Accounting
for Derivative  Instruments and Hedging  Activities".  The primary focus of this
Statement  is to amend  and  clarify  financial  accounting  and  reporting  for
derivative  instruments.  This Statement is effective for contracts entered into
or modified after  September 30, 2003.  Adoption of SFAS No. 149, did not have a
material impact on the Company's financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  For Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity".  SFAS No. 150
changes the accounting for certain financial instruments with characteristics of
both liabilities and equity that, under previous  pronouncements,  issuers could
account for as equity.  The new  accounting  guidance  contained in SFAS No. 150
requires that those  instruments  be classified  as  liabilities  in the balance
sheet.

SFAS No. 150 affects the  issuer's  accounting  for three types of  freestanding
financial  instruments.  One type is mandatorily  redeemable  shares,  which the
issuing company is obligated to buy back in exchange for cash or other assets. A
second type includes put options and forward purchase contracts,  which involves
instruments  that do or may require the issuer to buy back some of its shares in
exchange  for cash or other  assets.  The  third  type of  instruments  that are
liabilities  under this  Statement  are  obligations  that can be  settled  with
shares,  the monetary value of which is fixed, tied solely or predominantly to a
variable  such as a market  index,  or  varies  inversely  with the value of the
issuers' shares. SFAS No. 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety.

Most of the  provisions  of  SFAS  No.  150 are  consistent  with  the  existing
definition  of  liabilities  in FASB  Concepts  Statement  No. 6,  "Elements  of
Financial Statements". The remaining provisions of this Statement are consistent
with the  FASB's  proposal  to  revise  that  definition  to  encompass  certain
obligations  that a  reporting  entity  can or must  settle by  issuing  its own
shares. This Statement shall be effective for financial instruments entered into
or modified after May 31, 2003 and otherwise shall be effective at the beginning
of the first interim period beginning after June 15, 2003.  Adoption of SFAS No.
150 did not have a material impact on the Company's financial statements.

                                       34
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


NOTE 2 - LIQUIDITY

As reflected in the accompanying financial statements,  the Company has incurred
significant  net losses since  inception and could  continue to incur losses and
generate  negative cash flows from  operations  through 2004.  Until the Company
generates positive cash flow, the Company is dependent on an infusion of debt or
equity capital.

On  April  12,  2004,  the  Company  signed  a  commitment  letter  with a major
shareholder  for a line of credit  up to  $500,000.  The line of credit  will be
secured against all assets of the Company, will bear interest at 15% and becomes
immediately  due and payable with no further draw downs upon certain  conditions
including the departure of the Chairman & CEO, Harley Rollins.

Based upon the above events and  management's  projected  operations and related
cash flows,  it believes  that there will be  sufficient  cash flows to meet the
needs of the Company for 2004.


NOTE 3 - DISCONTINUED OPERATIONS

In the fourth quarter of 2001,  the Board of Directors of the Company  committed
to a plan to exit its real  estate  operations  and to focus the  company on its
telecommunication  sector as its sole operating  segment.  On February 26, 2003,
the Company sold its property in  Sacramento,  California for  $5,500,000.  As a
result of the sale,  the existing  mortgage was  assigned to the  purchaser  and
approximately $735,000 of notes payable and related interest were satisfied.

Included in the 2002 results of  operations  is an  impairment  loss of $759,998
which was  recognized  based on the Company's  estimate of net proceeds from the
sale of its property in Sacramento, California.

Revenues and expenses from  discontinued  operations for the year ended December
31, 2003 were  $362,271 and $412,792,  respectively.  Revenues and expenses from
discontinued operations for the year ended December 31, 2002 were $1,264,882 and
$1,467,290, respectively not including the impairment loss discussed above.


                                       35
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)



NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment are summarized as follows:

                                                  2003
                                               ----------
Telecommunications and office equipment        $  778,593
Furniture and Fixtures                             19,973
Leasehold Improvements                            109,502
                                                ---------
                                                  908,068
Less accumulated depreciation and amortization   (505,167)
                                                 ---------
                                               $  402,901
                                               ==========

Depreciation and amortization expense on property and equipment was $266,040 and
$242,069 for the years ended December 31, 2003 and 2002, respectively.


NOTE 5 - GOODWILL

The changes in the carrying  amount of goodwill for the years ended December 31,
2003 and 2002, are as follows:

                                                  2003             2002
                                               ---------        ---------
Balance as of January 1                        $ 226,575        $ 663,750
Transitional impairment loss                        --           (339,208)
Goodwill impairment                              (93,707)            --
Goodwill sold as part of the
  sale of the Retail Operations Division        (132,868)         (97,967)
Amortization expense                                --               --
                                               ---------        ---------
Balance as of December 31, 2003                $    --          $ 226,575
                                               =========        =========

In 2002, the Company  recognized  transitional  goodwill  impairment of $339,208
from the Retail  Operations  Division  related to the  adoption of  Statement of
Financial Accounting Standards No. 142. The fair value of the reporting unit was
determined  using  sales data of the Retail  Operations  Division as well as the
final selling price.


                                       36
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 6 - NOTES PAYABLE

Notes payable are as follows:

15% Unsecured note payable to a vendor, repaid on February 26, 2004 $ 169,312

Convertible note payable, terms currently under negotiation           225,950

                                                                    ---------
Total Notes Payable                                                 $ 395,262
Less current maturity                                                 169,312
                                                                    ---------
Long-term debt                                                      $ 225,950
                                                                    =========

There is no definite  maturity date for the remaining  long-term  debt,  and the
Company does not expect to repay any portion of this debt in 2004.


NOTE 7 - SALE OF ASSETS

Effective  October 27, 2003, the Company completed the sale of the net assets of
its  wholly-owned  subsidiary  Mundo Express of NY, Ltd., a New York corporation
("Mundo Express") to Mateo Express,  Inc., a privately held New York corporation
("Mateo  Express"),  in  accordance  with the terms and  conditions  of an Asset
Purchase   Agreement   for   $210,000   and  a  two-year   renewable   strategic
alliance/supplier  agreement specifying the Company as the exclusive supplier of
long-distance services.


NOTE 8 - COMMITMENTS AND CONTINGENCIES

Operating Leases
----------------

The Company  leases  certain  equipment and real estate under various  operating
leases which expire at various  dates through  September  2007.  Future  minimum
rental payments  required under operating  leases that have initial or remaining
terms in excess of one year at December 31, 2003, are as follows:

 2004                                                $ 145,000

 2005                                                  151,000

 2006                                                  157,000

 2007                                                   80,000

                                                      ---------

 Total future minimum rentals                        $ 533,000
                                                      =========

Rent expense for the years ended  December  31, 2003 and 2002,  was $391,033 and
$530,727, respectively.

                                       37
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


Legal Proceedings
-----------------

There  are  no  material  legal  proceedings,   other  than  routine  litigation
incidental to the business,  to which the Company or any of its subsidiaries are
a party to or which any of their property is subject.

Carrier Services
----------------

The Company has minimum volume  commitments  with three of its carrier  services
providers totaling $500,000.


NOTE 9 - STOCKHOLDERS' EQUITY

The Company's  authorized  capital stock is 500,000,000  shares of common stock,
par value of $0.001 and 25,000,000  shares of non-voting  preferred  stock,  par
value $0.001.  At December 31, 2003 and 2002,  the Company had  156,175,141  and
148,725,141 issued and outstanding common shares, respectively.

Warrants Outstanding
--------------------

Under the terms of a stock purchase  agreement  dated July 27, 2000, the Company
issued  warrants to the buyer to purchase  1,271,186  shares of common  stock at
$0.6785 per share, expiring four years from the date of issue.

As part of an officer's  employment  agreement in 2002, the Board authorized the
issuance of warrants to purchase 1,666,600  restricted shares of common stock at
$0.00001 per share.

As of December 31, 2003,  warrants to purchase  2,937,786 shares of common stock
were outstanding.



                                       38
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


Capital Stock Transactions
--------------------------

Between  January 11, 2002 and  February 12,  2002,  the Company  sold  2,320,754
shares of common stock to Evertrend Holdings Limited ("Evertrend") at an average
purchase  price  of  $0.0269  per  share  pursuant  to a common  stock  purchase
agreement with  Evertrend.  Ladenburg  Thalmann & Co., Inc.  received  $5,000 in
placement fees and Evertrend  received a warrant to purchase 1,160,377 shares of
our  common  stock at an  exercise  price of  $0.0269  until  March 15,  2002 in
connection  with this  transaction.  These  warrants  expired as of December 31,
2003. We paid $1,000 in escrow fees in connection with this  transaction.  These
securities  were  issued in a  transaction  exempt from  registration  under the
Securities  Act of 1933 in reliance  on Section  4(2) of the  Securities  Act of
1933.

In December 2002, the Company  issued  3,183,400  shares of its common stock for
services comprised of the following:  2,000,000 issued shares in connection with
the  extension of the 9% mortgage  note that should have been issued at the time
of  the  original  loan   consummation   in  1999,   500,000  shares  issued  as
compensation,  350,000  shares  issued  individuals  serving  on  the  Board  of
Directors as director's fees and 333,400 shares issued for consulting services.

In December  2002,  the Company  returned  to treasury  3,675,000  shares of its
common stock.  The Company had requested the return of 3,175,000 shares from its
former Chairman,  Michael Zwebner, because the consideration was never received.
The Board  voted in  December  2002 to cancel the  500,000  shares that had been
awarded to Mr. Sanchez, the Company's former chief technical officer.

On  August  13,  2003,  in  accordance  with  its  agreement  with  non-employee
directors,  the Company issued 450,000 shares of its common stock and recorded a
non-cash compensation expense in the amount of $11,250.

In the third  quarter of 2003,  in  connection  with the  exercise  of a warrant
issued in September of 2002, the Company issued  2,000,000  shares of its common
stock for $2,000.

On November 18,  2003,  the Company sold  1,000,000 of its  unregistered  common
stock for $18,000 to Rodney W. Sturm, a member of the Board of Directors.

                                       39
<PAGE>
                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 10 - STOCK OPTION AND PURCHASE PLAN

The TVC Telecom  Incorporated and Subsidiaries 1995 Stock Option/Stock  Issuance
Plan,  as  amended  (the  "Plan"),  is a tax  qualified  stock  option  plan for
employees  and certain  non-employees,  that  provided for the granting of stock
options and authorizes the issuance of common stock.

Under the Plan, options fall into two categories: (i) the Incentive Stock Option
Plan  under  which  qualified  employees  can,  at the  discretion  of the  Plan
administrator,  be granted  options  to  purchase  shares of Common  Stock at an
exercise price of not less than 85% of their fair market value on the grant date
or at the Plan  Administrator's  discretion,  be issued  shares of Common  Stock
directly,  through the  purchase of shares at a price not less than 85% of their
fair market value at the time of issuance or as a bonus tied to the  performance
of services;  and (ii) the  Automatic  Option Grant  Program  under which option
grants will automatically be made at periodic intervals to eligible non-employee
Board members to purchase  shares of Common Stock at an exercise  price equal to
100% of the fair market value on the grant date.

In 2002 options were issued to Harley L. Rollins for 5,250,000  shares of common
stock,  Andrew T.  Silber  for  4,500,000  shares of common  stock and all other
employees  for an  aggregate of 2,785,000  shares of common  stock.  The options
issued to Mr. Silber were cancelled in February, 2003. The options issued to Mr.
Rollins were cancelled in August, 2003.

In 2003,  options were issued to Philip H. Sitton for 5,000,000 shares of common
stock and all other  employees  for an  aggregate  of  420,000  shares of common
stock. The options issued to Mr. Sitton were cancelled in August, 2003.

Option activity within each plan was as follows:
<TABLE>
<CAPTION>

                                         Incentive        Directors      Average
                                       Stock Option     Stock Option  Exercise Price
                                           Plan             Plan        Per Share
                                        ------------    ------------    ---------

<S>                                           <C>             <C>        <C>  <C>
Balance outstanding, December 31, 2001       -0-             -0-         $   -0-

 Options Granted                         12,665,000          -0-         $  0.011

 Options Cancelled                          130,000                      $  0.011
                                        -----------     -----------     ---------
Balance outstanding, December 31, 2002   12,535,000          -0-         $  0.011


 Options Granted                          5,420,000          -0-         $  0.017

 Options Cancelled                       15,380,000          -0-         $  0.013
                                        -----------     -----------      ---------
Balance outstanding, December 31, 2003    2,575,000          -0-         $  0.011
                                        -----------     -----------      ---------
</TABLE>

                                       40
<PAGE>
                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

The following table summarizes  information  about stock options  outstanding at
December 31, 2003:
<TABLE>
<CAPTION>
                                       Options Outstanding                             Options Exercisable
                             --------------------------------------------     --------------------------------------------
                                                      Weighted Average                                 Weighted Average
                                                    Remaining Contractual                            Remaining Contractual
Exercise Price               Number of Options          Life (Years)          Number of Options          Life (Years)
---------------              -----------------      ---------------------     -----------------      ---------------------
<S>                               <C>                      <C>                    <C>                        <C>
    $0.011                        2,575,000                8.5                    1,078,125                  8.5
</TABLE>

The weighted average fair value per option as of grant date was $0.006 for stock
options  granted during the year ended December 31, 2003. The  determination  of
the fair value of all stock options  granted during the years ended December 31,
2003 and 2002 was based on (i) risk-free  interest rate of 2.97%,  (ii) expected
option lives ranging from 1 to 4 years,  depending on the vesting  provisions of
each option,  (iii)  expected  volatility  in the market price of the  Company's
common stock of 100%, and (iv) no expected dividends on the underlying stock.

NOTE 11 - STOCK COMPENSATION PLAN

The TVC Telecom Incorporated and Subsidiaries 1999 Stock Compensation Plan, (the
"Compensation  Plan"),  is a stock  compensation  plan for employees and certain
non-employees,  that  provides  for the granting of common stock as an increased
incentive to contribute to the future success of the Company. The administration
of the  plan  and  grants  issued  under  the plan are done at the full and sole
discretion of the Board of Directors of the Company. There are 20,000,000 common
shares available for issue under the plan.

In December 2001, the Board of Directors authorized the issuance of the Chairman
and certain officers of the Company 10,000,000 shares of restricted common stock
under the  Compensation  Plan at a fair market  value of $0.03 per share.  These
shares were issued in January 2002. Pursuant to an employment agreement with the
Chairman and separation agreements with former officers, the restrictions on the
sale of this common stock were lifted during January 2002.

NOTE 12 - INCOME TAXES

The components of income taxes were as follows:

Provision (benefit) for income taxes
                                   December 31
                                                 2003             2002
                                             ----------       ----------
Current
   Federal                                   $    -0-         $    -0-
   State                                          -0-              -0-

Deferred
   Federal                                    2,229,000         (998,000)
   State                                        336,000         (167,000)

Change in Valuation Allowance                (2,565,000)       1,165,000
                                             ----------       ----------
Income tax expense                                -0-              -0-
                                             ----------       ----------

                                       41
<PAGE>
                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 12 - INCOME TAXES (Continued)

The effective tax rate for the years ended December 31, 2003 and 2002,  differed
from the federal statutory rate as follows:

                                                         2003            2002
                                                         ----            ----
         Statutory rate applied to loss
            before income taxes                          34%              34%

         Increase (decrease) in income tax
            benefit resulting from:

                  State income tax benefit                6%               6%
                  Change in valuation allowance         (40%)            (40%)
                                                        -----            -----

                                                          0%               0%
                                                        =====            ====-


As of December 31, 2003,  the Company has net operating  loss  carryforwards  of
approximately $25,000,000,  expiring in various years through 2023. The Internal
Revenue Service Code contains  provisions  which limit the federal net operating
loss  carryforward  available that can be used in any given year in the event of
certain occurrences, which include significant ownership changes.

At December 31, 2003, approximate deferred tax assets were as follows:

Allowance for doubtful accounts                                 $   60,000
Inventory reserve                                                   10,000
Net operating loss carryforward                                  9,430,000
                                                                -----------
Deferred tax assets                                              9,500,000
Less valuation allowances                                       (9,500,000)
                                                                -----------
                                                                $    -0-
                                                                ==========

NOTE 13 - RELATED PARTY TRANSACTIONS

As of December 31, 2003,  amounts due from former officer represents amounts due
from Michael Zwebner (Mr. Zwebner), former officer, former Chairman of the Board
and current  stockholder.  In connection with this receivable,  on May 16, 2003,
the  Company  and Mr.  Zwebner  agreed to amend Mr.  Zwebner's  termination  and
severance   agreement   originally  dated  June  20,  2002.  The  new  agreement
encompasses  the  following:  1) an extension fee of $12,500 upon signing of the
document;  2) monthly  payments of $7,500  beginning  September  30, 2003; 3) an
escrow  of YAK  common  stock in an amount  equal to the  unpaid  principal  and
interest balance of the notes; and 4) a balloon payment due on May 31, 2004. The
Company has agreed to sell Mr. Zwebner 4,000,000 shares of its restricted common
stock for $40,000 and reduce the balloon  payment due on May 31, 2004 by $40,000
if all other  terms of the  agreement  are kept.  In the event of  default,  the
Company will be entitled to receive an equivalent  amount of YAK common stock of
the then outstanding  balance of principal and interest and will have the option
of  rescinding  the sale of its common  stock to Mr.  Zwebner.  The  Company has
recorded  compensation  of  $40,000  related  to the  reduction  of the  balloon
payment. All amounts due under this note were repaid on February 22, 2004.

                                       42
<PAGE>
                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)


NOTE 13 - RELATED PARTY TRANSACTIONS (cont'd)

In December 2001, the Company completed the purchase of 405,516 shares of common
stock of Yak, for a purchase price of $793,204 consisting of 8,241,600 shares of
the Company's  common stock and  conversion  of $462,840 of debt.  Following the
consummation  of the  transaction,  the  Company  owned  10% of the  outstanding
capital  stock of YAK  Communications  Inc.  ("YAK").  Mr.  Zwebner  and Charles
Zwebner, Mr. Zwebner's brother, are significant stockholders of YAK. On March 5,
2003, the Company completed the sale of 400,000 shares of YAK for $800,000.

In December  2001,  the Board of Directors  authorized the issuance of 4,000,000
shares  of  restricted  common  stock to Mr.  Zwebner  and  3,000,000  shares of
restricted  common stock to each of Mr. Rosov and Mr. Snyder.  These shares were
issued in January  2002. In connection  with an  employment  agreement  with Mr.
Zwebner  and  separation   agreements  with  Mr.  Rosov  and  Mr.  Snyder,   the
restrictions  on the sale of this  common  stock were  lifted  during  2002.  In
connection with this transaction,  the Company recorded a non-cash charge in the
amount of $300,000 during 2001.

On November 14, 2003, the Company authorized the issuance of 5,600,000 shares of
its common stock to Harley Rollins (the Company's  Chairman and Chief  Executive
Officer). Under the terms of this issuance, the Company has the right to recover
155,556  shares for each month through  January,  2006,  that Mr. Rollins is not
with the Company.  For the year ended December 31, 2003,  1,711,111  shares were
earned under the terms of this agreement.  The Company's  Compensation Committee
took this action due to the lack of available  options under the Employee  Stock
Option Plan.

On November 14, 2003, the Company authorized the issuance of 4,000,000 shares of
its common stock to Phil Sitton (the Company's Chief Operating  Officer).  Under
the terms of this  issuance,  the Company has the right to recover 83,333 shares
for each month through  March 2007 that Mr. Sitton is not with the Company.  For
the year ended December 31, 2003,  750,013 shares were earned under the terms of
this agreement. The Company's Compensation Committee took this action due to the
lack of available options under the Employee Stock Option Plan.

On December 12, 2003, the Company authorized the issuance of 5,000,000 shares of
its common  stock to Joe Guzman (the  Company's  President).  Under the terms of
this  issuance,  the  Company has the right to recover  104,167  shares for each
month through  December 2007 that Mr. Guzman is not with the Company.  No shares
were earned during the year ended December 31, 2003. The Company's  Compensation
Committee  took  this  action  due to the lack of  available  options  under the
Employee Stock Option Plan.

                                       43
<PAGE>

                    TVC TELECOM INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (continued)

NOTE 14 - EARNINGS PER SHARE

The following is a reconciliation  of the weighted average number of shares used
to compute basic and diluted earnings per share:

                                                 2003            2002
                                             -----------      ----------
Basic weighted average shares outstanding    151,905,963     148,825,179
Dilutive effect of options and warrants             --              --
                                             ----------       ----------
Diluted weighted average shares outstanding  151,905,963     148,825,179
                                             ===========     ===========

Options and warrants to purchase  5,512,786  shares were outstanding at December
31, 2003. These amounts were not included in the computation of diluted loss per
common share because the effect would be anti-dilutive.

NOTE 15 - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

                                                 2003             2002
                                              ---------       ----------

Write down of Assets Held for Sale (a)      $      --        $( 759,998)


(a) As more fully described in Note 3, management  decided in the fourth quarter
of 2001 to sell its remaining real property in Sacramento, California.

NOTE 16 - VENDOR SETTLEMENTS

During the year  ended  December  31,  2003,  the  Company  settled  outstanding
payables  with two vendors.  In  connection  with the  settlements,  the Company
recognized a reduction in expenses of approximately $1,152,770.

NOTE 17 - SUBSEQUENT EVENTS

On April 12, 2004,  the Company  entered  into a commitment  letter with a major
shareholder for a secured line of credit in the amount of $500,000.  The line of
credit  may be closed  anytime  prior to July 11,  2004 and will be  secured  by
assets  of the  Company.  Any draw  downs  under  the line of  credit  will bear
interest at the rate of 15%.  The line of credit is subject to certain  negative
covenants  including  the continued  employment of the Chairman and CEO,  Harley
Rollins.  A  commitment  fee of 1% is to be paid  upon  closing  of the  line of
credit.

                                       44
<PAGE>
ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. The Company maintains controls
and procedures  designed to ensure that information  required to be disclosed in
the reports that the Company files or submits under the Securities  Exchange Act
of 1934 is recorded, processed,  summarized and reported within the time periods
specified  in the rules and forms of the  Securities  and  Exchange  Commission.
Based upon his evaluation of those controls and procedures  performed  within 90
days of the  filing  date of this  report,  the chief  executive  and  principal
financial  officers  of the  Company  concluded  that the  Company's  disclosure
controls and procedures were effective.

Changes in Internal  Controls.  The Company made no  significant  changes in its
internal  controls or in other  factors  that could  significantly  affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive and principal financial officers.

                                       PART III

ITEM 9.  DIRECTORS,   EXECUTIVE   OFFICERS,   PROMOTERS  AND  CONTROL   PERSONS,
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Certain biographical information concerning the Directors and Executive Officers
of the Company as of March 31, 2003, is set forth below.  Such  information  was
furnished by them to the Company.

Mike Rollins - Age 32, has served as Chairman since July 2002, as a director and
as Chief Executive Officer since February 2002 and as Chief Financial Officer of
the Company since  January  2002.  From 1993 to 1995 he worked as an auditor and
tax associate for Deloitte and Touche LLP. From 1995 to 1996, Mr. Rollins served
as Director of Finance  and SEC  Reporting  at TresCom  International,  Inc.,  a
publicly-traded  international  telecommunications  company. From August 1996 to
May 1997,  Mr.  Rollins  was the  Director  of Finance,  Treasury  and  External
Reporting for US One  Communications  Corporation,  a competitive local exchange
carrier.  From May 1997 to March 2001,  Mr.  Rollins  served as Chief  Financial
Officer  of  Technology  Control  Services,  Inc.  (TCS),  a  telecommunications
software provider. During his tenure at TCS, Mr. Rollins also served as Managing
Director  of  Interglobe  Telecommunications,  Ltd.,  a  London,  England  based
telecommunications provider.

Joseph A. Guzman - Age 47, has served as President  since December 2003 and as a
director of the Company since May 2002. From 1981 to 1998 he worked with AT&T in
a variety  of  positions  from  account  executive  to Vice  President  of Field
Operations for AT&T's Latin America & Caribbean  Communications  Services Group.
From 1998 to November of 2001,  Mr.  Guzman worked with Global  Crossings,  most
recently as the Chief  Operating  Officer for Global  Crossing's  Latin  America
Division. Mr. Guzman has served in the California Air National Guard and holds a
B.S. in Finance from California State University at Hayward.

Rodney W. Sturm - Age 62, has served as a  director  of the  Company  since July
2002.  From 1966 to 1996 he worked  with AT&T in a  variety  of  positions  from
Director of International Marketing of AT&T's International Communications Group
to Chairman  and CEO of AT&T Puerto Rico and AT&T Virgin  Islands.  From 1996 to
2002,  Mr. Sturm has served as President of the Sigma Group,  a consulting  firm
focused on strategic  development  and deployment  within the  telecommunication
industry.  Mr. Sturm has served as a director for several  public  companies and
holds a BS in Industrial  Engineering  from the University of Illinois and an MS
in Management from the Stanford Graduate School of Business.

                                       45
<PAGE>

Phil Sitton,  - Age 56, has served as Chief Operating  Officer since March 2003.
From 1973 to 1978 he worked for Eastman Kodak as a Cost Engineer. He joined AT&T
in 1978.  From 1978 to 1998, Mr. Sitton was in a variety of  assignments  and in
various  locations  as a Product  Manager,  National  Sales  Manager,  Marketing
Manager,  Network Operations,  Manager,  Chief Financial Officer,  President and
Chief Operating Officer of a wholly-owned offshore subsidiary, and as a Regional
Managing  Director for AT&T's  Caribbean and Latin America  Group.  From 1998 to
2003 Mr. Sitton served as a consultant  to the  telecommunications  industry and
not-for-profit   organizations.   During  this   period  he  joined   Centennial
Communications on an interim basis serving as Unit President.

Clinton H. Snyder,  CPA - Age 49, has served as a director of the Company  since
November  1998,  and  served as Chief  Financial  Officer  of the  Company  from
November  1998 to  January  2002.  From 1975 to 1982 he served  as  auditor  and
business  consultant  with the public  accounting  firm of Stegman & Associates.
From 1982 to 1985 he served as Finance Officer for a multi-national construction
products and real estate development firm in Baltimore,  Maryland.  From 1985 to
1990 he served as Executive  Officer for Finance and  Administration  with North
American  Beauty  Services,  Inc., a wholesale and retail  distributor of beauty
products.  From 1990 to 1992, he served as VP of Finance for Innovative  Telecom
Company, Inc., a telecommunications  provider. From 1992 to 1998, he served as a
business  consultant,  financial and tax strategist for companies throughout the
New  England  area.  Mr.  Snyder is  currently  the CFO of Global  Entertainment
Holdings, Inc.

Section 16(a) Beneficial Ownership Reporting Compliance

Section  16(a) of the  Securities  Exchange Act of 1934  requires our  executive
officers,  directors,  and persons who own more than ten percent of a registered
class of our equity securities to file reports of security ownership and changes
in such ownership with the SEC. Executive  officers,  directors and greater than
ten percent  stockholders  are  required by SEC  regulations  to furnish us with
copies of all Section  16(a) forms they file.  Based solely on our review of the
copies of such forms  received by us and written  representations  received from
those   reporting   persons   recognized  by  us  as  being  subject  to  filing
requirements,  we believe that the following required Section 16(a) reports were
not timely filed during 2001.

Four  reports on Form 4 were not  timely  filed in  connection  with the sale by
Eugene  Rosov of a total of 901,581  shares of our common  stock in 12  separate
transactions.  A Form 4 reporting these  transactions was subsequently  filed on
November 6, 2001.  One report on Form 5 was not timely filed in connection  with
an acquisition by Michael  Zwebner of a total of 4,777,286  shares of our common
stock in December 2001. A Form 5 reporting  this  transaction  was  subsequently
filed on February 11, 2002


ITEM 10.  EXECUTIVE COMPENSATION

Compensation of Directors

During  2003,  the  Company  elected to  compensate  its  Directors  through the
issuance of restricted  common stock.  For the Director term beginning on August
12, 2003,  each  non-employee  Director  was given a grant of 150,000  shares of
common stock or $3,750.

                                       46
<PAGE>

Compensation of Executive Officers

The  following   table  sets  forth  certain  summary   information   concerning
compensation paid or accrued by the Company on behalf of (i) the Chief Executive
Officer and (ii) the other most  highly  compensated  executive  officers of the
Company  whose  total  annual  salary  and  bonus for  fiscal  year 2003 or 2002
exceeded  $100,000 (the "Named  Executive  Officers"),  with respect to services
rendered by such  persons to the Company  and its  subsidiaries  for each of the
fiscal years ended December 31, 2003 and 2002:

<TABLE>
<CAPTION>

Summary Compensation Table
--------------------------
                                                                            Long-Term Compensation
                                                          Other Annual              Awards
                                             Salary       Compensation         ---Securities---
Name and Principal Position      Year         ($)              ($)           Underlying Options(#)
---------------------------      ----        ------       ------------      ----------------------

<S>                              <C>        <C>                 <C>                <C>
Harley L. Rollins                2003       $112,500           -0-                 5,600,000 (1)
   Chairman of the Board         2002       $102,916           -0-                 1,666,600 (2)
   of Directors, President and
   Chief Executive Officer

Andrew T. Silber (3)             2003       $ 22,212           -0-                     -0-
   Former Director of Sales and  2002       $103,553           -0-                 5,750,000 (3)
   Director
----------------------------------------------------------------------------------------------------
</TABLE>

         (1)  On November  14,  2003,  the Company  authorized  the  issuance of
              5,600,000  shares of its common  stock to Mr.  Rollins.  Under the
              terms of this  issuance,  the  Company  has the  right to  recover
              155,556  shares for each month  through  January,  2006,  that Mr.
              Rollins is not with the Company.

         (2)  As part of Mr.  Rollins  employment  agreement,  in 2002 the Board
              authorized   the  issuance  of  warrants  to  purchase   1,666,600
              restricted shares of common stock.

         (3)  Mr.  Silber  resigned  as  Director of Sales and a Director of the
              Company on February 28, 2003. In June 2002,  the Board  authorized
              the issuance of 500,000  restricted  shares of common stock to Mr.
              Silber.  Additionally,  the Board  granted Mr.  Silber  options to
              purchase  5,250,000 shares of our common stock. These options were
              cancelled upon Mr. Silber's resignation.

                                       47
<PAGE>

Compensation Committee Interlocks and Insider Participation

The Compensation Committee was formed in January 1996 to establish salary, bonus
and  other  forms  of  compensation   for  officers  of  the  Company,   provide
recommendations for the salaries and incentive compensation of the employees and
consultants of the Company,  and make  recommendations to the Board of Directors
regarding such matters.

The principal objectives of the Company's executive compensation are to:

         -    support the achievement of the desired Company performance;
         -    align the executive  officer's  interests  with the success of the
              Company and with the interests of the Company's stockholders; and
         -    provide  compensation  that  will  attract  and  retain  qualified
              management and reward performance.

These objectives are principally  achieved  through  compensation in the form of
annual base salaries, discretionary bonuses and equity investment opportunities,
such as stock  option  grants.  Prior to January  1996,  the Board of  Directors
performed the functions of the Compensation  Committee. We have not historically
linked executive compensation directly to corporate performance.

The  Compensation  Committee is composed of the following  Directors:  Joseph A.
Guzman,  Rodney W. Sturm and Clinton H.  Snyder.  No  interlocking  relationship
exists between the Company's  Board of Directors or  Compensation  Committee and
the board of directors or compensation  committee of any other company,  nor has
any such interlocking relationship existed in the past.

Audit Committee

The Audit  Committee  was formed in 1999 to assist the Board of Directors in the
general  oversight and monitoring of management's and the independent  auditor's
participation in the Company's  financial reporting process and of the Company's
procedures for compliance  with legal and regulatory  requirements.  The primary
objective of the Audit Committee is to promote and preserve the integrity of the
Company's  financial  statements  and the  independence  and  performance of the
Company's external auditor.

The principal activities of the Audit Committee are to:

         -    periodically review the Company's audit charter;
         -    annually  Review  the  overall  audit  plan  and the  accompanying
              financial statements;
         -    review and discuss the  Company's  quarterly  unaudited  financial
              statements;
         -    recommend  action  relating  to  the  selection,  performance  and
              independence of the Company's independent auditor; and
         -    periodically  review  the  independence  of  the  Company's  audit
              committee.

The Audit  Committee is composed of the following  Directors:  Joseph A. Guzman,
Rodney W. Sturm and Clinton H. Snyder.

Stock Options

The Company  cancelled all options granted to management in 2002 and 2003 during
2003 due to the lack of options  available under the Employee stock option plan.
The 1,666,600 restricted shares of common stock the Board authorized as part the
Mr. Rollins employment have not been issued.

There were no options exercised by the Company's named executive officers during
2003. The Company did not grant any stock appreciation rights during fiscal year
2003 and no such rights were outstanding as of the end of such fiscal year.

                                       48
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following  table sets forth, as of March 30, 2004, the number and percentage
of shares of Common Stock  beneficially  owned (as defined in Rule 13d-3 adopted
under  the  Exchange  Act)  by (a)  all  persons  known  to the  Company  to own
beneficially  more than 5% of any class of voting  security of the Company,  (b)
each of the Company's directors, (c) the Company's officers named in the Summary
Compensation Table set forth herein and (d) all directors and executive officers
of the Company as a group.

                                                          Common Stock
                                                     -----------------------
                                                       Number     Percentage
                                                     of Shares    of Shares
                                                   Beneficially  Beneficially
Name and Address (1)                                Owned(2)(3)   Owned(2)(3)
----------------------------------------------     ------------  ------------

Harley L. Rollins (4)
   CEO and Chairman of the Board of Directors         7,266,600      4.65%

Phil Sitton (5)
   Chief Operating Officer                            4,195,000      2.69%

Clinton H. Snyder
   Secretary and Director                             2,950,000      1.89%

Joseph A. Guzman (6)
    President and Director                            5,500,000      3.52%

Rodney W. Sturm
   Director                                           1,500,000      0.96%

All directors and executive officers as a
   Group (5 persons) (7)                             21,411,600     13.71%

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


(1) Unless  otherwise  indicated,  the  stockholder's  address is the  Company's
    principal executive offices.

(2) Percentage  ownership  is  based  on  156,175,141  shares  of  common  stock
    outstanding  as of March 30,  2004,  plus any shares  issuable  pursuant  to
    options or  warrants  held by the person or class in  question  which may be
    exercised  within 60 days of March 30, 2004. Only those shares  beneficially
    owned by the person  holding such  options are  included in the  outstanding
    shares for purposes of computing the percentage  beneficially  owned by that
    person;  such  shares  are not  deemed to be  outstanding  for  purposes  of
    computing any other person's percentage.

(3) Except  as  indicated  in the  footnotes  to  this  table  and  pursuant  to
    applicable community property laws, each stockholder named in this table has
    sole  voting  and  investment  power  with  respect  to the shares set forth
    opposite such stockholder's name.

(4) Includes shares to be issued of 7,266,600 shares of common stock.

(5) Includes shares to be issued of 4,000,000 shares of common stock.

(6) Includes shares to be issued of 5,000,000 shares of common stock.

(7) Includes shares to be issued of 16,266,600 shares of common stock.

                                       49
<PAGE>

Agreements with potential for change in control.

We have registered 56,018,307 shares of our common stock for sale by the selling
stockholders  under a certain  registration  statement  which  became  effective
October 31, 2000.  Under the terms of our common stock  purchase  agreement with
Evertrend  (described  above),  we may not issue  shares of our common  stock to
Evertrend  which would result in ownership by Evertrend of more than 9.9% of our
issued and  outstanding  common stock.  However,  if all of the shares that were
registered are issued under the terms of the common stock purchase agreement and
resold by Evertrend and the other selling stockholder(s),  third party investors
could acquire a significant  percentage of our common stock.  The acquisition by
third party  investors  of a  significant  percentage  of our common stock could
enable  such  investors  to  influence  or direct the  policies,  decisions  and
composition of our Board of Directors and management.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We engaged the services of Michael J. Zwebner,  the former Chairman of the Board
of  Directors  of the  Company,  under  a  consulting  agreement  with  Overseas
Communications,  Ltd.,  an Israeli  corporation.  Annual  payments  to  Overseas
Communications  under this  agreement are $120,000.  Mr. Zwebner owns 33% of the
capital stock and is a director of Overseas  Communications.  In 2001, we issued
2,482,759  shares of common  stock to  Overseas  Communications  in  payment  of
$90,000 of our  obligations  under this  agreement.  As of December 31, 2001, no
amounts were due to Overseas  Communications under the consulting agreement.  In
January  2002,  Mr.  Zwebner  agreed  to waive  future  amounts  due  under  the
consulting agreement in exchange for release of restrictions on stock granted to
Mr. Zwebner in December of 2001.

In December  2001,  the Board of Directors  authorized the issuance of 4,000,000
shares  of  restricted  common  stock to Mr.  Zwebner  and  3,000,000  shares of
restricted  common stock to each of Mr. Rosov and Mr. Snyder.  These shares were
issued in January  2002. In connection  with an  employment  agreement  with Mr.
Zwebner  and  separation   agreements  with  Mr.  Rosov  and  Mr.  Snyder,   the
restrictions  on the sale of this  common  stock were  lifted  during  2002.  In
connection with this transaction,  the Company recorded a non-cash charge in the
amount of $300,000 during 2001.

As of December  31,  2001,  the  Company had  advanced a total of $26,000 to Mr.
Snyder, $40,467 to Mr. Rosov, and $93,094 to Mr. Zwebner. Pursuant to separation
agreements  with Mr.  Snyder  and Mr.  Rosov,  amounts  advanced  to them by the
Company were forgiven.  Accordingly,  the Company has recorded an expense in the
amount of $66,467 in its results from  operations  for the year ending  December
31, 2001. Mr. Zwebner has agreed to repay amounts advanced by the Company on his
behalf in 2003 as described in the following paragraph.

As of December 31, 2002, amounts due from a former officer consists of $245,209.
Such amount is due from  Michael  Zwebner  (Mr.  Zwebner),  former  director and
Chairman  of the Board and a current  stockholder  of the  Company.  Such  terms
require  interest at 8% and the payment by Mr.  Zwebner of an  extension  fee of
$12,500 upon  execution  of a definitive  agreement.  This  agreement  will also
require minimum monthly  principal  payments of $10,000 beginning April 30, 2003
with the balance  including  unpaid  interest due December 31, 2003. All amounts
due under this note were paid by February 22, 2004.

                                       50
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits
1.1(1)   Common Stock Purchase  Agreement dated July 27, 2000 between Registrant
         and Evertrend Holdings Limited
1.2(1)   Amendment  dated July 28, 2000 to the Common Stock  Purchase  Agreement
         dated July 27, 2000 between Registrant and Evertrend Holdings Ltd.
3.1(2)   Articles of Incorporation 3.2(2) By-Laws
4.1(1)   1995 Stock  Option/Stock  Issuance Plan 4.2(3) 1999 Stock  Compensation
         Plan (as amended)
4.3(1)   Stock Purchase Warrant dated July 27, 2000 issued to Evertrend Holdings
         Ltd.
4.4(1)   Form of Stock Purchase Warrants to be issued to Evertrend  Holdings Ltd
         4.5(1) Stock  Purchase  Warrant dated July 27, 2000 issued to Ladenburg
         Thalmann & Co. Inc.
4.6(1)   $3,840,000 Note dated September 24, 1998 issued by Sacramento  Results,
         Inc. to Bar K, Inc.
10.1(1)  Registration  Rights  Agreement dated July 27, 2000 between  Registrant
         and Evertrend Holdings Limited
10.2(1)  Escrow  Agreement  dated  July 27,  2000  among  Registrant,  Evertrend
         Holdings Limited, and Epstein, Becker & Green, P.C.
10.3(1)  OEM Agreement  dated as of February 11, 2000 between the Registrant and
         Motion Media Technology Limited
10.4(1)  Joint Venture  Agreement dated April 1, 2000 between the Registrant and
         EnterTech Media Group
10.5(1)  Lease  Agreement  dated July 30, 1999 between Lucky  Capital,  Inc. and
         Talk Visual Corporation
10.6(1)  Lease Agreement dated February 1, 2000 between Lucky Capital,  Inc. and
         Talk Visual Corporation
10.7(1)  Agreement  dated as of June 22, 2000 by and between Talk Visual  Retail
         Acquisitions, Inc. and Various Business Management
10.8(4)  Agreement  and Plan of Merger dated as of September  14, 1998 among the
         Registrant,   Legacy   Software   Acquisition,   Inc.,   and  Videocall
         International Corporation
10.9(4)  Amendment No. 1 to Agreement and Plan of Merger dated as of December 1,
         1998 among the  Registrant,  Legacy  Software  Acquisition,  Inc.,  and
         Videocall International Corporation
10.10    Share  Purchase  Agreement  with YAK  Communications,  (USA) Inc. dated
         December 24, 2002.
10.11    Employment  Settlement  Agreement  dated  February 12, 2002 between the
         Registrant and Eugene Rosov.
10.12    Employment  Settlement  Agreement  dated  January 25, 2002  between the
         Registrant and Clinton Snyder.
21       Subsidiaries of Talk Visual Corporation
24       Power of Attorney
31       Rule  13a-14(a)/15d-14(a)  Certification of Chief Executive Officer and
         Chief Financial Officer
32       Certification  of Chief Executive  Officer and Chief Financial  Officer
         Pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906
         of the Sarbanes- Oxley Act of 2002.
 ------------------
(1)  Incorporated  herein by reference to exhibits  filed with the  Registrant's
     Registration Statement on Form SB-2 (File No. 333-43806) declared effective
     by the SEC on October 31,  2000.
(2)  Incorporated  herein by reference to exhibits  filed with the  Registrant's
     Annual Report on Form 10-KSB for the year ended December 31, 1999.
(3)  Incorporated  herein by reference to exhibits  filed with the  Registrant's
     Registration  Statement on Form S-8 (File No. 333-73518) dated November 16,
     2001.
(4)  Incorporated    herein   by   reference   to   Annex   A   to   the   Proxy
     Statement/Prospectus/Notification  of Merger,  included in the Registrant's
     Registration  Statement on Form S-4 (File No. 333-79597) declared effective
     by the SEC on June 1, 1999.

                                       51
<PAGE>

(b) Reports on Form 8-K

Date of Report: October 10, 2002 - Item 4. Changes in Registrant's Certifying
                                   Accountant

ITEM 14.          PRINCIPAL ACCOUNTING FEES AND SERVICES


The Audit Committee of the Board of Directors has selected Kaufman, Rossin & Co.
PA as the independent public accountants for the fiscal year ending December 31,
2003, and the Board of Directors,  including a majority of the Directors who are
not "interested  persons" (as defined in the 1940 Act), has unanimously ratified
such  selection.  Kaufman,  Rossin & Co. PA's service is subject to removal by a
majority of the outstanding shares of the Company.


The  following  table  presents fees billed in each of the last two fiscal years
for services rendered to the Company by Kaufman, Rossin & Co. PA:


Fiscal Year Ended         Audit Fees        Tax Fees         All Other Fees
-------------------------------------------------------------------------------

December 31, 2003        $     68,000     $        --        $         --

December 31, 2002        $     56,000     $        --        $         --


"Audit  Fees"  represents  fees billed for each of the last two fiscal years for
professional  services  rendered for the audit of the Company's annual financial
statements  and review of financial  statements  included in the Company's  Form
10-Q or services that are normally provided by the accountant in connection with
statutory or regulatory filings or engagements for those fiscal years.


"Tax Fees"  represents  fees  billed  for each of the last two fiscal  years for
professional  services  related to tax compliance,  tax advice and tax planning,
including preparation of federal and state income tax returns. Kaufman, Rossin &
Co. did not  perform  any tax  services  for us during the  fiscal  years  ended
December 31, 2003 or 2002.


"All Other Fees" represents fees billed for other products and services rendered
by Kaufman  Rossin & Co. PA to the  Company for the last two fiscal  years.  Our
independent auditors did not perform any other services for us during the fiscal
years ended December 31, 2003 or 2002.


Pre-Approval Policies of the Audit Committee. The Audit Committee has determined
that all work  performed for the Company by Kaufman Rossin & Co. PA for the year
will be pre-approved by the full Audit Committee and, therefore, has not adopted
pre-approval  procedures.  All audit and non-audit services performed by Kaufman
Rossin & Co. PA for the Company  during 2003,  to the extent that such  services
related directly to the operations and financial reporting of the Company,  have
been  pre-approved  by the Audit  Committee.  The  percentage of  "Audit-Related
Fees," "Tax-Fees" and "Other Fees" set forth in the table above that were waived
pursuant to 17 CFR 210.2-01(c)(7)(i)(c) was zero.


SIGNATURES

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

                            TVC TELECOM INCORPORATED

                            By:  /s/  HARLEY L. ROLLINS
                                 ----------------------------
                                 Harley L. Rollins
                                 Chief Executive Officer &
                                 Chief Financial Officer


Dated:  April 13, 2004


                                       52