<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-KSB A/1

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

(Mark one)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934.

[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
    of 1934.

                   For The Fiscal Year Ended December 31, 1999

                      GLOBAL TELEPHONE COMMUNICATION, INC.
              (Exact name of Small Business Issuer in Its Charter)


                NEVADA                                        87-0285729
    (State or other jurisdiction of                        (I.R.S. Employer
     incorporation or organization)                      Identification Number)

SUITE 1800, 10 SOUTH RIVERSIDE PLAZA, CHICAGO, IL               60606
(Address of principal executive offices)                     (Zip Code)

                                 1-877-901-4824
                           (Issuer's Telephone Number)

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

     Title of Each Class                     Name of Each Exchange on Which
     To be so Registered                     Each Class is to be Registered
     -------------------                     ------------------------------

            n/a                                            n/a

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

                         COMMON EQUITY, PAR VALUE $.001
                                (Title of Class)

<PAGE>


         Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [X]

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, as of a
specified date within 60 days: $25,883,585, as of May 11, 2000.

         Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable date: As
of May 11, 2000, there were 18,488,275 shares of common stock outstanding.

<PAGE>


                      GLOBAL TELEPHONE COMMUNICATION, INC.
                                   FORM 10-KSB
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

No.               Title                                                                             Page No.
<S>               <C>                                                                               <C>
                                                      PART I

Item 1.           Description of Business................................................................1
Item 2.           Description of Property................................................................9
Item 3.           Legal proceedings......................................................................9
Item 4.           Submission of Matters to a Vote of Security Holders....................................9

                                                      PART II

Item 5.           Market for Common Equity and Related Stockholder Matters..............................10
Item 6.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations...................................................15
Item 7.           Financial Statements..................................................................28
Item 8.           Changes in Disagreements with Accountants on Accounting
                  and Financial Disclosure..............................................................28

                                                     PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance With Section 16(a) of the Exchange Act.....................................29
Item 10.          Executive Compensation................................................................31
Item 11.          Security Ownership of Certain Beneficial Owners and Management........................33
Item 12.          Certain Relationships and Related Transactions........................................34
Item 13.          Exhibits, List and Reports on Form 8-K................................................35
                  Signatures............................................................................41
</TABLE>


<PAGE>


                                     PART I

ITEM 1.      DESCRIPTION OF BUSINESS.

         The Registrant was incorporated on March 10, 1970 for the purpose of
raising capital to develop and possibly put into production certain oil and
mineral deposits. The Registrant was unable to raise development money and the
Registrant's operations ceased and the mineral deposits were abandoned.

         On June 4, 1997 the Registrant acquired Krystar International Ltd.
(Krystar) in exchange for 6,000,000 shares of common stock. Krystar had
proprietary ownership of a technology that transported minerals using Boundary
Air/Laminar Flow Technology. On September 24, 1997, the Board of Directors of
the Registrant discontinued the operations of Krystar and the 6,000,000 shares
of common stock were cancelled.

         On June 23, 1997, the Registrant acquired all of the outstanding shares
of Chow's Consulting Corporation for 90,000 common shares of its common stock.
The only asset of Chow's was a mining claim that has since been deemed worthless
and Chow's was dissolved.

         On October 14, 1997 the Registrant changed its name from Dynasty Oil
and Minerals Corporation to Global Telephone Communication, Inc., in line with a
change in its strategic direction. The Registrant's current focus is to seek and
develop opportunities in the IT (Information Technology), telecommunications,
and Internet industries. To capitalize on management's industry experience and
relationships, the Registrant will favor opportunities in Southeast Asia, with
an emphasis on the People's Republic of China (China.)

         On February 9, 1998, the Registrant acquired all of the issued and
outstanding shares of an operating multimedia company, Planet City Graphics
Corp. (Planet City), a private company incorporated under the laws of British
Columbia, Canada, with offices in Vancouver, BC. The Registrant issued a total
of 1,500,000 common shares in exchange for all the issued and outstanding shares
of Planet City. This acquisition was rescinded on October 1, 1999 as of the date
of acquisition. The Registrant returned all shares of Planet City and received
back and cancelled the 1,500,000 shares previously issued.

         On February 9, 1998, the Registrant also acquired all of the issued and
outstanding shares of another operating multimedia company, Webworks Multimedia
Corporation (Webworks), a private company incorporated under the laws of British
Columbia, Canada, with offices in Vancouver, BC. The Registrant

                                       1

<PAGE>


issued a total of 500,000 common shares in exchange for all the issued and
outstanding shares of Webworks. This acquisition was rescinded on October 1,
1999 as of the date of acquisition. The Registrant returned all shares of
Webworks and received back and cancelled the 500,000 shares previously issued.

         Both Planet City and Webworks are in the businesses of Web graphic
design and hosting and systems integration. However, these entities failed to
operate profitably and the Registrant has decided that these operations do not
complement its current business direction and thus, disposed of these
operations. (See Item 2 Management's Discussion and Plan of Operation for more
details.)

         On March 24, 1998, the Registrant changed its domicile from the State
of Utah to the State of Nevada.

         On April 16, 1998, the Registrant entered into a Share Exchange
Agreement (Regent Agreement) with Regent Luck Holdings Ltd. (Regent), a
corporation registered and headquartered in Hong Kong, whereby the Registrant
acquired all the issued and outstanding shares of Regent by issuing and
exchanging 4,950,000 common shares of the Registrant with the shareholders of
Regent, which constituted approximately 45% of the Registrant's then outstanding
shares.

         Regent has a 90% interest in a joint venture company, Shenzhen Global
Net Computer Information Co. Ltd. (Shenzhen Global), organized under the laws of
China, which has an Exclusive Agency Agreement with Shenzhen Newsnet Co., Ltd.
(Newsnet), a wholly-owned subsidiary of China Telecom. The 10% minority owner is
Shenzhen Xin Yun Da Electronics Co. Ltd., a company owned by citizens of China.
At the time Shenzhen Global was formed, a nominal Chinese ownership interest in
the joint venture was statutorily required under applicable Chinese foreign
investment laws. The minority shareholders of Shenzhen Global have no approval
or veto rights and have no other rights other than minority voting rights.
Accordingly, such minority shareholders are not able to make any decisions or to
direct the management of Shenzhen Global in any way.

         The telecommunications business in China is highly regulated by the
central Government's Telecommunications Bureau. A Chinese company must get
authorization from many different levels of government before entering the
telecommunications business. The first step is to obtain Joint Venture approval
from the Foreign Merchant Investment Bureau. To qualify for this level of
approval, an applicant must provide a Joint Venture Feasibility Report, a Joint
Venture Contract, and a Joint Venture Corporate Charter. This approval, along
with all aforesaid documents are then forwarded to the National Industrial and
Commercial Administrative Bureau for a business license.

                                       2

<PAGE>

         On June 8, 1998, the Shenzhen Global joint venture received the
approvals required under the China Sino-Foreign Equity Joint Venture
Enterprise Law from the Shenzhen Foreign Investment Bureau (No. 1998 0520).
Such approvals permit Shenzhen Global to operate in the six Chinese cities in
which it currently intends to conduct business. In addition, the China
National Industrial and Commercial Administrative Bureau issued a Joint
Venture Business License to Shenzhen Global in July 1998, which is effective
for 12 years. The business scope of this license includes computer software
development, Internet Protocol (IP) product development and related technical
consulting, computer systems integration and Internet service provider (ISP)
services. The cost of the license from the Chinese government was $200.

         Newsnet is a subsidiary of China Telecom and is the biggest ISP in the
city of Shenzhen with a subscriber base of over 60,000. The exclusive Agency
Agreement between Shenzhen Global and Newsnet, which gives Shenzhen Global the
right to act as exclusive agent to conduct all of Shenzhen Newsnet's
telecommunications and internet business and services in Shenzhen, Guangdong
Province and in six of the biggest cities in China. The term of the Agency
Agreement is for 12 years with options to renew, subject to further
negotiations. Profits will be shared on a 69%-31% basis in favor of Shenzhen
Global for the first 18 months and 55%-45% thereafter. As part of the Regent
Agreement, the Registrant agreed to provide funds as capital for the Shenzhen
Global joint venture in the amount of $1,300,000. As of September 30, 1999, the
Registrant had provided approximately $975,000 and as of December 31, 1999, the
Registrant had provided the balance of $325,000 to Shenzhen Global. Such funds
were provided to Regent by the Registrant and were subsequently provided by
Regent to Shenzhen Global to satisfy applicable paid in capital requirements
under the Exclusive Agency Agreement in connection with the formation of the
Shenzhen Global joint venture. As of December 31, 1999, of the $1,300,000
required to be provided under the Regent Agreement, $189,237 had been spent on
opening an office in Shenzhen, employee expenses, license fees and equipment
purchases. The balance of $1,110,763 is included in cash in the Registrant's
consolidated financial statements. The Registrant and its subsidiaries have no
further financial obligation to Shenzhen Newsnet under the Exclusive Agency
Agreement or otherwise.

         With respect to the Shenzhen Global Joint Venture, the Registrant will
be engaged in the delivery of web-based e-mail, voice over Internet Protocol,
systems integration, Internet access and content, and other information
technology Internet value added applications.

         These products and services will be delivered under licenses provided
directly from China Telecom, the dominant carrier in China, or through its

                                       3

<PAGE>

wholly owned subsidiaries. The services will be delivered to commercial,
residential and educational users through the Public Switched Telephone network
and will have their origin on Internet service platforms owned jointly or
independently by the Registrant.

         Currently, Newsnet is a leading Internet service provider in Southern
China with a 60% market share in the City of Shenzhen. On a national scale,
Newsnet holds a 2% market share. For all six cities, the major competition is
from the ISP arm of China Telecom (HK) Limited (China Telecom). Newsnet is
targeting an average market share of 30% for each city. Customers usually base
their purchase decisions on quality, timing and the range of services that are
offered.

         On March 9, 1999, the Registrant entered into a Share Exchange
Agreement providing for the acquisition of 51% of the issued and outstanding
shares of Pacific Asset International Ltd. (Pacific Asset), a Hong Kong
corporation, in exchange for 600,000 shares of the Registrant's common stock
representing approximately 4% of the Registrant's then issued common stock.
Pacific Asset was expected to provide the Registrant access to institutional
and banking e-commerce business in Asia and the Registrant planned to assist
Pacific Asset in the development of its business in the telecommunications
and information technology sector. Under the terms of the Share Exchange
Agreement, the Registrant had an enforceable right to receive an aggregate of
5,100 shares of common stock of Pacific Asset and believed that it had
obtained control of Pacific Asset and that the transaction had for all
intents and purposes been legally consummated. However, the shareholders of
Pacific Asset failed to deliver such shares of its common stock to the
Registrant in accordance with the terms of the Share Exchange Agreement. In
addition, the Registrant subsequently determined it would not be able to
provide such assistance and that it would not be in the best interest of the
Registrant to continue its relationship with Pacific Asset. For the foregoing
reasons, the exchange transaction was rescinded pursuant to a Mutual
Rescission Agreement dated as of January 13, 2000 between the Registrant and
the shareholders of Pacific Asset.

         On September 15, 1999, the Registrant entered into an agreement with
International Communications Enterprises Ltd. (ICE), a company operating and
incorporated in the United Kingdom, to provide funding for a Joint Venture
between ICE and First Telecom (FT) of Hong Kong. The primary purpose of the
Joint Venture will be to originate and terminate telephone traffic in China. The
Registrant has made an investment of approximately $243,500 to acquire 25% of
the gross revenue due to ICE from all activities generated by the ICE/FT venture
on a monthly basis. (See Item 2 Management Discussion and Plan of Operation for
more details).

                                       4

<PAGE>

         On October 21, 1999, the Registrant entered into a second joint
venture with ICE as a financial partner to assist it in the development and
distribution of promotional commemorative prepaid calling cards relating to
sports figures. Initially the program is directed primarily towards the
leading drivers of Formula 1 race car teams. ICE has several contracts in
place as of the date hereof including one with the Yamaha race car team. (See
Item 2 Management Discussion and Plan of Operation for more details). In
addition, as of the date hereof, the Registrant has loaned approximately
$200,000 to ICE pursuant to an unsecured promissory note payable on July 4,
2000 bearing interest at an annual rate of 10% from July 1, 2000 to the date
of payment.

         On January 28, 2000, the Registrant acquired 70% of the issued and
outstanding shares of capital stock of Nano Technology Limited (Nano), a British
Virgin Islands company. Nano owns 100% of the issued and outstanding capital
stock of Cyber 2000 Ltd. (Cyber 2000), a Hong Kong company. Nano's only activity
is to hold the Registrant's ownership interest in Cyber 2000. Cyber 2000 is
engaged in the business of developing Voice over Internet Protocol (VoIP) and is
expected to become a provider of VoIP re-sale services with major international
telephony carriers. The Registrant acquired its interest in Nano for an
aggregate purchase price of $2,600,000, of which $1,350,000 was payable in cash
and the balance was payable by delivery of 500,000 restricted shares of the
Registrant's common stock valued at $2.50 per share. As of the date hereof, a
portion of the purchase price in the amount of $850,000 has been paid in cash
and 500,000 restricted shares of the Registrant's common stock, representing
2.9% of the Registrant's then issued and outstanding common stock, have been
issued.

         On March 20, 2000, Cyber 2000, in cooperation with Teleinfo Co. Ltd.
(Teleinfo), a wholly owned subsidiary of China Telecom signed a Service
Agreement with AT&T Asia/Pacific Group (AT&T) in Hong Kong. Under this
Agreement, AT&T is expected to provide a number of professional and management
services to implement Cyber 2000's VoIP Program in China and the US, including
project management, global clearing house and MIS (Management Information)
services. AT&T will also provide and install gateways to the Company's network,
including international Internet Phone circuits from Hong Kong to the US. AT&T
is expected to be able to use its extensive project management expertise to help
Cyber 2000 to quickly establish a high performance International Internet Phone
Backbone Network in Asia and implement its planned expansion program in offering
various services to carriers and enterprises in China, the US and other
countries. Cyber 2000 has also established a cooperation arrangement with
Teleinfo pursuant to which Teleinfo will work with Cyber 2000 in this project to
provide various supports in marketing and technical programs.

                                       5

<PAGE>

         The Internet and information technology industries are relatively
new and subject to rapid change. Regulatory and political issues in Asia pose
many potential problems. The size of the Asian market, and the low cost of
entry into these new industries are attracting an increasing number of new
entrants. Weaknesses in infrastructure further complicate the task of
building reliable and responsive systems. Intense competition from existing
and potential competitors with longer operating histories, greater brand name
recognition, larger customer bases and greater financial, technical and
marketing resources, may adversely affect the Registrant's ability to secure
a viable position in the marketplace.

         During 1998 and 1999 the Registrant publicly announced:

         -  the marketing of Year 2000 software solutions;
         -  its Global Positioning System (GPS) project;
         -  its plans to acquire an ISP company and
         -  various marketing agreements.

The Registrant has not pursued any of these due to the following reasons:

         In November of 1998 the Registrant's management team decided that it
would become a provider of Year 2000 (Y2K) software solutions for China.
Management believed that this was complimentary to the Registrant's core
information technology business. As a result of this business decision, on March
4, 1999 the Registrant entered into a Marketing Agreement with Planet City to
market Planet City's Y2K solutions (the Millennium Bug Compliance Kit) in China
and on April 21, 1999 the Registrant entered into two Agency Agreements with
Manful Commerce Co. Ltd. and Beijing JinXunDa Telecommunications Technology
Development Co. Ltd. to supply the Millennium Bug Compliance Kit to the Chinese
Government. Subsequently, the Y2K solution was sent to China for testing. After
failing the required tests, the Registrant terminated all contracts involving
this product, without penalty, and subsequently terminated its relationship with
Planet City.

         With respect to the GPS project, on June 10, 1999 the Registrant's
joint venture company, Beijing Global Net Communication Technology Co., Ltd.,
received Chinese governmental approval and the required business licenses to
provide GPS in China. However, the Registrant has elected to postpone further
efforts in this area due to limited resources.

         On June 14, 1999 the Registrant signed a conditional Memorandum of
Agreement to enter into a joint venture with Beijing Tian Guang Information
Communication Services Ltd. (BTGIC), a Chinese company with a valid permit from
the State Information Technologies Ministry to operate as an ISP in the cities
of Beijing, Shanghai and Guangzhou. The Registrant was to issue 1,200,000

                                       6

<PAGE>

shares of its common stock for a 65% equity interest in BTGIC. After the
Registrant's management team completed its due diligence, it determined that
this joint venture would not be beneficial to the Registrant at the agreed
upon terms and conditions, and the agreement was terminated.

         On January 8, 1999 the Registrant announced that it had entered into a
teaming agreement with Veronex Technologies, Inc. to jointly pursue business
opportunities in China. On February 24, 1999 the Registrant announced that it
had entered into a marketing agreement with iBiz Technology Corp., to market
iBiz technology and products in the Pacific Rim. The anticipated business
opportunities have not yet developed sufficiently to pursue these projects.

         The Registrant has structured operations in accordance with current
local and foreign governmental regulations.

         While there can be no certainty, the Registrant believes that the
regulatory environment will continue to support the Registrant's current and
planned activities. However, any reversal of current government willingness to
continue to approve such activities could have a serious material negative
effect on the business prospects of the Registrant.

         The Registrant has spent approximately $50,000 over the past two years
in developing relationships and opportunities and obtaining licenses and
approvals.

         The available telecommunication and information technology market is
substantial and underserved. The Registrant will not be reliant upon any small
number of major customers in any of its markets.

         The Registrant believes there is minimal, if any, cost to the
Registrant for compliance with current environmental laws.

         The Registrant currently employs fourteen full time employees and
expects the total number of employees to reach twenty or more within six months.

         The Registrant plans to market its products and services both directly
and indirectly. A direct sales force will be developed to market the
Registrant's services and products. Furthermore, the Registrant will use its
contacts and relationships in China to further develop and market the
Registrant's products as they are developed.

                                       7

<PAGE>

         This Registration Statement became automatically effective as of 60
days from the date of filing and consequently, the Registrant is required to
file annual reports in accordance with the Securities Act of 1934.

         The Registrant has been advised that the Division of Enforcement of
the SEC has commenced an investigation regarding a company (and its
principal) that provided investor relations services to the Registrant during
a portion of 1999. The Registrant is cooperating voluntarily with the
Division of Enforcement in connection with such investigation.

         The public may read and copy any materials filed with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC.
The address of that site is (http://www.sec.gov). The Registrant's Internet
address is www.globaltci.com.

                                       8
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTIES.

         The Registrant's principal office is located at Suite 1800, 10 South
Riverside Plaza, Chicago, IL, 60606. This office acts as the Registrant's U.S.
office and is approximately 1,300 square feet. The Registrant leases this space
for approximately $2200 per month on a month-to-month basis.

         The Registrant also operates offices in New Canaan, CT. Vancouver,
British Columbia, Hong Kong and Shenzhen, China.

         The New Canaan office occupies approximately 1,000 square feet and is
located at 49 Locust Avenue, New Canaan CT. 06840. The Registrant leases this
space for approximately $1600 per month on a lease that expires December 31,
2000.


         The Vancouver office occupies approximately 2,500 square feet and is
located at Suite 1700-355 Burrard Street, Vancouver, BC, V6C 2G8. The Registrant
leases this space for approximately $5,170 per month on a three year lease that
will expire on May 31, 2003.

         The Hong Kong office occupies approximately 1,000 square feet and
is located at 1601 Causeway Bay Plaza 1, 489 Hennessy Road, Hong Kong. The
Registrant leases this space for $800 per month on a month-to-month basis.

         The Shenzhen office occupies approximately 2,000 square feet and is
located at Room 201, Tower B, Fujian Building, Caitain South Road, Fujian
District, Shenzhen city, Quondong Province, China 518026. The Registrant leases
this space for $1,500 per month on a month to month basis.

ITEM 3.  LEGAL PROCEEDINGS.

         The Registrant is not involved in any legal proceedings.

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

         No matters were submitted to a vote of the Company's stockholders
during the fourth quarter of the fiscal year ended December 31, 1999.

                                       9

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a) MARKET INFORMATION: The Registrant's common stock trades on the NASDAQ Pink
Sheets under the symbol GTCI. The Registrant's common stock price as of the
close of business on June 30, 2000 was $1.00 per share.

        PRICE RANGE: The following is the range of the high and low bids for the
Registrant's common stock for each quarter within the last two fiscal years as
determined by the over-the counter market. Quotations reflect inter-dealer
prices, without retail market, mark-down or commission and may not represent
actual transactions.

<TABLE>
<CAPTION>

                   1997                  1998                    1999
--------- ---------- ---------- ---------- -----------  ---------- ------------
QUARTER   HIGH BID   LOW BID     HIGH BID   LOW BID      HIGH BID    LOW BID
--------- ---------- ---------- ---------- -----------  ---------- ------------
<S>        <C>        <C>       <C>        <C>          <C>        <C>
MARCH      $6.00      1 1/2        9/16         3/8      1 31/32      1 3/32

JUNE       $3.06      1 1/8       15/16        7/16      3 27/32     1 11/16

SEPT.     11/12       1 1/8       13/16        5/16       2 7/16       1 1/2

DEC.      1            7/16       1 1/8       13/32       2 5/16     1 11/16
--------- ---------- ---------- ------------ ---------- ---------- ------------
</TABLE>

         HOLDERS: The Registrant has approximately 329 common stock
shareholders.

         DIVIDENDS: The Registrant has never paid a cash dividend. It is the
present policy of the Registrant to retain any extra profits to finance growth
and development of the business. Therefore, the Registrant does not anticipate
paying cash dividends on its common stock in the foreseeable future.

(b) RECENT SALES OF SECURITIES: The Registrant had the following stock issuances
as described below. All such shares were sold by the officers and directors of
the Registrant and no underwriters were utilized.

     1.  On June 23, 1997, 90,000 shares of common stock were issued in exchange
         for all of the issued and outstanding shares of Chow's Consulting
         Corporation.

                                      10

<PAGE>

     2.  On October 23, 1997, 3,000,000 shares of common stock at $.01 per
         share pursuant to Regulation D, Rule 504 Offering for a total offering
         of $30,000.

     3.  On January 16, 1998, 1,140,142 shares of common stock at $.50 per share
         pursuant to a Regulation D, Rule 504 Offering for a total offering of
         $570,071. Of this offering, a total of $180,800 was for cash and the
         balance of $389,271 was for the cancellation of debt.

     4.  On February 9, 1998, 1,500,000 shares of common stock were issued in
         exchange for all of the issued and outstanding shares of Planet City
         Graphics Corp.

     5.  On February 9, 1998, 500,000 shares of common stock were issued in
         exchange for all of the issued and outstanding shares of Webworks
         Multimedia Corporation.

     6.  On April 16, 1998, 4,950,000 shares of common stock were issued in
         exchange for all of the issued and outstanding shares of Regent Luck
         Holdings Limited. The Share Exchange Agreement called for the issuance
         of a total of 5,000,000 shares, but due to an oversight on the part of
         the Registrant's Stock Transfer Agent, only 4,950,000 shares were in
         fact issued.

     7.  On January 16, 1999, 700,000 shares of common stock at $.25 per share
         pursuant to a Regulation D, Rule 504 Offering for a total offering of
         $175,000.

     8.  On January 20, 1999, 1,574,000 shares of common stock at $.50 per share
         pursuant to a Regulation D, Rule 504 Offering for a total offering of
         $784,500.

     9.  On January 20, 1999, 80,000 shares of common stock pursuant to
         Regulation D Rule, 504 Offering to settle $40,000 worth of debt owed to
         Koo and Partners for the Company's legal fees for 1998.

    10.  On March 9, 1999, 600,000 shares of common stock were issued in
         exchange for 51% of the issued and outstanding shares of Pacific Asset
         International Ltd.

    11.  On March 15, 1999, 200,000 shares of common stock at $1.00 per share
         for a total offering of $200,000.

                                      11

<PAGE>


    12.  On March 19, 1999, 200,000 shares of common stock at $1.00 per share
         for a total offering of $200,000.

    13.  On March 26, 1999, 100,000 shares of common stock at $1.00 per share
         for a total offering of $100,000.

    14.  On April 16, 1999, 200,000 shares of common stock at $1.00 per share
         for a total offering of $200,000.

    15.  On June 14, 1999, 277,778 shares of common stock at $.72 for a total
         offering of $200,000.

    16.  On June 28, 1999, 1,494,000 shares were issued as collateral for a loan
         amount to be determined by the Registrant's trading share price at the
         time of funding. The loan was not funded and the collateral shares were
         cancelled on January 31, 2000.

    17.  On July 27, 1999, 69,444 shares of common stock at $.72 per share for a
         total offering of $50,000.

    18.  On August 3, 1999, 69,445 shares of common stock at $.72 per share for
         a total offering of $50,000.

    19.  On August 30, 1999, 25,000 shares of common stock at $2.00 per share
         for a total offering of $50,000.

    20.  On September 20, 1999, 125,000 shares of common stock at $.80 per share
         for a total offering of $100,000.

    21.  On October 13, 1999, 100,000 shares of common stock at $1.00 per share
         for a total offering of $100,000.

    22.  On October 20, 1999, 212,766 shares of common stock at $.94 per share
         for a total offering of $200,000.

    23.  On November 29,1999, 1050,000 shares of common stock at $1.20 per share
         for a total offering of $1,260,000.

    24.  On December 20, 1999, 6,383 shares of common stock was issued for stock
         offering costs.

    25.  On December 29, 1999, 250,000 shares of common stock at $1.00 per share
         for a total offering of $250,000.

                                      12

<PAGE>

    26.  On December 30, 1999, 52,524 shares of common stock were issued for
         settlement of a promissory note of $86,665.

    27.  On December 31, 1999, 250,000 shares of common stock at $1.00 per share
         for a total offering of $250,000.

    28.  On January 14, 2000, 400,000 shares of common stock were issued at
         $1.25 per share for a total offering of $500,000.

    29.  January 28, 2000, 500,000 shares of common stock were issued for 70% of
         Nano Technology Limited.

    30.  On February 22, 2000, 500,000 shares of common stock were issued at
         $1.00 per share for a total offering of $500,000.

    31.  On March 17, 2000, 200,000 shares of common stock were issued at $1.00
         per share for a total offering of $200,000.

    32.  On March 28, 2000, 100,000 shares of common stock were issued at $1.00
         per share for a total offering of $100,000.

    33.  On May 11, 2000, 50,000 shares of common stock were issued for investor
         relations services.

         (b) EXEMPTIONS FROM REGISTRATION:

         With respect to the issuance of the 3,000,000 common shares listed at
Item 4(a)2, the 1,140,142 shares listed at Item 4(a)3, the 700,000 common shares
listed at Item 4(a)7 and the 1,574,000 common share listed at Item 4(a)8, such
issuances were made in reliance on the private placement exemptions provided by
Section 4(2) of the Securities Act of 1933 as amended, (the "Act"), SEC
Regulation D, Rule 504 of the Act and Nevada Revised Statutes Sections 78.211,
78.215, 73.3784, 78.3785 and 78.3791 (collectively the "Nevada Statutes").

         With respect to the issuance of the 90,000 common shares listed at
Item 4(a)1, the 1,500,000 common shares listed at Item 4(a)4, the 500,000
common shares listed at Item 4(a)5, the 4,950,000 common shares listed at
Item 4(a)6, the 80,000 shares listed at Item 4(a) 9, the 600,000 common
shares listed at Item 4(a)10, the 200,000 common shares listed at Item
4(a)11, the 200,000 common shares listed at Item 4(a)12, the 100,000 common
shares listed at Item 4(a)13, the 200,000 shares listed at Item 4(a)14 the
277,778 shares listed at Item 4(a)15, the 1,494,000.shares listed at Item
4(a)16, the 69,444 shares listed at Item 4(a)17, the 69,445 shares listed at
Item 4(a)18, the 25,000 shares listed at Item 4(a)19, the 125,000 shares
listed at Item 4(a)20, the 100,000 shares listed at Item 4(a)21, the

                                      13

<PAGE>

212,766 shares listed at Item 4(a)22, the 1,050,000 shares listed at Item
4(a)23, the 6,383 shares listed at Item 4(a)24, the 250,000 shares listed at
Item4(a)25, the 52,524 shares listed at Item 4(a)26, the 250,000 shares
listed at Item 4(a)27, the 400,000 shares listed at Item 4(a)28, the 500,000
shares listed at Item 4(a)29, the 500,000 shares listed at Item 4(a)30, the
200,000 shares listed at Item 4(a)31, the 100,000 shares listed at Item
4(a)32, and the 50,000 shares listed at Item 4(a)33, such issuances were made
in reliance upon the private placement exemptions provided by Section 4(2) of
the Act and the Nevada Statutes.

             In each instance, each of the purchasers of such shares had access
to sufficient information regarding the Registrant so as to make an informed
investment decision. More specifically, each purchaser signed either a written
Subscription Agreement, a Share Exchange Agreement, a Share Purchase Agreement
or a Collateral Loan Agreement, with respect to their financial status and
investment sophistication wherein they warranted and represented, among other
things, the following:

     1.  That they had the ability to bear the economic risks of investing in
         the shares of the Registrant.

     2.  That they had sufficient knowledge in financial, business, or
         investment matters to evaluate the merits and risks of the investment.

     3.  That they had a certain net worth sufficient to meet the suitability
         standards of the Registrant.

     4.  That the Registrant has made available to them, their counsel and their
         advisors, the opportunity to ask questions and that they have been
         given access to any information, documents, financial statements, books
         and records relative to the Registrant and an investment in the shares
         of the Registrant.

                                      14

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

         The disposition of Krystar was effected by discontinuing operations and
canceling 6,000,000 shares of common stock of the Registrant issued in
connection with this exchange transaction. While there was no impact of this
discontinued operation in 1998, there was loss from discontinued operations of
$87,429 in 1997.

         From February 1998 through March of 1999, the Registrant made four
acquisitions pursuant to share exchange agreements. The first two of these
acquisitions, Planet City and Webworks were rescinded on October 1, 1999 due to
the following business decisions and events:

PLANET CITY AND WEBWORKS

         Originally, on February 17, 1998 the Registrant concluded negotiations
with two multimedia companies, Planet City and Webworks. The scope of the
business was to develop Internet based telecommunications application software,
products and services. The Registrant acquired assets valued at $1,000,000 in
exchange for a total of 2,000,000 shares of the Registrant's common stock.
Shortly thereafter, in March 1998, the Registrant was approached with
telecommunications joint venture opportunities in China. Due to the
underdeveloped telecommunications market in China, the Registrant's management
team believed that it was a prudent business decision to change the scope of the
business. The Registrant then acquired its subsidiary, Regent, to pursue these
opportunities.

         Subsequent to the acquisition of Planet City and Webworks, it became
apparent to management of the Registrant that the strategy and objectives of
both companies were widely divergent from the Registrant's. The management of
Planet City and Webworks did not operate within the Registrant's corporate
structure. Webworks and Planet City were previously involved in buying and
selling marketable securities. Such activity was not included in the
Registrant's intended operations. Further, the resources of Planet City and
Webworks did not fit well with the Registrant's needs to exploit new
telecommunications opportunities in China. For example, the Registrant
determined that the management teams of Planet City and Webworks were unable to
carry out the launching of the Registrant's Web-hosting, e-commerce and systems
integration operations in China. In addition, the computer equipment and
software owned by Planet City and Webworks needed considerable upgrading in
order to serve the needs of the Registrant. As a result, rather than allocating
further resources to these two operations, the Registrant's Board of Directors
determined that it

                                      15

<PAGE>

was in the best interest of the Registrant to rescind its agreements with
Planet City and Webworks. On October 1, 1999, the rescissions were completed.

PACIFIC ASSET

         The Registrant entered into the Share Exchange Agreement with Pacific
Asset in good faith, pursuant to which the Registrant agreed to deliver 600,000
shares of its common stock to the shareholders of Pacific Asset in exchange for
an aggregate of 5,100 shares of common stock of Pacific Asset. Pacific Asset was
expected to provide the Registrant access to institutional and banking
e-commerce business in Asia and the Registrant planned to assist Pacific Asset
in the development of its business in the telecommunications and information
technology sector. The Registrant delivered its shares to such shareholders on
or about March 19, 1999. Such shares were accepted by the shareholders of
Pacific Asset and have not been returned to the Registrant but such shareholders
failed to deliver their shares of common stock of Pacific Asset to the
Registrant in accordance with the terms of the Share Exchange Agreement. Under
the terms thereof, the Registrant had an enforceable right to receive such
shares of common stock of Pacific Asset and believed that it had obtained
control of Pacific Asset and that the transaction had for all intents and
purposes been legally consummated. At the time of delivery of its shares to the
shareholders of Pacific Asset, the Registrant reasonably believed that the share
exchange transaction had been legally consummated and that the Registrant would
receive from such shareholders their shares of common stock of pacific asset.
Based on such reasonable belief, the transaction was accounted for as a
purchase.

         Through December 1999, the Registrant received no benefit from its
ownership of Pacific Asset and none of the anticipated business opportunities
materialized. Management of the Registrant determined that the potential risk of
loss to the Registrant from ownership of Pacific Asset exceeded any possible
benefits. Accordingly, the Registrant approached the former owners of Pacific
Asset about rescinding the transaction in December 1999. The operations of
Pacific Asset were classified as discontinued at that time. The value of the
shares issued to acquire Pacific Asset of $840,000 had been recorded as
goodwill. When it was determined to discontinue Pacific Asset, the goodwill was
deemed to be impaired in full because no revenues had been received, and
following the discontinuation, no revenues would be received in the future.
Accordingly, the goodwill of $840,000 was written off in full and was recorded
as a loss on discontinued operations at December 31, 1999.

         The exchange transaction was rescinded pursuant to a Mutual Rescission
Agreement dated as of January 13, 2000 between the Registrant and the
shareholders of Pacific Asset. The shareholders of Pacific Asset signed the
Mutual Rescission Agreement on April 15, 2000 but have not yet returned the

                                      16
<PAGE>

shares of common stock of the Registrant previously issued to them. Pending the
return of such shares pursuant to the terms of such agreement, the Registrant
has placed a stop transfer on the shares, is taking appropriate steps to cancel
such shares, and has shown Pacific Asset as a discontinued operation.

         The acquisitions and rescissions of Planet City, Webworks and Pacific
Asset were accounted for as a purchase and sale. For the year ended December 31,
1999, the Registrant recorded a loss of $548,448 from discontinued operations in
connection with the disposition of Planet City, Webworks and Pacific Asset. This
loss was computed as follows:

<TABLE>
         <S>                                <C>
         Investment in Planet City
         and Webworks:                      $1,000,000

         Accumulated earnings of
         Planet City and Webworks:          $  708,448

         Investment in Pacific Asset:       $  840,000
         (As disclosed in Note 11 of
         the audited financial statements
         for December 31, 1999.)
         Total cost:                        $2,548,448

         Value of Shares received in
         Rescission:                        $2,000,000

         Loss                               $  548,448
</TABLE>

         At the time the purchase of Webworks and Planet City was rescinded
on October 1, 1999, the 2,000,000 shares of Webworks and Planet City were
priced at $1.00 per share, resulting in an aggregate value of $2,000,000. The
value of the shares upon rescission was based on the price of restricted
common stock issued by the Registrant in connection with private placements
of its equity securities as of such date. Shares issued in connection with
such private placements were sold at approximately $1.00 per share,
representing a discount of approximately 50% off the bid price of the free
trading common stock on the transaction date. This method is consistent with
the method of valuation of the shares at the time of the original purchase of
the two subsidiaries.

         For the year ended December 31, 1999, the Registrant recorded a gain of
$848,891 from discontinued operations, of which $975,172 represents gains from
sales of marketable securities that were owned by Planet City and Webworks. The
following is a summary of the Registrant's activities buying and selling
marketable securities for the year ended December 31, 1999.

                                      17

<PAGE>

<TABLE>
<CAPTION>

   MARKETABLE
   SECURITIES             SALES ($)       COST ($)       GAIN OR (LOSS) ($)
   -----------           -------        -----------      -----------------
<S>                      <C>             <C>             <C>
GAB                        2000            1500                   500

Gala Bari               133,057          29,939               103,118

Novamed                     539             250                   289

BudgetHotels.com         36,169          20,554                15,615

International Jaguar      4,090           2,426                 1,664

Dynamic Imaging           3,212           3,114                    98

Planet City(1)          984,563         124,886               859,677

Realty World                720             575                   145

GTCI                      5,790           5,824                   (34)

GRP Seven                27,679          33,579                (5,900)
                                                         -------------
TOTAL                                                        $975,172
</TABLE>

         During the years 1998 and 1999 all of the Registrant's revenues were
generated by its discontinued operations. During the year ended December 31,
1999, the Registrant generated revenues of $0 and operating expenses of
$6,018,194, resulting in a net loss of $6,018,194 from operations.

         General and administrative expenses increased to $3,534,305 in 1999
from $407,554 in 1998 and depreciation and amortization expenses increased to
$2,483,889 in 1999 from $373 in 1998. The following is a breakdown of the
significant general and administrative expenses incurred in 1999:

         The Registrant's legal and accounting expenses increased to $234,255,
representing an increase of 199% in 1999. This increase in the legal and
accounting costs occurred as a result of the following factors:

         1.       Legal and accounting costs associated with compliance;

         2.       Due diligence costs associated with acquisitions; and

         3.       Costs associated with the rescission of prior acquisitions.

         The Registrant's travel and entertainment expenses increased to
$348,148, representing an increase of 530% in 1999. This increase was due
primarily to increased travel requirements relating to the Registrant's current
operations located in Europe and the Far East. In addition, an increase in the
number of professionally trained consultants and employees retained or hired by
the Registrant during this period to help develop its business resulted in
increased


--------------------
(1)A public company currently trading on the OTC Electronic Pink Sheets,
unrelated to the Registrant's former subsidiary.

                                      18


<PAGE>

travel requirements and expenses for the purposes of due diligence and
subsequent closing of the Registrant's acquisitions.

          In 1999, the Registrant had a total of 14 employees, five of whom
were employed by Regent Luck and six of whom were employed by Shenzhen
Global. During 1999, the Registrant also retained a total of 18 consultants
to provide various consulting services, including management consulting,
business advisory services and investor relations. As a result, the
Registrant's consulting expenses increased from $28,013 in 1998 to $1,417,008
in 1999. The increase in consulting expenses was due to the fact that the
Registrant retained new management personnel in 1999, who initially joined
the Registrant on a consulting basis. During this period the Registrant also
engaged additional business consultants with specialized expertise in the
telecommunications field to assist in the implementation of the Registrant's
current business plan. Of the $1,417,008 in consulting expenses, an aggregate
of $550,000 was paid to First Continental Capital LP, a financial consultant.
Included in this amount was $50,000 of cash and 500,000 shares of common
stock, valued at $1.00 per share, which was paid in consideration for
financial advisory and other consulting services provided during 1999. The
financial advisory services related to mergers, acquisitions and financing
activities. In addition to such amounts, an aggregate of $286,000 was paid
for management consulting fees, $130,000 was paid for advisors and
consultants specialized in telecommunications in Asia, $71,000 was paid for
fundraising activities, $142,983 was paid for investor relations, $198,000 in
consulting fees was paid for head office administration, $28,898 was paid for
payroll costs and $10,127 was paid for promotion costs.

          The general and administrative costs for Regent Luck totaled $217,911,
which included the salaries of 5 employees and the costs relating to the day to
day operations. The total general and administrative costs for Shenzhen Global
totaled $24,704, which included the salaries for 6 employees and the costs
relating to day to day operations.

          General and administrative expenses incurred by the Registrant in
1999, also include an aggregate of $431,000 paid by the Registrant to ICE
pursuant to the ICE Revenue Participation Agreement, including the amounts it
is required to pay as costs for prepaid phone cards. Such amounts have been
expensed because the Registrant has no history of being able to sell prepaid
calling cards or ICE telephone services and the Registrant is unable to
predict whether such sales will be possible in the future or whether they
will be profitable.

          The Registrant also had an expense of $505,625 for discount on options
that were issued as compensation to employees and consultants of the Registrant.
(See note 7 of the audited financial statements)


                                      19

<PAGE>

          The remaining expenses are made up of a reserve for bad debt of
$49,500 and office rent of $62,000 and office expenses of $244,154.

          Depreciation and amortization expense increased from $373 in 1998
to $2,483,889 in 1999. This increase was attributable to the acquisition of
Regent Luck in 1998 and the determination in 1999 that the goodwill
recognized in the acquisition was impaired in full. This determination was
made based on the fact that no revenues were received from Regent Luck in
1999 and no revenues have been forecast for 2000. The Registrant determines
recoverability of the goodwill using undiscounted, estimated future cash
flows. If impairment is determined the goodwill is adjusted down to fair
value as determined by estimated discounted future cash flows.

         As of December 31, 1999, of the $1,300,000 required to be provided
under the Regent Agreement, $189,237 had been spent on opening an office in
Shenzhen, employee expenses, license fees and equipment purchases. The balance
of $1,110,763 is included in cash in the Registrant's consolidated financial
statements.

         On May 13, 1998, Regent had entered into a joint venture with Shenzhen
Global. In 1998 and 1999, the Shenzhen joint venture's intended business was to
provide dial-up Internet access to Shenzhen Newsnet's customer base. Although
the Registrant had fulfilled its legal obligation to provide $1,300,000 funds
under the Regent Agreement as of December 31, 1999, the Registrant determined
during the fourth quarter of 1999 that the dial-up Internet access business
proposed to be conducted by the Shenzhen joint venture was not a sufficiently
diversified or economically viable opportunity and that it was not in the best
interests of the Registrant to pursue it. In addition, based on the information
available at such time, the Registrant was unable to quantitatively evaluate the
future value of Shenzhen Newsnet's dial-up Internet access or the value of its
customer base. For these reasons, and because no revenues had been received in
1999 or were expected in 2000 as discussed above, the goodwill of $2,475,000
recognized in the Regent Luck acquisition was deemed impaired and was written
off as of December 31, 1999 in accordance with the Registrant's policy for
determining the recoverability of goodwill based only on undiscounted, estimated
future cash flows.

         During the second quarter of 2000, and in the course of implementing
changes to its business plan, new management of the Registrant identified a new
opportunity to use the existing funds of $1,110,763 within the framework of the
existing Shenzhen joint venture arrangement to engage in the business of
providing web-based e-mail, voice over Internet protocol, systems integration,
Internet access and content and other value-added internet technology
applications. The integration of these diversified services into the existing
ISP
                                      20


<PAGE>

are expected to bring the future operations of this business in line with
the Registrant's current business plan and to provide future opportunities for
growth and income. The Registrant expects to use the existing subscriber base in
Newsnet for the e-commerce platform and has selected Sun Microsystems to provide
the required hardware for the Shenzhen e-commerce joint venture.

         Operations pursuant to the ISP Agency Agreement between Shenzhen
Global and Newsnet will commence in Shenzhen and then the Registrant intends
to move into five other cities (Beijing, Shanghai, Wuhan, Guangzhou and
Chongquing). The timing of the development will depend upon the success of
the Shenzhen operation. Each additional facility will cost approximately
$1,300,000 to commence operations.

         The strategic partnership with Newsnet is expected to give the
Registrant certain advantages in the marketplace over its competitors, including
a direct customer base of over 60,000, more favorable terms from China Telecom
in lease-line contracts and technical support.

         The Registrant has only external sources of liquidity. During the years
ended December 31, 1998, and December 31, 1999, the Registrant was engaged
primarily in fund raising activities. Pursuant to private placement offerings, a
total of $451,462 in 1998 and $4,152,753 in 1999 was raised.

         During the year ended December 31, 1998 the Registrant raised $146,837
from notes payable and $451,462 from sales of common stock to fund its
operations. During the year ended December 31, 1999 the Registrant raised
$4,152,753 from the sale of equity securities and $544,921 from notes payable to
fund current operations.

         On September 15, 1999 the Registrant entered into an agreement with
ICE to provide funding for a joint venture between ICE and FT (ICE/FT Joint
Venture). Under the terms of the agreement, the Registrant is to receive
revenue participation in exchange for its investment in ICE. ICE is expected
to be a provider of telephony services to business customers, with a focus on
multinational companies in the European Union. The Registrant's objective is
to become a leading provider of such services in its areas of operations. ICE
has uncovered niche telephony products for this market that it believes
represent revenue opportunities. The Registrant anticipates that the ICE/FT
Joint Venture will allow ICE to deliver voice, fax and data traffic via earth
stations owned by FT in China for termination into China at competitive
pricing. ICE is now seeking funding for its next stage of development in
China. To date, the Registrant has made an investment of approximately
$243,500 for 25% of the gross revenue due to ICE from all activities
generated by the ICE/FT Joint Venture on a monthly basis. The Registrant is
to receive this percentage for a
                                      21


<PAGE>

period of time beginning with the first month of revenue generation and
ending when ICE's revenue participation from the ICE/FT Joint Venture has
exceeded approximately $807,000 ((pound)500,000) per month for 12 individual
months. The Registrant's gross revenue participation is to decrease to 12
1/2% of the gross revenue due to ICE from all activities generated by the
ICE/FT Joint Venture, on a monthly basis, for the duration of the ICE/FT
Joint Venture. The Registrant expects revenues to begin in second quarter of
2000.

         On October 21, 1999, the Registrant entered into a second joint
venture with ICE as a financial partner to assist it in the development and
distribution of promotional commemorative prepaid calling cards relating to
sports figures. Initially the program is directed primarily towards the
leading drivers of Formula 1 race car teams. ICE has several contracts in
place as of the date hereof including one with the Yamaha race car team. In
addition, subsequent to December 31, 1999, the Registrant has loaned
approximately $200,000 to ICE pursuant to an unsecured promissory note
payable on July 4, 2000 bearing interest at an annual rate of 10% to commence
on July 1, 2000.

         The Registrant has paid approximately $48,400 US ((pound)30,000) for
the right of first refusal on any and all such cards that ICE may choose to
market.

         The Registrant expects to invest approximately $121,000 ((pound)75,000)
per card for design, artwork, impression, printing, testing and delivery of
satisfactory network delivery and support capabilities. In exchange, the
Registrant is to receive 50% of ICE's gross revenue monthly until it has
received twice (2x) its original investment, and subsequently, 25% of gross
monthly revenues for as long as the contract is in force, including renewals.

         The Registrant has completed its $121,000 ((pound)75,000) obligation to
ICE for the Yamaha contract. Two other contracts are also now being funded.

         All funds invested in ICE are expensed when incurred due to the
uncertainty of the recoverability of the costs.

         A copy of the "Revenue Sharing Agreement" for promotional calling cards
is included as an Exhibit.

         There have been no seasonal aspects that caused any material changes in
the Registrant's financial statements.

         The Registrant's viability is contingent upon its ability to raise
additional funds to support development efforts. There is no assurance the
Registrant will obtain additional financing on terms it deems acceptable.

                                      22

<PAGE>

         The implementation and expansion of the Registrant's business is
expected to require a commitment of substantial funds. The Registrant is
currently negotiating the placement of a subordinated debt facility
("Subordinated Loan") in the principal amount of $10,000,000 that the
Registrant expects to close contingent upon the Registrant having satisfied
all applicable requirements for listing its common stock and the common stock
having been accepted for trading on the NASDAQ OTC Bulletin Board. There can
be no assurance that the Registrant will be successful on a timely basis in
satisfying such requirements, that its Common Stock will be accepted for
trading on the NASDAQ OTC Bulletin Board or that the Subordinated Loan will
be closed. In connection with the Subordinated Loan, the Registrant will be
required to deliver a 9% Subordinated Debenture ("Debenture") and a Warrant
to Purchase Common Stock ("Warrant").

         The same lender that proposes to make the Subordinated Loan has also
extended a bridge loan facility to the Registrant in the original principal
amount of $800,000 (the "Bridge Loan"). The Bridge Loan was initially
evidenced by a 15% Convertible Promissory Note (the "Convertible Note"). The
Convertible Note was subsequently converted into $3,200,000 principal amount
subordinated loan facility ("Conversion Loan") on substantially the same
terms and conditions as the Subordinated Loan. The lender has not advanced
any amount to the Registrant in excess of the $800,000 original principal
amount of the Bridge Loan and the unfunded principal amount of the Conversion
Loan is evidenced by a promissory note from the lender to the Registrant. It
is anticipated that the Conversion Loan will be repaid (and the lender's
promissory note evidencing the unfunded portion thereof will be satisfied) by
conversion into the Subordinated Loan. In connection with the closing of the
Bridge Loan, the Registrant delivered to the lender a five-year warrant to
purchase 200,000 shares of its common stock, exercisable at $2.25 per share.

         The Debenture will be convertible into shares of Common Stock of the
Registrant and will be due a maximum of 30 months after the date of issuance.
The holder may convert up to a specified face amount of the Debenture upon
issuance (a minimum of $122,223 under the Conversion Loan and a maximum of
$555,556 under the Subordinated Loan) on each monthly anniversary date
thereafter (each, a "Due Date"). Any amount not converted accumulates and may
be converted thereafter. However, the holder is prohibited from converting
any amount of the Debenture that would cause the holder's total ownership of
common stock to equal 4.9 percent or more of the total shares outstanding.
Under the Conversion Loan, the per share conversion price will be equal to
the lesser of (a) $2.50 and (b) the lowest daily trading price of the common
stock (as reported by Bloomberg) of the twenty (20) consecutive trading days
immediately preceding submission of a notice to convert by the holder. Under
the Subordinated Loan, the per share conversion price will be equal to the
lesser of

                                       23

<PAGE>

(a) $4.00 and (b) the average of the three lowest daily trading prices of the
common stock (as reported by Bloomberg) of the twenty (20) consecutive
trading days immediately preceding submission of a notice to convert by the
holder. In the event the closing bid price of the Registrant's common stock
is less than a specified amount per share at any time during the five trading
days preceding a Due Date, the Registrant will have the right to redeem for
cash the monthly conversion amount of the Debenture (in lieu of allowing the
holder to convert such amount) at premiums ranging from 105% to 108%. The
Debenture will be secured by a letter of credit in an initial principal
amount equal to 75% of the principal amount of the Debenture. The required
amount of the letter of credit will decrease by a specified amount for every
$1.00 of principal reduction of the Debenture, whether the reduction occurs
by conversion or redemption.

         The Warrant will be exercisable for the purchase of 40,000 shares of
Common Stock per $100,000 in principal amount of the Debenture, one third of
which will be exercisable at $2.25 per share, one third of which will be
exercisable at $3.00 per share, and one third of which will be exercisable at
$3.75. The Warrant will be exercisable at any time prior to the expiration of
five years from the date of issuance.

         The Registrant will be required to register for resale all shares of
Common Stock issuable upon conversion of the Debenture and exercise of the
Warrant. Certain penalty provisions apply if a registration statement covering
the shares is not filed within 150 days or is not declared effective within 180
days of the date of issuance.

         The shares to be issued in connection with its proposed subordinated
loan facility are not at a discount from the market price of the Registrant's
common stock (i.e. are not "in the money") and, accordingly, no additional
expense is expected to be required to be recorded in connection with the
issuance of such shares.

         The Registrant expects to use a portion of the net proceeds of the
Subordinated Loan to develop its telecommunications products and services and to
make other acquisitions that it deems beneficial to the continuation of its
business. Specifically, the Registrant expects to use such funds within the
framework of the existing Shenzhen joint venture arrangement to engage in the
business of providing web-based e-mail, voice over Internet protocol, systems
integration, Internet access and content and other value-added internet
technology applications. The Registrant intends to provide these diversified
services on an integrated basis to the existing customer base available under
its Exclusive Agency Agreement with Newsnet and eventually to expand into five
of the largest cities in China, namely, Beijing, Chonquing, Ghangzhou, Shanghai,
and Wuhon. In connection with establishing and developing these integrated

                                      24

<PAGE>

ISP businesses, the Registrant expects that it will be required to make
investments of approximately $1,300,000 for each additional city it expands
to as it has for the existing joint venture in Shenzhen.

         In particular, Cyber 2000, in which the Registrant has a 70%
ownership interest through its investment in Nano, is developing Voice over
Internet Protocol (VoIP) and is expanding to become a provider of VoIP
re-sale services with major international telephony carriers and also intends
to build its own Internet Protocol backbone network. The Registrant expects
to use approximately $750,000 in 2000, $1,600,000 in 2001, and $2,550,000 in
2003 from proceeds of the Subordinated Loan to complete this project. In
addition to capital expenditures for equipment, funds will be allocated for
personnel back office support platforms and development of additional
software and products. Except as set forth above, the Registrant has not
specifically committed funds to any specific products or services at this
time.

         The Registrant believes that the foregoing financing sources will
provide sufficient funds for its operational activities for the next 12
months. Nevertheless, the Registrant intends to pursue additional funding in
the form of additional direct equity. The Registrant does not intend to
develop its own value-added products and services at this time. It will,
instead, purchase or license those products and services from third parties.

         On November 15, 1999 China signed a trade agreement with the United
States that lifts trade barriers. The pact obligates China to cut tariffs an
average of 23% which promises greater access for telecommunications firms. But
China must still sign agreements with several other nations including the
European Union before it can be admitted to the World Trade Organization (WTO),
which will take additional time to resolve.

         Socio-political factors and other variables will have a significant
impact on the Registrant's future financial condition. Among other things,
China is seeking entry into the WTO and if it is successful, the
liberalization of its telecom markets to foreigners will have a direct effect
on the Registrant's and its subsidiaries' business operations. Some of these
factors are, the lowering of tariff and non-tariff barriers for information
technology products and services; more transparency and clearer rules and
regulations with respect to the telecom industry; an increase in
globalization and the free flow of information among trading partners; access
to more reliable market data; and other multilateral arrangements and market
reforms that are prerequisites for entry into the WTO.

         Present indications from Beijing point to the liberalization of foreign
investment in China's Internet sector. The liberalization of the telecom sector
would allow the Registrant to provide capital and investment in other
value-added

                                      25

<PAGE>

products and services within the information technology/Internet sector such
as IP Telephony and Long Distance Calling Cards that are presently prohibited
from foreign participation.

         In the meantime, there are inherent risks in operating in this
sector where the rules and regulations are still uncertain. Opening of the
information technology/Internet sector to foreign participation will also
mean an increase in competition from multinational telecommunications
companies in China. The degree to which it will affect the Registrant's
future operations and financial results is uncertain and will depend on the
competency of the management team in executing its business plan and carrying
out an effective implementation of the core operations of the joint ventures.

         As a result of conducting overseas operations, the Registrant is
vulnerable to foreign exchange fluctuations. This is especially true in Asia
where currency fluctuations and devaluations are not only determined by
market forces but are also affected by the monetary and fiscal policies of
foreign governments. There are also risks associated with the laws and
regulations that apply to the repatriation of capital from overseas
operations.

         The success of the Registrant and its subsidiaries' operations in
China is subject to the political and economic uncertainties of that region.
These unknowns are characterized by unexpected changes in rules and
regulations; tariffs or other barriers; policy changes regarding foreign
asset ownership; changes in tax laws for foreign companies; unexpected
changes in monetary or fiscal policies; market reforms; austerity programs
enacted by the government; government subsidies that are anti-competitive in
nature; currency exchange regulations and lack of transparency in the
financial markets. These and other factors could have an adverse impact on
the Registrant's business and financial results in the future or require the
Registrant to modify its current business practices.

         The market for information technology products and services is
characterized by rapidly changing technology, frequent introductions of new
products and evolving industry standards that result in product obsolescence and
short product life cycles. Accordingly, the Registrant's success is dependent
upon its ability to anticipate technological changes in the industry and to
continually identify, obtain and successfully market new products and services
that satisfy evolving technologies, customer preferences and industry
requirements within the markets that the Registrant and its subsidiaries
operate.

         There can be no assurance that competitors will not market products and
services in the Chinese markets that have certain competitive advantages over
those of the Registrant and its subsidiaries.

                                      26

<PAGE>

         There are also uncertainties and risks attributable to the immature
and volatile nature of the Chinese information technology market. This market
is still in its nascent stage where sufficient data and market studies are
not available for any thorough analysis in determining the viability of the
Registrant's business plan. The Registrant and its subsidiaries mainly have
to rely on the experiences of its local joint venture partners and of its own
management team to make strategic decisions with respect to its operations.
This lack of clear and reliable market information dramatically increases the
risk of the Registrant making incorrect market assumptions.

         The Registrant believes that the size of the emerging market in
China contributes positively to its prospects for success and that the
current availability of capital seems to support present and future needs of
the Registrant's operations. Any material change in the regulatory climate in
China could be materially damaging to the Registrant's future prospects for
success. The Registrant has not had any Y2K problems in 2000.

         Because they do not appear to be material, costs for Y2K compliance
are not being segregated from the Registrant's operating budget. Overall, the
costs are not expected to have a significant effect on the Company's
consolidated financial position or results of operations. The cost is not
foreseen to be significant due to the developmental nature of the business.
Any costs will be deducted from income in the period incurred.

         In the event that any of the Registrant's subsidiaries do not
successfully and timely achieve Y2K compliance, the Registrant's business or
operations will be minimally affected due to the fact that all pertinent data
has been backed up. Finally, Year 2000 problems could have a ripple effect
through world economies, which could adversely affect the demand for some or
all of the Registrant's products and services. Of course, this is the case
for all operating companies worldwide.

         The Registrant, as part of the certification process, had each of its
operating subsidiaries perform a Y2K "dry run", where the dates on all computers
and microprocessor-controlled equipment were set ahead to a date within the year
2000. These dry runs identified all remaining internal Y2K issues before any
problems occurred. The Registrant performed the dry run on a subsidiary by
subsidiary basis before December 15, 1999. These procedures do not, however,
identify external Y2K problems, and they will not provide any information as to
how Y2K problems throughout world economies may affect the Registrant.

                                      27

<PAGE>

         In December 1998, the Registrant signed consulting contracts with Lions
Peak Capital Ltd. and Milan Financial Inc. These two companies have been working
with the Registrant to provide consulting services with respect to investor
relations, marketing and business development. The Registrant has recently
retained or is presently seeking new management with significant experience in
areas that are expected to contribute to the implementation of its current
operating plan.

         On October 1, 1999, the Registrant appointed Thomas Brandenburg to
serve as interim Chief Executive Officer (CEO) and Robert Luth as Chief
Financial Officer. Mr. Brandenburg served as interim CEO from October 1, 1999
through December 31, 1999. Effective January 1, 2000, Mr. Brandenburg became CEO
of the Registrant. Due to personal circumstances, Mr. Luth was unable to assume
the CFO position. The Registrant is now seeking a qualified individual to serve
in this position. In addition, on March 2, 2000, the Registrant appointed Robert
J. Andresen to serve as President.

                                       28
<PAGE>


ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         Financial Statements are referred to in Item 13, listed in Part F/S and
filed and included elsewhere herein as a part of this Annual Report on Form
10-KSB.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

        The Registrant's principal independent accountant has not resigned,
declined to stand for re-election, nor were they dismissed. The principal
accountant's report on the financial statements for the last two years contains
no adverse opinion or disclaimer of opinion, nor were they modified as to
uncertainty, audit scope, or accounting principles. There have been no
disagreements with any former accountants or any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.

                                      29

<PAGE>

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following table sets forth information regarding the directors,
executive officers, promoters and control persons of the Registrant as of
December 31, 1999:

<TABLE>
<CAPTION>
                                                                                SERVED
     NAME                      AGE    POSITION                        TERM      SINCE
  ----------                  ------  --------                       ------   ---------
<S>                           <C>     <C>                            <C>           <C>
1.  Thomas C. Brandenburg      64     CEO & Director                  2yrs      10/99
2.  Terry Wong(1)              40     President, Chief Operating      2yrs      10/97
                                      Officer & Director
3.  Thomas J. Kennedy          50     Secretary, Treasurer &          2yrs      10/97
                                      Director
</TABLE>

The following table sets forth information regarding the directors, executive
officers, promoters and control persons of the Registrant as of the date hereof:

<TABLE>
<CAPTION>
                                                                              SERVED
     NAME                    AGE     POSITION                        TERM      SINCE
  ----------                ------   --------                       ------   ---------
<S>                         <C>      <C>                             <C>      <C>
1.  Thomas C. Brandenburg     64     CEO & Director                   2yrs      10/99
2.  Robert J. Andresen        53     President & Director             2yrs      03/00
3.  Thomas J. Kennedy         50     Secretary, Treasurer &           2yrs      10/97
                                     Director
4.  Terry Wong                40     Vice Chairman & Director         2yrs      10/97
</TABLE>

THOMAS C. BRANDENBURG

         Mr. Brandenburg became a director of the Registrant on October 1, 1999.
He served as interim CEO of the Registrant from October 1, 1999 until December
31, 1999 and has served as CEO since January 1, 2000.

         Prior to joining the Registrant, Mr. Brandenburg founded US Network
Corporation Inc., the first company to negotiate territory wide term and
volume based resale contracts with any US Regional Bell Operating Company
(RBOC) concluding contracts with Nynex and Ameritech. Prior to his five-year
involvement with that firm, he was the founding chairman of Litel, Inc. from
1984-1988. He commenced his involvement in the communications industry
in

---------------------
(1) Mr. Wong resigned as President of the Registrant as of March 2, 2000 and
    Mr. Robert J. Andresen was appointed as President on the same day.

                                      30

<PAGE>

1978, providing equity to an MCI reseller, United Networks Corp. in Dallas
and subsequently selling the company to US Tel. From 1974-1978 Mr.
Brandenburg served as President and CEO of Rocky Mountain Industries managing
and operating oil ventures in California and Canada, an auto leasing company,
a specialty steel company and land development activities. Prior to this, he
was the Senior Vice President of Graham Loving & Company, a private brokerage
firm. He held a ten year position as Senior Superintendent for Zurich
American Insurance Group from 1960 to 1970.

         Mr. Brandenburg holds a Bachelors and Masters of Art in Literature from
the University of Notre Dame.

ROBERT J. ANDRESEN

         Mr. Andresen has served as Director and Chief Operating Officer of the
Registrant since January 10, 2000 and as President since March 2, 2000.

         Prior to joining the Registrant, Mr. Andresen served as Regional Vice
President for two major voice/data network companies, WILTEL from 1991 to 1993
and WANG LABS from 1987 to 1991, and as General Manager for US Network Inc., a
major reseller of local RBOC services from 1995 to 1997. He was recruited by the
Registrant, away from Focal Communications, a competitive local exchange carrier
where he was responsible for the sales and customer support in the New York
Metro territory. He has directed the design and implementation of major computer
and telecom systems for municipalities and private sector firms representing
long-term projects of up to $15 million.

         Robert Andresen holds a Master of Business Administration in Finance
from Long Island University and a Bachelor of Arts in Psychology from Brooklyn
College. He is a Certified Electronics Technician of the U.S. Marine Corps.

TERRY WONG

         Mr. Wong has been a Director of the Registrant since March 1998, and
has served as President of the Registrant from March 1998 until March 2, 2000,
when he became Vice Chairman.

         Mr. Wong was the President of Fortune Maple Capital Ltd. (Hong
Kong/Canada) from 1989 to 1997. During this time he was instrumental in setting
up major telecommunications projects in North Eastern China and developing a
strategic joint-venture partnership with China's Post and Telecom real estate
development projects in Canada and China in excess of $80 million. He was also
involved in investments in high-growth, high-technology companies in both Asia
and North America. From 1984 to 1994, he held the position of

                                      31

<PAGE>

director of sales and marketing for Tak Kee Stevedoring and Shipping (Hong
Kong) where he was responsible for increasing sales for the company at an
annual average rate of 65% during the ten year period and opened major
markets for the company in both China and Malaysia. Mr. Wong received a BA
Commerce degree, with a focus on finance, from Simon Fraser University,
Vancouver, BC in 1982 and was enrolled in the Master of Economics program the
following year.

THOMAS J. KENNEDY

         Mr. Kennedy has served as a Director and Secretary and Treasurer of the
Registrant since March 1998.

         Mr. Kennedy has been practicing as a barrister, solicitor and
management consultant since 1991. Between 1981 and 1991, Mr. Kennedy was Vice
Chairman of the Workers Compensation Review Board. Prior to this, he served as a
prosecutor for the Canadian Department of Justice, Vancouver regional office.
From 1991 to present, he has held the position of Director for three public
companies: Global Tree Technologies Inc., Rock Resources Inc. and Nu-Lite
Industries Ltd. Mr. Kennedy received a Bachelor of Commerce and Business
Administration degree in 1973 and a Bachelor of Law degree in 1974 from the
University of BC in Vancouver and was admitted to the Law Society of BC in 1975.

ITEM 10. EXECUTIVE COMPENSATION.

         Mr. Terry Wong, the President, and Mr. Thomas Kennedy, the Secretary
and Treasurer, were the only full time executive officers of the Registrant
during the period ended December 31, 1999. Mr. Brandenburg served as interim CEO
from October 1, 1999 to December 31, 1999. Effective January 1, 2000, Mr.
Brandenburg became CEO. Mr. Andresen became President effective March 2, 2000.

         No executive officer or director of the Registrant received any cash or
non-cash compensation in excess of $100,000 in the years ended December 31, 1999
or 1998. The following sets forth information concerning all cash and non-cash
compensation awarded to the Registrant's executive officers in excess of
$100,000 for the year ended December 31, 1999:

                                      32

<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                        Annual Compensation                    Long-Term Compensation
                                   ---------------------------   -----------------------------------------------
                                                                            AWARDS                 PAYOUTS
                                                                  ------------------------   -------------------
                                                                               SECURITIES
                                                       OTHER                      UNDER-                  ALL
                                                       ANNUAL     RESTRICTED      LYING                   OTHER
                                                       COMPEN-       STOCK       OPTIONS/      LTIP      COMPEN-
     NAME AND                      SALARY    BONUS     SATION       AWARD(S)       SARS       PAYOUTS    SATION
PRINCIPAL POSITION        YEAR      ($)      ($)        ($)           ($)           (#)         ($)        ($)
-----------------------   ----     ------    -----     -------    ----------    ----------    -------    -------
<S>                        <C>      <C>       <C>        <C>         <C>          <C>           <C>        <C>
Thomas C. Brandenburg,
CEO                        1999       0(1)      0        89,900(2)       0             0           0          0

Thomas Kennedy
Director                   1999       0         0             0          0             0           0          0

Terry Wong
President                  1999       0         0             0          0             0           0          0
</TABLE>



                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (INDIVIDUAL GRANTS)

<TABLE>
<CAPTION>
                                             PERCENT OF
                             NUMBER OF      TOTAL OPTIONS/
                            SECURITIES       SARS GRANTED
                            UNDERLYING       TO EMPLOYEES     EXERCISE OR
                           OPTIONS/SARS        IN FISCAL       BASE PRICE   EXPIRATION
       NAME                 GRANTED (#)         YEAR            ($/SH)         DATE
---------------------      ------------     -------------     -----------   ----------
<S>                         <C>                <C>              <C>         <C>
Thomas C. Brandenburg       1,000,000          76.92%            $1.65       09/23/2002

Terry Wong                    200,000          15.38%            $1.25       09/28/2002

Thomas Kennedy                100,000           7.69%            $1.25       09/28/2002
</TABLE>

         Under the terms of his employment agreement with the Company, Mr.
Brandenburg received a one-time signing bonus of $95,000, which will be paid
in 2000. Mr. Brandenburg is entitled to receive base annual compensation of
not less than $360,000 during the three year term of his employment agreement
with the Registrant, and has been receiving his base compensation since
January 1, 2000. In addition, the Board of Directors of the Company has
approved a grant to Mr. Brandenburg of options to acquire 1,000,000 shares of
common stock, which are exercisable at an exercise price of $1.65 per share
and expire on September 23, 2002. Such options are required to be granted
under an incentive


--------------------------
(1) Under the terms of his employment agreement with the Registrant, Mr.
Brandenburg did not receive a salary in the year ended December 31, 1999.

(2) Represents fees paid in 1999 for services as a consultant and interim CEO.

                                      33

<PAGE>

stock option plan that qualifies under Section 422A of the Internal Revenue
Code to be adopted by the Registrant subject to any required stockholder
approval. The Registrant has not adopted such a plan as of the date hereof.

             Under his employment agreement with the Registrant, Mr. Andresen
will receive a one-time signing bonus of $50,000, which will be paid in 2000.
Mr. Andresen is entitled to receive base annual compensation of not less than
$200,000 during the three year term of his employment agreement, and has been
receiving his base compensation since January 10, 2000. In addition, the Board
of Directors of the Company has approved a grant to Mr. Andresen of warrants or
nonqualified options to acquire 500,000 shares of common stock. Such warrants or
nonqualified options will be exercisable at an exercise price to be determined
by the Board of Directors of the Registrant.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth information as to the shares of common
stock owned as of May 11, 2000:

          I.      Each person who beneficially owns so far as the Registrant has
                  been able to ascertain, more than 5% of the 18,488,275
                  outstanding shares of the Registrant.

         II.      Each director.

        III.      Each of the officers named in the summary compensation table.

         IV.      All the directors and officers as a group unless otherwise
                  indicated in the footnotes below on the table is subject to
                  community property laws where applicable, the persons as to
                  whom the information is given has sole investment power over
                  the shares of common stock.

                                      34

<PAGE>

<TABLE>
<CAPTION>
                                                               PRINCIPAL
                                                               BENEFICIAL      NUMBER OF
NAME                                 ADDRESSES                    OWNER          SHARES       PERCENT
----                                 ---------                 ----------      ---------      -------
<S>                            <C>                            <C>              <C>            <C>
1.  Sino Concourse Limited     5/F Effectual Building,        Mr. T.O. Yip &   1,875,000       10.6%
                               16 Hennessy Road               Mr. Ricky Lum
                               Wanchail, Hong Kong

2.  Sinoway Technology Ltd.    5/F Effectual Building,        Mr. Joseph Li    1,825,000        0.4%
                               16  Hennessy Road
                               Wanchail, Hong Kong

3.  Ricky Ming Wah Ng          RM 25A/10F Profit                               1,250,000        7.1%
                               Ind. Bldg, 1-15 Kwai
                               Fung Crescent Kwai
                               Chung N-7

4.  Terry Wong                 Suite 1700-555                                    588,000         3.3%
                               Burrard Street,
                               Vancouver BC V6C 2G8

5.  Thomas J. Kennedy          Suite 910-510
                               Burrard Street,                                       -0-           0%
                               Vancouver, BC V6C 3A8
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Until May 31, 2000, The Registrant leased office space in Vancouver
B.C. from one of its officers and directors, Thomas Kennedy. The Vancouver
office occupied approximately 1,000 square feet and was located at Suite 910-510
Burrard Street, Vancouver BC, Canada V6C 3A8. The Registrant leased this space
for approximately US$3,300 per month on a month-to-month basis. There were no
other transactions during the last two years, or proposed transactions, to which
the Registrant was or is to be a party, in which any director, executive
officer, nominee for directorship, security holder or immediate family member
had a direct or indirect material interest as defined by Rule 404 of Regulation
S-B.

--------------
(2)Sino Concourse Limited, is a Hong Kong limited liability company of which Mr.
   Yip owns 80% and Mr. Lum owns 20%.

(3)Mr. Joseph Li is 100% owner of the issued and outstanding shares of Sinoway
   Technology Ltd., a Hong Kong limited liability company.

                                      35
<PAGE>


ITEM 13. INDEX TO EXHIBITS.


             The following list describes the exhibits filed as part of this
Annual Report Form 10-KSB. Each of the following Exhibits is incorporated by
reference to the Registrant's Form 10-SB.

<TABLE>
<CAPTION>
EXHIBIT NO.     DESCRIPTION
-----------     -----------
<S>             <C>
   2            Charter and By-Laws

   2.1          Articles of Merger Merging Global Telephone Communication, Inc.
                (a Utah Corporation) into Global Telephone Communication, Inc.
                (a Nevada Corporation)

   2.2          Articles of Incorporation of Global Telephone Communication, Inc.

   2.3          Articles of Amendment and Restatement to Articles of Incorporation
                of Dynasty TMT Corp.

   2.4          Articles of Amendment to Articles of Incorporation of Dynasty TMT Corp.

   2.5          Articles of Amendment to the Articles of Incorporation of Dynasty TMT Corp.

   2.6          Articles of Incorporation of Dynasty Ore and Minerals Corporation

   2.7          By-Laws of Global Telephone Communication, Inc.
</TABLE>

                                      36

<PAGE>


<TABLE>
<CAPTION>
EXHIBIT NO.     DESCRIPTION
-----------     -----------
<S>             <C>
   3            Instruments Defining the Rights of Security Holders

   3.1          15% Convertible Promissory Note

   6            Material Contracts

   6.1          Share Exchange Acknowledgement -- of Webworks Multimedia Corp.

   6.2          Share Exchange Acknowledgements -- Planet City Graphics Corp.

   6.3          Share Exchange Agreement with Regent Luck Holdings Ltd.

   6.4          Amendment of Share Exchange Agreement with Regent Luck Holdings Ltd.

   6.5          Joint Venture Agreement between Shenzhen Xun Yun Yun Da Electronics Co.
                Ltd. And Regent Luck Holdings Ltd. for Shenzhen Global Net Computer
                Information Co. Ltd.

   6.6          Agency Agreement between Shenzhen Newsnet Information Co. and
                Shenzhen Global Net Computer Information Co. Ltd.

   6.7          Telecommunication Business Operation Approval of Peoples Republic of
                China for Shenzhen Newsagent Co. Ltd.
</TABLE>

                                      37


<PAGE>


<TABLE>
<CAPTION>
EXHIBIT NO.     DESCRIPTION
-----------     -----------
<S>             <C>
   6.8          Share Exchange Agreement with Pacific Asset International Ltd.

   6.9          Consulting Agreement with Lions Peak Capital Ltd.

   6.10         Consulting Agreement with Milan Financial Inc.

   6.11         Revenue Participation and Option to Purchase Agreement

   6.12         Mutual Rescission Agreement Between Global Telephone
                Communication, Inc. and Planet City Graphics Corp.

   6.13         Mutual Rescission Agreement Between Global Telephone
                Communication, Inc. and Webworks Multimedia Corporation

   6.14         Yamaha Promotional Calling Card Program

   6.15         First Continental Capital L.P. Revenue Participation Agreement

   6.16         Employment Agreement with Robert J. Andresen

   6.17         Employment Agreement with Thomas C. Brandenburg

   6.19         Subscription Agreement for Shares in Nano

   6.20         Sale and Purchase of Shares in Nano

   6.21         Shareholders Agreement relating to Nano

   6.22         AT&T Asia/Pacific Group Ltd. and Teleinfo Co. Ltd. and Cyber
                2000 Limited Services Agreement

   27           Financial Data Schedule
</TABLE>

                                      38

<PAGE>

Reports on Form 8-K

None.


                                    PART F/S

             The following financial statements are submitted pursuant to the
information required by Item 310 of Regulation S-B:

                              FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

NO.                                         DESCRIPTION
---                                         -----------
<S>          <C>

FS-1         Global Telephone Communication, Inc. and Subsidiaries Consolidated
             Financial Statements for Years Ended December 31, 1999 and 1998.

FS-2         Planet City Graphics Corporation Financial Statements for the Year
             Ended December 31, 1997.

FS-3         Webworks Multimedia Corporation Financial Statements for the Year
             Ended December 31, 1997.

FS-4         Regent Luck Holdings Limited Financial Statements for the Year Ended
             December 31, 1997

FS-5         Pacific Asset International Limited Financial Statements for the
             Year Ended February 28, 1999

FS-6         Cyber 2000 Limited Financial Statements for the Year Ended
             December 31, 1999

FS-7         Nano Technology Ltd. Financial Statements for the Year Ended
             December 31, 1999
</TABLE>

                                      39

<PAGE>

                                   SIGNATURES


             In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.



                                                 GLOBAL TELEPHONE
                                                 COMMUNICATION INC.



Dated:  August 11, 2000                          BY:
                                                     ---------------------------
                                                     ROBERT J. ANDRESEN
                                                     President

             Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                            TITLE                           DATE
---------                            -----                           ----
<S>                                  <C>                             <C>

                                     Chairman of the Board,          August 11, 2000
---------------------------------    and Chief Executive Officer
Thomas C. Brandenburg


                                     President and Chief Operating   August 11, 2000
---------------------------------    Officer
Robert J. Andresen


                                     Secretary, Treasurer, and       August 11, 2000
---------------------------------    Director
Thomas J. Kennedy
</TABLE>


                                      40
<PAGE>

                                                                            FS-1






                      GLOBAL TELEPHONE COMMUNICATION, INC.
                                AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 1999 AND 1998

<PAGE>


                                 C O N T E N T S

<TABLE>

<S>                                                                          <C>
     Independent Auditors' Report                                              3

     Consolidated Balance Sheets                                               4

     Consolidated Statements of Operations                                     6

     Consolidated Statements of Stockholders' Equity                           7

     Consolidated Statements of Cash Flows                                    10

     Notes to the Consolidated Financial Statements                           13
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
Global Telephone Communication, Inc. and Subsidiaries
(A Development Stage Company)
Vancouver, British Columbia, Canada

We have audited the accompanying consolidated balance sheet of Global Telephone
Communication, Inc. and Subsidiaries (a development stage company) as of
December 31, 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1999 and
1998 and from inception on March 10, 1970 through December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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 Global
Telephone Communication, Inc. and Subsidiaries (a development stage company) as
of December 31, 1999 and the results of their consolidated operations and their
cash flows for the years ended December 31, 1999 and 1998 and from inception on
March 10, 1970 through December 31, 1999 in conformity with generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has no significant operating
results to date, which raises substantial doubt about its ability to continue as
a going concern. Management's plans in regard to these matters are also
described in Note 2. The consolidated financial statements do not include any
adjustments that might result form the outcome of this uncertainty.



Jones, Jensen & Company
Salt Lake City, Utah
April 11, 2000

<PAGE>



              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           Consolidated Balance Sheet


                                     ASSETS

<TABLE>
<CAPTION>


                                                          December 31,
                                                               1999
                                                              ------
<S>                                                     <C>
CURRENT ASSETS

   Cash                                                 $  1,485,896
   Restricted cash (note 3)                                  850,000
   Notes receivable - related party, net (note 4)             50,500
   Investments                                                 2,657
                                                               -----

      Total Current Assets                                 2,389,053
                                                           ---------

FIXED ASSETS, NET (Note 10)                                   36,825
                                                              ------

OTHER ASSETS

   Deposits                                                    1,495
                                                               -----
      Total Other Assets                                       1,495
                                                               -----
      TOTAL ASSETS                                      $  2,427,373
                                                           =========
</TABLE>

               The accompanying notes are an integral part
               of these consolidated financial statements.

                                       4
<PAGE>



              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                     Consolidated Balance Sheet (Continued)


                             LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>


                                                                           December 31,
                                                                               1999
                                                                              -------
       CURRENT LIABILITIES

<S>                                                                      <C>
          Accounts payable                                                 $   143,883
          Accrued expenses (Note 3)                                            166,811
          Notes payable (Note 3)                                               543,631
          Shareholder payable (Note 4)                                           1,289
                                                                                 -----

            Total Current Liabilities                                          855,614
                                                                               -------

       LONG-TERM DEBT                                                              -
                                                                                   ---

            TOTAL LIABILITIES                                                  855,614
                                                                               -------

       COMMITMENTS (Note 9)

       STOCKHOLDERS' EQUITY

          Preferred stock: 5,000,000 shares authorized of
           $1.00 par value, -0- shares issued and outstanding
          Common stock: 25,000,000 shares authorized of
           $0.001 par value, 16,788,275 shares issued
           and outstanding, respectively                                        16,788
          Additional paid-in capital                                         8,834,665
          Other comprehensive income (loss)                                     (1,402)
          Deficit accumulated during the development stage                  (7,278,292)
                                                                            ----------

            Total Stockholders' Equity                                       1,571,759
                                                                             ---------

            TOTAL LIABILITIES AND STOCKHOLDERS'
             EQUITY                                                        $ 2,427,373
                                                                           ===========
</TABLE>

               The accompanying notes are an integral part
               of these consolidated financial statements.

                                       5

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations


<TABLE>
<CAPTION>
                                                                                                     From
                                                                                                  Inception on
                                                                                                    March 10,
                                                              For the Years Ended                 1970 Through
                                                                  December 31,                    December 31,
                                                         --------------------------------         ------------
                                                            1999                 1998                 1999
                                                         -----------          -----------         ------------

    <S>                                                  <C>                  <C>                  <C>
    REVENUES                                             $    -               $     4,705          $     4,705
                                                         -----------          -----------          -----------

    OPERATING EXPENSES

       General and administrative                          3,534,305              407,554            5,087,580
       Depreciation and amortization expense               2,483,889                  373            2,484,262
                                                         -----------          -----------          -----------

         Total Operating Expenses                          6,018,194              407,927            7,571,842
                                                         -----------          -----------          -----------

    OPERATING LOSS                                        (6,018,194)            (403,222)          (7,567,137)
                                                         -----------          -----------          -----------

    OTHER INCOME (EXPENSE)

       Interest income                                         7,003               -                     7,003
       Interest expense                                       (9,198)              (8,150)             (17,348)
                                                         -----------          -----------          -----------

         Total Other Income (Expense)                         (2,195)              (8,150)             (10,345)
                                                         -----------          -----------          -----------

         Loss Before Discontinued Operations              (6,020,389)            (411,372)          (7,577,482)

    GAIN FROM DISCONTINUED OPERATIONS (Note 5)               848,891              (11,253)             847,638

    LOSS ON DISCONTINUED OPERATIONS                         (548,448)              -                  (548,448)
                                                         -----------          -----------          -----------

       NET LOSS                                           (5,719,946)            (422,625)          (7,278,292)
                                                         -----------          -----------          -----------

    OTHER COMPREHENSIVE INCOME (LOSS)

       Foreign currency translation adjustments               (1,402)              -                    (1,402)
                                                         -----------          -----------          -----------

         Total Other Comprehensive Income (Loss)         $(5,721,348)         $  (422,625)         $(7,279,694)
                                                         ===========          ===========          ===========

       Continuing operations                             $     (0.60)         $     (0.04)
       Discontinued operations                                  0.03                (0.01)
                                                         -----------          -----------

    BASIC LOSS PER SHARE                                 $     (0.57)         $     (0.05)
                                                         ===========          ===========

    WEIGHTED AVERAGE NUMBER
    OF SHARES OUTSTANDING                                  9,964,098            7,836,836
                                                         ===========          ===========
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       6

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Consolidated Statements of Stockholders' Equity


<TABLE>
<CAPTION>


                                                                                                                          Deficit
                                                         Common Stock                                    Other          Accumulated
                                                   --------------------------         Additional     Comprehensive      During the
                                                                                       Paid-in           Income         Development
                                                    Shares           Amount            Capital           (Loss)            Stage
                                                   ---------        ---------         ---------         ---------       -----------

<S>                                                <C>              <C>               <C>            <C>                <C>
    Balance, March 10, 1970                            -          $     -           $     -           $        -        $       -

    Common stock issued for cash at
       $16.00 per share during 1970                  1,906                2            30,498                  -                -

    Common stock issued for services
       rendered at $6.40 per share
       during 1970                                   1,578                1            10,099                  -                -

    Common stock issued for cash
       at $32.00 per share during 1971               4,075                4           130,396                  -                -

    Common stock issued for services
       rendered at $15.52 per share during
       the period of inception through 1983         11,641               12           180,581                  -                -

    Common stock issued for services
       rendered at $6.40 per share
       during 1988                                   2,817                3            18,027                  -                -

    Net loss from inception on
       March 10, 1970 through
       December 31, 1991                               -                -                 -                    -           (369,623)
                                                ----------        ---------         ---------         ------------      -----------

    Balance, December 31, 1991                      22,017               22           369,601                  -           (369,623)

    Net loss for the year ended
       December 31, 1992                               -                -                 -                    -               (552)
                                                ----------        ---------         ---------         ------------      -----------
    Balance, December 31, 1992                      22,017               22           369,601                  -           (370,175)

    Net loss for the year ended
       December 31, 1993                               -                -                 -                    -               (100)
                                                ----------        ---------         ---------         ------------      -----------

    Balance, December 31, 1993                      22,017               22           369,601                  -           (370,275)

    Common stock issued for services
       rendered at $6.40 per share on
       August 1, 1994                               43,750               44           279,956                  -                -

    Net loss for the year ended
       December 31, 1994                               -                -                 -                    -           (280,100)
                                                ----------        ---------         ---------         ------------      -----------
    Balance, December 31, 1994                     65,767         $      66         $ 649,557         $        -        $  (650,375)
                                                ----------        ---------         ---------         ------------      -----------
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       7

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
           Consolidated Statements of Stockholders' Equity (Continued)


<TABLE>
<CAPTION>

                                                                                                                         Deficit
                                                       Common Stock                                    Other           Accumulated
                                                 --------------------------         Additional     Comprehensive       During the
                                                                                     Paid-in           Income          Development
                                                  Shares           Amount            Capital           (Loss)             Stage
                                                ----------        ---------         ---------        ------------      -----------
<S>                                             <C>               <C>               <C>               <C>             <C>
    Balance, December 31, 1994                      65,767        $      66         $ 649,557         $         -      $  (650,375)

    Net loss for the year ended
       December 31, 1995                                 -                -                 -                   -           (4,053)
                                                ----------        ---------         ---------        ------------      -----------

    Balance, December 31, 1995                      65,767               66           649,557                   -         (654,428)

    Expenses paid on the Company's
       behalf by a shareholder                           -                -               716                   -                -
    Common stock issued for cash at
       $0.04 per share on July 23, 1996          1,000,000            1,000            39,000                   -                -

    Fractional shares issued in
       conjunction with a 1-for-80 reverse
       stock split                                      33                -                 -                   -                -

    Fractional shares issued in conjunction
       with a 3-for-1 forward stock split               34                -                 -                   -                -

    Net loss for the year ended
       December 31, 1996                                 -                -                 -                   -         (347,222)
    Balance, December 31, 1996                   1,065,834            1,066           689,273                   -       (1,001,650)

    Common stock issued to acquire
       Chow's Consulting Corporation
       on April 30, 1997 recorded at
       predecessor cost of $0.00                    90,000               90               (90)                  -                -

    Fractional shares canceled in
       conjunction with a 1-for-6
       reverse stock split                             (41)               -                 -                   -                -

    Common stock issued for cash
       at $0.01 per share                        3,000,000            3,000            28,000                   -                -

    Net loss for the year ended
       December 31, 1997                                 -                -                 -                   -         (134,071)
                                                ----------        ---------         ---------         ------------    ------------

    Balance, December 31, 1997                   4,155,793        $   4,156         $ 717,183         $         -     $ (1,135,721)
                                                ----------        ---------         ---------         ------------    ------------
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       8

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
           Consolidated Statements of Stockholders' Equity (Continued)


<TABLE>
<CAPTION>
                                                                                                                        Deficit
                                                       Common Stock                                    Other          Accumulated
                                                ----------------------------        Additional     Comprehensive      During the
                                                                                     Paid-in           Income         Development
                                                  Shares           Amount            Capital           (Loss)            Stage
                                                ----------        ----------       ------------     ------------      ------------
<S>                                             <C>               <C>               <C>             <C>                <C>

Balance, December 31, 1997                       4,155,793         $   4,156       $   717,183       $        -        $(1,135,721)

Common stock issued to acquire
 subsidiaries valued at $0.50 per
 share                                           6,950,000             6,950         3,468,050                -                 -

Common stock issued for cash
 at $0.50 per share                              1,140,142             1,140           568,931                -                 -

Net loss for the year ended
 December 31, 1998                                     -                 -                 -                  -           (422,625)
                                                ----------        ----------       ------------     ------------      ------------

Balance, December 31, 1998                      12,245,935            12,246         4,754,164                -         (1,558,346)

Common stock issued to acquire
  subsidiaries at $1.40 per share                  600,000               600           839,400                -                 -

Common stock issued for cash from $0.50
  to $2.00 ($0.78 average) per share             5,483,433             5,483         4,204,017                -                 -

Stock offering costs paid                            6,383                 6           (56,753)               -                 -

Rescinded acquisitions                          (2,000,000)           (2,000)       (1,998,000)               -                 -

Debt converted to equity at
  $1.65 per share                                   52,524                53            86,612                -                 -

Discount on options                                    -                 -             505,625                -                 -

Common stock issued for services at
 $1.25 per share                                   400,000               400           499,600                -                 -

Foreign currency translation
 adjustment                                            -                 -                 -              (1,402)               -

Net loss for the year ended
  December 31, 1999                                    -                 -                 -                  -         (5,719,946)
                                                ----------        ----------       ------------      ------------      -----------
Balance, December 31, 1999                      16,788,275         $  16,788       $  8,834,665      $    (1,402)      $ 7,278,292)
                                                ==========        ==========       ============      ============      ===========
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       9

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                              From
                                                                                          Inception on
                                                           For the Years Ended             March 10,
                                                                December 31,              1970 through
                                                        ---------------------------       December 31,
                                                           1999            1998              1999
                                                        -----------     -----------      -------------
OPERATING ACTIVITIES

   CONTINUING OPERATIONS

<S>                                                    <C>              <C>              <C>
    Net loss                                           $(6,020,389)     $  (411,372)     $(7,577,482)
    Adjustments to reconcile net loss to net cash
     used by operating activities:
      Depreciation expense                                   9,072              373            9,445
      Allowance for bad debts                               49,500              -             49,500
      Common stock and options
      issued for services and expenses
      paid on behalf of the Company                      1,005,625              -          1,495,064
      Goodwill expensed                                  3,475,000              -          3,475,000
      Foreign currency translation adjustment               (1,402)             -             (1,402)
    Changes in operating assets and liabilities:
      Increase (decrease) in restricted cash              (850,000)             -           (850,000)
      Increase (decrease) in inventories                    (2,657)             -             (2,657)
      (Increase) decrease  in stock offering costs             -              8,204              -
      (Increase) decrease in accounts receivable          (100,000)          10,685          (89,315)
      (Increase) decrease in other assets                      -            (93,699)         (93,699)
      Increase (decrease) in deposits for 504                 (785)        (170,780)            (785)
      Increase (decrease) in accounts payable              (11,658)         181,528          176,985
      Increase (decrease) in accrued expenses              164,179          (36,595)         171,576
                                                       -----------      -----------      -----------

        Net Cash (Used) by Continuing Operations        (2,283,515)        (511,656)      (3,237,770)
                                                       -----------      -----------      -----------

    DISCONTINUED OPERATIONS

    Net gain                                               300,443          (11,253)         289,190
    Adjustments to reconcile net loss to net cash
     used by operating activities:
      Depreciation                                          41,717           57,463           99,180
      Disposal of assets                                       -             15,456           15,456
    Changes in operating assets and liabilities:
      Increase (decrease) in marketable securities          36,708              -             36,708
      (Increase) decrease in accounts receivable            16,693          (16,613)              80
      (Increase) decrease in other assets                      -            (87,174)         (87,174)
      Increase (decrease) in accounts payable                4,524          (30,495)         (25,971)
      Increase (decrease) in accrued expenses              104,572            5,664          110,236
                                                       -----------      -----------      -----------

        Net Cash (Used) by Discontinued Operations         504,657          (66,952)         437,705
                                                       -----------      -----------      -----------

        Net Cash (Used) by Operating Activities        $(1,778,858)     $  (578,608)     $(2,800,065)
                                                       -----------      -----------      -----------
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       10
<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)


<TABLE>
<CAPTION>

                                                                                             From
                                                                                          Inception on
                                                            For the Years Ended             March 10,
                                                                December 31,              1970 Through
                                                        ---------------------------       December 31,
                                                           1999            1998              1999
                                                        -----------     -----------       -----------
<S>                                                     <C>             <C>               <C>

CASH FLOWS FROM INVESTING ACTIVITIES

   CONTINUING OPERATIONS

       Purchase of fixed assets                           $   (39,685)     $  (224,494)     $  (264,179)
                                                          -----------      -----------      -----------

         Net Cash (Used) by Continuing Operations             (39,685)        (224,494)        (264,179)
                                                          -----------      -----------      -----------

       DISCONTINUED OPERATIONS

       Purchase of fixed assets                               (10,600)             -            (10,600)
                                                          -----------      -----------      -----------

         Net Cash (Used) by Discontinued Operations           (10,600)             -            (10,600)
                                                          -----------      -----------      -----------

         Net Cash (Used) by Investing Activities              (50,285)        (224,494)        (274,779)
                                                          -----------      -----------      -----------

    CASH FLOWS FROM FINANCING ACTIVITIES

       CONTINUING OPERATIONS

       Increase in notes payable                              544,921          146,837        1,056,758
       Common stock issued for cash                         4,152,753          451,462        4,836,055
                                                          -----------      -----------      -----------

         Net Cash Provided by Continuing Operations         4,697,674          598,299        5,892,813
                                                          -----------      -----------      -----------

       DISCONTINUED OPERATIONS

       Repayment of notes payable                             (44,371)         (51,657)         (96,028)
       Related party lending                               (1,354,656)         118,609       (1,236,047)
                                                          -----------      -----------      -----------

         Net Cash Provided by Discontinued Operations      (1,399,027)          66,952       (1,332,075)
                                                          -----------      -----------      -----------
         Net Cash Provided by Financing Activities        $ 3,298,647      $   665,251      $ 4,560,738
                                                          -----------      -----------      -----------
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       11

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)


<TABLE>
<CAPTION>

                                                                                        From
                                                                                     Inception on
                                                       For the Years Ended             March 10,
                                                           December 31,              1970 Through
                                                   ---------------------------       December 31,
                                                      1999            1998              1999
                                                   -----------     -----------       -----------
<S>                                                <C>             <C>               <C>
NET INCREASE (DECREASE ) IN CASH AND
     CASH EQUIVALENTS                              $ 1,469,504      $  (137,851)     $ 1,485,894

    CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                             16,390          154,241              -
                                                   -----------      -----------      -----------

    CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                              $ 1,485,894      $    16,390      $ 1,485,894
                                                   ===========      ===========      ===========

    CASH PAID FOR:

       Interest                                    $     9,198      $    66,384      $    75,582
       Income taxes                                $       -        $       -        $       -

    NON-CASH FINANCING
     ACTIVITIES:

       Common stock and options issued for
        services rendered and expenses
        paid on behalf of the Company              $ 1,005,625      $       -        $ 1,495,064

       Common stock issued for subsidiaries        $   840,000      $ 3,475,000      $ 4,315,000

       Common stock rescinded for subsidiaries     $(2,000,000)     $       -        $(2,000,000)

       Common stock issued for debt                $    86,665      $       -        $    86,665
</TABLE>

                  The accompanying notes are an integral part
                  of these consolidated financial statements.

                                       12

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 1 -  ORGANIZATION AND ACCOUNTING POLICIES

          a. Organization

          The financial statements presented are those of Global Telephone
          Communication, Inc. The Company was incorporated on March 10, 1970 for
          the purpose of raising capital to develop and possibly mine certain
          oil and mineral deposits. The Company was unable to raise development
          money and the Company's operations ceased and the mineral deposits
          were abandoned. The Company has been seeking new business
          opportunities believed to hold a potential profit. The Company changed
          its name to Global Telephone Communication, Inc. on October 14, 1997.

          On June 23, 1997, the Company acquired all of the outstanding shares
          of Chow's Consulting Corporation (Chow's) for 90,000 common shares of
          the capital stock of the Company. The acquisition of Chow's was valued
          at approximately $0.01 per share which is the price common stock was
          issued for in that year. The acquisition was recorded as a purchase.
          The only asset of Chow's was a mining claim which was deemed worthless
          in 1997 and Chow's was dissolved.

          On February 9, 1998, the Company acquired all of the issued and
          outstanding shares of an operating multimedia company, Planet City
          Graphics Corp. (Planet City), a private company incorporated under the
          laws of British Columbia, Canada, having its office in Vancouver, B.C.
          The Company issued a total of 1,500,000 common shares (valued at $0.50
          per share) in exchange for all the issued and outstanding shares of
          Planet City. There was no cash consideration and the Company accounted
          for the acquisition of all the shares of Planet City as a purchase and
          an acquisition of a wholly-owned subsidiary. There was no adjustment
          to the carrying value of the assets or liabilities of Planet City as
          they approximate fair value. The excess was recorded as goodwill. The
          acquisition was rescinded on October 1, 1999 and the goodwill was
          expensed. The operations of Planet City are included as discontinued
          operations for the year ended December 31, 1998 and the nine months
          ended September 30, 1999.

          On February 9, 1998, the Company acquired all of the issued and
          outstanding shares of an operating multimedia company, Webworks
          Multimedia Corporation (Webworks), a private company incorporated
          under the laws of British Columbia, Canada, having its office in
          Vancouver, B.C. The Company issued a total of 500,000 common shares
          (valued at $0.50 per share) in exchange for all the issued and
          outstanding shares of Webworks. There was no cash consideration and
          the Company accounted for the acquisition of all the shares as a
          purchase and an acquisition of a wholly-owned subsidiary. There was no
          adjustment to the carrying value of the assets or liabilities of
          Webworks as they approximate fair value. The excess was recorded as
          goodwill. The acquisition was rescinded on October 1, 1999 and the
          goodwill was expensed. The acquisition was rescinded on October 1,
          1999. The operations of Planet city are included as discontinued
          operations for the year ended December 31, 1998 and the nine months
          ended September 30, 1999.

          On March 24, 1998, the Company changed its domicile from the State of
          Utah to the State of Nevada.

                                      13

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 1 -  ORGANIZATION AND HISTORY (Continued)

         On April 16, 1998, the Company entered into a Share Exchange
         Agreement with Regent Luck Holdings Limited (Regent), a Hong Kong
         corporation, with offices in Hong Kong, whereby the Company acquired
         all the issued and outstanding shares of Regent by issuing and
         exchanging 4,950,000 shares (valued at $0.50 per share) of the
         Company to the shareholders of Regent for a total consideration of
         $2,475,000.

          Regent has a ninety percent (90%) ownership and interest in a joint
          venture company, Shenzhen Global Net Computer Information Co. Ltd.
          (SGNCI), organized under the laws of The Peoples Republic of China,
          with Shenzhen Newsnet Co. Ltd.

          Shenzhen Newsnet Co. Ltd. has obtained the Telecommunications Business
          Operation Approval (No. GDSZ P90007) which allows it to carry out
          computer information internet service. Shenzhen Newsnet Co. Ltd.
          (Shenzhen Newsnet) and SGNCI have entered into an exclusive agency
          agreement which allows SGNCI to act as the exclusive agent to conduct
          all telecommunications and internet business and services in Shenzhen,
          Guangdong Province, PRC for Shenzhen Newsnet.

          As part of the Share Exchange Agreement, the Company agreed to provide
          funds as capital for the SGNCI joint venture in the amount of
          $1,300,000. As of December 31, 1999, the Company had met its
          obligation to the joint venture. These funds are included in the
          consolidated cash of the Company of $1,485,896 as of December 31,
          1999.

          The Company accounted for the acquisition of all the shares of Regent
          as a purchase and an acquisition of a wholly-owned subsidiary. There
          was no adjustment to the carrying value of the assets or liabilities
          of Regent. The excess of the purchase price was recorded as goodwill.

          On March 7, 1999, the Company entered into a share exchange agreement
          with Pacific Asset International Ltd. (PAI), a Hong Kong Corporation,
          whereby the Company acquired 51% of the outstanding shares of PAI by
          issuing and exchanging 600,000 shares of the Company's common stock
          to the shareholder's of PAI.

          On October 1, 1999, the Company sold Planet City and Webworks back to
          the original shareholders of the respective companies. The Company
          returned to the shareholders all the issued and outstanding shares of
          common stock of each Company in exchange for the shares of the
          Company's common stock held by the shareholders. There was no cash
          consideration and the Company accounted for the disposition of all the
          shares of Planet City and Webworks as discontinued operations. The
          statements of operations of the Company have been adjusted to reflect
          the disposition of the subsidiaries as discontinued operations
          retroactively for the nine months ended September 30, 1999 and the
          year ended December 31, 1998.

                                       14

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 1 -  ORGANIZATION AND HISTORY (Continued)

          b. Accounting Method

          The Company's financial statements are prepared using the accrual
          method of accounting. The Company has elected a December 31 year end.

          c. Cash and Cash Equivalents

          Cash equivalents include short-term, highly liquid investments with
          maturities of three months or less at the time of acquisition. The
          Company has classified as restricted cash the $850,000 which is held
          in segregated accounts as collateral for the promissory bank note.

          d. Basic Loss Per Share

          The computations of basic loss per share of common stock are based on
          the weighted average number of shares outstanding during the period.
          Common stock equivalents are not included because they are
          antidilutive.

          e. Provision for Taxes

          At December 31, 1999, the Company has net operating tax loss carry
          forwards totaling approximately $7,200,000 that may be offset against
          future taxable income through 2019. No tax benefit has been reported
          in the financial statements because the Company believes there is a
          50% or greater chance the loss carryforwards will expire unused.
          Accordingly, the potential tax benefits of the loss carryforwards are
          offset by a valuation allowance of the same amount.

          f. Use of Estimates

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

          g. Principles of Consolidation

          The consolidated financial statements include those of Global
          Telephone Communication, Inc. Shenzhen Global Net Computer Information
          Co, Ltd., and Regent Luck Holdings Limited Ltd. No loss has been
          attributed to the minority shareholder of SCNGI because it has no
          basis in its shares. All material intercompany accounts and
          transactions have been eliminated.

                                       15

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 1 -  ORGANIZATION AND HISTORY (Continued)

          h. Marketable Securities

          Marketable securities represent shares of stock which are classified
          as trading securities and are carried at market value. Any change in
          market value from period to period will be included in earnings. The
          Company held no marketable securities at December 31, 1999. There are
          no unrealized gains or losses in trading securities at December 31,
          1999.

          i. Advertising

          The Company follows the policy of charging the cost of advertising to
          expense as incurred.

          j. Revenue Recognition

          The Company currently has no source of revenues. Revenue recognition
          policies will be determined when principal operations begin. The
          Company's discontinued operations recognized revenues upon delivery of
          services or products to the customer.

          The Company expenses all funds paid or agreed to be paid under the
          terms of the Revenue Participation Agreement described in Note 9, at
          the time the contract is entered into. The Company also expenses all
          costs for prepaid phone cards or the right of first refusal on prepaid
          phone cards at the time they are purchased. These costs are expensed
          because the Company is unable to estimate the recoverability of the
          costs or the saleability of the phone cards.

          k. Costs of Developing Relationships, Opportunities and Acquiring
          Licenses

          Due to the uncertainty of the recoverability of such cost in
          developing relationships, opportunities and in acquiring licenses and
          approvals, these costs are expensed when incurred.

          l. Foreign Currency Remeasurement

          Monetary assets and liabilities denominated in foreign currencies are
          remeasured into United States dollars at the period end exchange rate.
          The aggregate adjustments resulting from currency translation
          adjustments are found in the consolidated statements of stockholders'
          equity.

                                       16

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 1 -  ORGANIZATION AND HISTORY (Continued)

          l. Foreign Currency Remeasurement (continued)

<TABLE>
<CAPTION>
          The Company's operating currencies are as follows:

                  <S>              <C>                 <C>                 <C>                 <C>
                                     Nature of                                 Local           Functional
                  Company            Business            Location            Currency          Currency
                  ----------         ----------         ----------          ----------        ----------
                  Shenzhen            Internet           Shenzhen,              RMB               RMB
                   Global             Service             China
                                      Provider

                  Regent             Holding Co.         Hong Kong              HK$                HK$
                   Luck             For Shenzhen
                                       Global

                  Global             Head Office         Chicago, IL            US$                US$
                 Telephone
</TABLE>

          m. Goodwill

          The excess of the purchase price over the fair market value of the
          assets and liabilities acquired in the purchase of PAI and Regent has
          been recorded as goodwill. At December 31, 1999 the Company recognized
          an impairment of the goodwill and expensed it in full. The PAI
          goodwill of $840,000 was recorded as a loss on discontinued operations
          at December 31, 1999 (see Note 5). The Regent goodwill of $2,475,000
          was included in amortization expense at December 31, 1999. The
          $1,000,000 goodwill recorded on the purchase of Planet City and
          Webworks was charged as a cost of discontinued operations at December
          31, 1999.

          On May 13, 1998, Regent had entered into a joint venture with SGNCI.
          In 1998 and 1999, the SGNCI's intended business was to provide dial-up
          Internet access to Shenzhen Newsnet's customer base. Although the
          Company had fulfilled its legal obligation to provide $1,300,000 funds
          under the Regent Agreement as of December 31, 1999, the Company
          determined during the fourth quarter of 1999 that the dial-up Internet
          access business proposed to be conducted by the SGNCI was not a
          sufficiently diversified or economically viable opportunity and that
          it was not in the best interests of the Company to pursue it. In
          addition, based on the information available at such time, the Company
          was unable to quantitatively evaluate the future value of Shenzhen
          Newsnet's dial-up Internet access or the value of its customer base.
          For these reasons, and because no revenues had been received in 1999
          or were expected in 2000 as discussed above, the goodwill of
          $2,475,000 recognized in the Regent Luck acquisition was deemed
          impaired and was written off as of December 31, 1999 in accordance
          with the Company's policy for determining the recoverability of
          goodwill based only on undiscounted, estimated future cash flows.

                                       17
<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 1 -  ORGANIZATION AND HISTORY (Continued)


          m. Goodwill (Continued)

          Goodwill generated from the purchase of Subsidiaries is amortized over
          a three-year life using the straight-line method. The Company
          evaluates the recoverability of the goodwill whenever events occur
          which may indicate an impairment of the goodwill but at a minimum the
          recoverability is evaluated annually. Any impairment of goodwill is
          realized in the period it is recognized.

          The recoverability of the goodwill is measured using undiscounted,
          estimated future cash flows. If an impairment is determined the
          goodwill is adjusted down to fair value as determined by estimated
          discounted future cash flows.

          n. Stock Offering Costs

          The Company capitalizes the cost of its stock offerings and charges
          the cost against the proceeds of the offering, upon its successful
          completion. If a stock offering is unsuccessful, the costs are
          expensed in the period.

NOTE 2 -  GOING CONCERN

          The Company's financial statements are prepared using generally
          accepted accounting principles applicable to a going concern which
          contemplates the realization of assets and liquidation of liabilities
          in the normal course of business. However, the Company does not have
          significant cash or other material assets, nor does it have an
          established source of revenues sufficient to cover its operating costs
          and to allow it to continue as a going concern. It is the intent of
          the Company to enter the business of internet service in China, build
          a fully integrated Asia-North American Internet Protocol backbone
          network geared for internet communication, the sales of phone cards
          internationally and to participate in wholesale intercontinental
          telecommunications transmissions. The Company intends to complete debt
          and equity offerings to raise the funds to develop its businesses.

NOTE 3 -  NOTES PAYABLE

          Notes payable consisted of the following at December 31, 1999:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                       1999
                                                                       ---------
          <S>                                                       <C>
          Promissory note to a bank at 6.435%, due in
          January 2000, secured by a certificate of deposit,
          for $850,000 classified as restricted cash.                $   543,631
                                                                     -----------

          Total Notes Payable                                        $   543,631
                                                                     ===========
</TABLE>

                                       18

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 4 -  RELATED PARTY TRANSACTIONS

          STOCKHOLDER PAYABLE

          The Company owes an officer of a subsidiary $1,289. The amount is due
          upon demand, non interest bearing and unsecured.

          NOTES RECEIVABLE - RELATED PARTY

          On May 11, 1999 the Company lent $300,000 to a Company controlled by
          former officers and directors of the Company. $200,000 was repaid in
          1999. The balance of $100,000 is secured by shares of a publicly
          traded Company. The shares were trading at a value of $50,500 on
          December 31, 1999, accordingly the Company has recorded an allowance
          for doubtful accounts of $49,500 on December 31, 1999. The note
          imputes interest at 10% per annum which has also been allowed for in
          full.

NOTE 5 -  INCOME (LOSS) FROM DISCONTINUED OPERATIONS

          On October 1, 1999, the Board of Directors of the Company decided to
          rescind the acquisitions of the Planet City and Webworks. On December
          31, 1999, the Board of Directors decided to rescind the acquisition of
          PAI. The following is the summary of the income (loss) from the
          discontinued operations.

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                     Planet                                             ------------
                                     City            Webworks     PAI              1999          1998
                                     ----------      ----------   ----------       ----------    -----------

<S>                                 <C>             <C>          <C>              <C>            <C>
         Sales                      $   65,476      $   34,445   $     -          $   99,921     $   176,268
         Operating expenses            (46,257)        (66,190)        -            (112,447)       (187,521)
         Other income                  569,010         406,162         -             975,172           -
         Income tax expense            (44,905)        (68,850)        -            (113,755)          -
                                        ------          ------      -------          -------         ------

               Income (loss) from
                discontinued
                operations          $  543,324      $  305,567   $      -         $  848,891     $   (11,253)
                                    ==========      ==========   ===========    ============     ===========
</TABLE>

          The Company retains no assets which were attributable to prior
          operations. No income tax expense or benefit has been attributed to
          the gain from the discontinued operations.

          The loss on discontinued operations was computed as shown in the
          following table:

<TABLE>
          <S>                                                      <C>
          Investment in Planet City and Webworks:                  $   1,000,000

          Accumulated earnings of Planet City and Webworks:              708,448

          Investment in Pacific Asset:                                   840,000
                                                                         -------

          Total Cost                                                   2,548,448
                                                                       ---------
          Value of Shares Received in Rescission:                      2,000,000
                                                                       ---------
          Loss                                                     $     548,448
                                                                   =============
</TABLE>

                                       19

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 6 -  STOCK TRANSACTIONS

          On June 26, 1996, the shareholders of the Company approved a 1-for-80
          reverse stock split. The financial statements have been restated to
          reflect this change retroactively to inception.

          On December 12, 1996, the shareholders of the Company approved a
          3-for-2 forward stock split. The financial statements have been
          restated to reflect this change retroactively to inception.

          On October 14, 1997, the shareholders of the Company approved a
          1-for-6 reverse stock split. The financial statements have been
          restated to reflect this change retroactively to inception.

          On June 26, 1996, the shareholders of the Company approved a change in
          the par value of its common stock to $0.001 from $0.01. The financial
          statements have been restated to reflect this change retroactively to
          inception.

NOTE 7 -  STOCK OPTION PLAN

          On October 14, 1997, the Company adopted the 1997 Stock Option Plan
          (the "Plan"), initially reserving an aggregate of 166,667 shares of
          the Company's common stock (the "Available Shares") for issuance
          pursuant to the exercise of stock options ("Options") which may be
          granted to employees, officers, and directors of the Company and
          consultants to the Company. The Plan provides for annual adjustment in
          the number of Available Shares, commencing December 31, 1997, to a
          number equal to 10% of the number of shares outstanding on December 31
          of the preceding year or 166,667 shares, whichever is greater. No
          options have been granted as of December 31, 1999 from the 1997 Stock
          Option Plan. In 1999 the Company issued options that were at a
          discount from the market price on the date issued. Accordingly the
          Company has recorded an expense for the discount. A schedule of the
          Company's outstanding options is as follows:

<TABLE>
<CAPTION>
                                                                                    Fair Market
                    Expiration                       Option           Expected        At Date of
 Date of Grant      Date             Shares          Price            Proceeds        Grant             Discount
---------------     --------------   ------------    ----------       ------------    ------------      -----------

<S>                <C>              <C>              <C>            <C>               <C>               <C>
 September 28,      September 28,    1,000,000       $ 1.56            $  1,560,000   $  1,625,000      $  65,000
        1999           2002
  September 28,     September 28,    1,575,000         1.25               1,468,750      1,909,375        440,625
        1999          2002                                                                              ---------
                                                                                                        $ 505,625
                                                                                                        =========
</TABLE>

NOTE 8 -  DEPOSIT FOR 504 OFFERING

          On January 21, 1998, the Company completed a Rule 504 stock offering.
          The Company had received $170,780 from investors in 1997. During 1998,
          the $170,780 was converted to common stock at $0.50 per share.

                                       20

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 9 -  COMMITMENTS

          OFFICE LEASE

          The Company is renting its office space for approximately $3,332 per
          month on a month-to-month basis.

          REVENUE PARTICIPATION AND OPTION TO PURCHASE AGREEMENT

          On September 15, 1999 the Company entered into an agreement with
          International Communications Enterprises, Ltd. (ICE) to provide
          funding for a joint venture between ICE and First Telecom (ICE/FT
          Joint Venture). Under the terms of the agreement, the Company is to
          receive revenue participation in exchange for the funding. ICE is
          expected to be a provider of telephony services to business customers,
          with a focus on multinational companies in the European Union. ICE's
          objective is to become a leading provider of such services in its
          areas of operations. ICE has niche telephony products for this market
          that it believes represent revenue opportunities. The Company
          anticipates that the ICE/FT Joint Venture will allow ICE to deliver
          voice, fax and data traffic via earth stations owned by FT in China
          for termination into China at competitive pricing. The Company has
          made an investment of approximately $243,500 for 25% of the gross
          revenue due to ICE from all activities generated by the ICE/FT Joint
          Venture on a monthly basis. The Company is to receive this percentage
          for a period of time beginning with the first month of revenue
          generation and ending when ICE's revenue participation from the ICE/FT
          Joint Venture has exceeded approximately $807,000 per month for 12
          individual months. The Company's gross revenue participation is to
          decrease to 12 1/2% of the gross revenue due to ICE from all
          activities generated by the ICE/FT joint venture, on a monthly basis
          for the duration of the ICE/FT Joint Venture.

          On October 21, 1999, the Company entered into a second joint venture
          with ICE as a financial partner to assist it in the development and
          distribution of promotional commemorative prepaid calling cards
          relating to sports figures. Initially the program is directed
          primarily towards the leading drivers of Formula 1 race car teams. ICE
          has several contracts in place including one with the Yamaha race car
          team.

          EXCLUSIVE AGENCY AGREEMENT

          Shenzhen Newsnet is a subsidiary of China Telecom and is an ISP in the
          city of Shenzhen Guangdong Province, PRC. Shenzhen Newsnet entered
          into an exclusive agency agreement with SGNCI, which gives SGNCI the
          rights to act as the exclusive agent to conduct all of Shenzhen
          Newsnet's telecommunications and internet business and services in
          Shenzhen, and six other cities in China. The term of the agency
          agreement is for 12 years with options to renew, subject to further
          negotiations. Profits are to be shared on a 69%-31% basis in favor of
          SGNCI for the first 18 months and 55%-45% thereafter. As part of the
          agency agreement, the Company agreed to provide funds as capital for
          the SGNCI joint venture in the amount of $1,300,000. The $1,300,000 is
          included in the consolidated cash of the Company of $1,485,896 at
          December 31, 1999. Under the terms of the agency agreement, the
          Company and its subsidiaries has no further financial obligations to
          Shenzhen Newsnet.

                                       21

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 10 - PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
          Property and equipment consists of the following:
                                                                                December 31,
                                                                                   1999
                                                                                   --------
<S>                                                                             <C>
          Computer equipment                                                    $    31,668
          Office equipment                                                           14,602
                                                                                     ------

          Subtotal                                                                   46,270
          Accumulated depreciation                                                   (9,445)
                                                                                -----------
          Net property and equipment                                            $    36,825
                                                                                ===========
</TABLE>

          Depreciation expense for the years ended December 31, 1999 and 1998
          was $8,889 and $373, respectively.

          Depreciation is computed using the straight-line method over the
          estimated useful lives as follows:

                Computer equipment               5 years
                Office equipment                 7 years

NOTE 11 - PURCHASE OF SUBSIDIARY

          On March 9, 1999, the Company entered into a stock purchase and sales
          agreement (Agreement) with Pacific Asset International, Ltd., (PAI).
          The Agreement called for the Company to purchase 51% of the
          outstanding stock of PAI for 600,000 shares of its common stock. The
          shares were valued at the trading price on the date the agreement was
          signed of $1.40 per share. The operations of PAI are included in the
          consolidated financial statements from April 1, 1999 to December 31,
          1999. The proforma financial statements are prepared to include the
          operations of PAI for the three months ended March 31, 1999.

          The following is a proforma consolidated statement of operations
          reflecting the issuance of 600,000 shares of common stock by PAI to
          acquire 51% of the outstanding shares of common stock of PAI as though
          the purchase occurred on December 31, 1998 and for the year ended
          December 31, 1999. The acquisition of PAI by the Company was accounted
          for as a purchase. The purchase generated goodwill of $840,000. The
          goodwill was all expensed in 1999 because the acquisition was
          rescinded.

                                       22
<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 11 - PURCHASE OF SUBSIDIARY (Continued)

                                         PROFORMA STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                            Proforma
                                                      Global              Adjustments
                                                     Telephone              Increase           Proforma
                                      Pai        Communication, Inc.       (Decrease)        Consolidated
                                   -----------      ---------              -----------        ----------
<S>                                <C>          <C>                      <C>                <C>
SALES, NET                         $      -        $      -                $      -            $     -

COST OF GOODS SOLD                        -               -                       -                  -
                                   -----------      ---------              -----------        ----------

   Gross Profit                           -               -                       -                  -
                                   ----------       ---------              ----------        ---------

OPERATING EXPENSE

   Depreciation and amortization          -         2,483,889                 840,000        3,323,889
   General and administrative          23,850       3,535,707                     -          3,559,557
                                       ------       ---------              ----------        ---------

     Total Operating
      Expenses                         23,850       6,019,596                 840,000        6,883,446
                                       ------       ---------                 -------        ---------

OPERATING LOSS INCOME                 (23,850)     (6,019,596)               (840,000)      (6,883,446)
                                      --------     ----------                -------        ---------

OTHER INCOME EXPENSES

   Interest income                        -             7,003                     -              7,003
   Interest expense                       -            (9,198)                    -             (9,198)
                                   ----------           -----              ----------            -----

     Total Other Income
      Expenses                              -          (2,195)                    -             (2,195)
                                   ----------           -----              ----------            -----

LOSS BEFORE INCOME
 TAXES                                (23,850)     (6,021,791)               (840,000)      (6,885,641)

INCOME TAXES                                -             -                       -                -
                                   ----------      ----------              ----------        ---------

NET LOSS                           $  (23,850)   $ (6,021,791)             $ (840,000)   $  (6,885,641)
                                   ==========    ============              ==========    =============
</TABLE>


NOTE 12 - SUBSEQUENT EVENTS

          COMMON STOCK ISSUANCE

          On January 14, 2000, the Company issued 500,000 shares of common stock
          at $2.50 per share for a total of $1,250,000 as part of the
          consideration for 3,000 shares of Nano. On February 9, 2000, the
          Company issued 400,000 shares of common stock at $1.25 for total
          consideration of $500,000. During March 2000, the Company issued
          800,000 shares of common stock at $1.00 per share for a total
          consideration of $800,000.

                                       23

<PAGE>

                 TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 12 - SUBSEQUENT EVENTS (Continued)
          ACQUISITION OF NANO TECHNOLOGY LTD.

          On January 28, 2000, the Company's wholly owned subsidiary, Global
          Telephone Communication (BVI) Inc., GTCI (BVI,), a British Virgin
          Islands company, arranged to acquire 70% of the shares of Nano
          Technology Ltd. (Nano), a British Virgin Islands company. Nano owns
          100% of the issued and outstanding capital stock of Cyber 2000 Ltd.
          (Cyber 2000), a Hong Kong company (acquired for a consideration of
          $1,910 which was expensed as organization costs). Nano's only activity
          is to hold the ownership interest in Cyber 2000.

          -  3,000 shares of Nano were acquired from existing shareholders in
             exchange for $350,000 cash and 500,000 shares of the Company's
             common stock valued at $2.50 per share for a total consideration of
             $1,600,000 which is allocated to goodwill and is amortized over a
             three-year life using the straight-line method;
          -  A further 4,000 shares of Nano were acquired by way of a share
             subscription agreement whereby GTCI (BVI) would pay $1,000,000 to
             Nano for 4,000 new shares.

          As of April 11, 2000, $500,000 of the subscription is unpaid. Such
          unpaid amount is due to an affiliate and is eliminated in
          consolidation.

          The purchase price will be allocated as follows:

<TABLE>

                <S>                                           <C>
                  Purchase price                               $      1,600,000
                  Subscription for new shares                  $      1,000,000
                                                               ----------------
                  Total cost of shares                         $      2,600,000
                                                               ================

                  Allocated as to cash held by Nano            $      1,000,000
                  Goodwill                                     $      1,600,000
</TABLE>

          This Hong Kong based company is developing voice over internet
          protocol (VOIP) and is to become a provider of VOIP re-sale services
          with major international telephone carriers, and also intends to build
          its own internet provider backbone network.

          Cyber 2000 has established arrangements with major carriers to
          implement VOIP in Hong Kong and the Peoples Republic of China. The
          Company acquired 70% of Nano for investment of approximately $2.6
          million in cash and stock.

          Cyber 2000 will be a facilities-based provider that will own or lease
          a substantial portion of the property, plant and equipment necessary
          to offer a broad range of integrated communication services. Cyber
          2000 will focus on international wholesale telecommunication
          requirements and will sell both origination and termination services.

          RECISSION OF PACIFIC ASSET INTERNATIONAL, LTD.

          A Mutual Rescission Agreement to rescind the acquisition of PAI was
          effective on January 13, 2000, however, the Company did not receive
          the signed agreement until April 2000. And thus, it could not assume
          on January 13, 2000 that the acquisition was rescinded. Although the
          Mutual Rescission Agreement has been signed, the Company is awaiting
          the return of the 600,000 shares of common stock. Until those shares
          are returned, the Company has placed a stop on the shares and has
          shown PAI as a loss from discontinued operations on its December 31,
          1999 financial statements.

                                       24

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 12 - SUBSEQUENT EVENTS (Continued)

          UNSECURED PROMISSORY NOTE

          The Company is currently negotiating the placement of a subordinated
          debt facility ("Subordinated Loan") in the principal amount of
          $10,000,000 that the Company expects to close after the Company has
          satisfied all applicable requirements for listing its common stock and
          the common stock has been accepted for trading on the NASDAQ bulletin
          board. There is no assurance that the Company will be successful on a
          timely basis in meeting these contingencies. In connection with the
          Subordinated Loan, the Company will be required to deliver a 9%
          Subordinated Debenture ("Debenture") and a Warrant to Purchase Common
          stock ("Warrant").

          The same lender that proposes to make the Subordinated Loan has also
          extended a bridge loan facility to the Company in the original
          principal amount of $800,000 (the "Bridge Loan"). The Bridge Loan was
          initially evidenced by a 15% Convertible Promissory Note (the
          "Convertible Note") and the Convertible Note was subsequently
          converted into a $3,200,000 principal amount subordinated loan
          facility ("Conversion Loan") on substantially the same terms and
          conditions as the Subordinated Loan. The lender has not advanced any
          amount to the Company in excess of the original principal amount of
          the Bridge Loan and the unfunded amount of the Conversion Loan is
          evidenced by a promissory note from the lender to the Company. It is
          anticipated that the Conversion Loan will be repaid (and the
          promissory note evidencing the unfunded portion thereof will be
          satisfied) by conversion into the Subordinated Loan. In connection
          with the Bridge Loan, the Company delivered to the lender a five-year
          warrant to purchase 200,000 shares of its common stock, exercisable at
          $2.25 per share.

          The Debenture will be convertible into shares of common stock of the
          Company (a minimum of 880,000 shares under the Conversion Loan and a
          maximum of 2,500,000 shares under the Subordinated Loan) and will be
          due a maximum of 30 months after the date of issuance. The holder may
          convert up to a specified face amount of the Debenture upon issuance
          (a minimum of $122,223 under the Conversion Loan and a maximum of
          $555,556 under the Subordinated Loan) on each monthly anniversary date
          thereafter (each, a "Due Date"). Any amount not converted accumulates
          and may be converted thereafter. However, the holder is prohibited
          from converting any amount of the Debenture that would cause the
          holder's total ownership of common stock to equal five percent or more
          of the total shares outstanding. Under the Conversion Loan, the per
          share conversion price will be equal to the lesser of (a) $2.50 and
          (b) the lowest daily trading price of the common stock (as reported by
          Bloomberg) of the twenty (20) consecutive trading days immediately
          preceding submission of a notice to convert by the holder. Under the
          Subordinated Loan, the per share conversion price will be equal to the
          lesser of (a) $4.00 and (b) the average of the three lowest daily
          trading prices of the common stock (as reported by Bloomberg) of the
          twenty (20) consecutive trading days immediately preceding submission
          of a notice to convert by the holder. In the event the closing bid
          price of the Company's common stock is less than a specified amount
          per share at any time during the five trading days preceding a Due
          Date, the Company will have the right to redeem for cash the monthly
          conversion amount of the Debenture (in lieu of allowing the holder
          to convert such amount) at premiums ranging from 105% to 108%. The
          Debenture will be secured by a letter of credit in an initial
          principal amount equal to 75% of the principal amount of the
          Debenture. The required amount of the letter of credit will decrease
          by a specified amount for every $1.00 of principal reduction of the
          Debenture, whether the reduction occurs by conversion or redemption.

                                       25

<PAGE>

              GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


NOTE 12 - SUBSEQUENT EVENTS (Continued)

          UNSECURED PROMISSORY NOTE (Continued)

          The Warrant will be exercisable for the purchase of 40,000 shares of
          common stock per $100,000 in principle amount of the Debenture, one
          third of which will be exercisable at $2.25 per share, one third of
          which will be exercisable at $3.75. The Warrant will be exercisable at
          any time prior to the expiration of five years from the date of
          issuance.

          The Company will be required to register for resale all shares of
          common stock issuable upon conversion of the Debenture and exercise of
          the Warrant. Certain penalty provisions apply if a registration
          statement covering the shares is not filed with 150 days or is not
          declared effective within 180 days of the date of issuance.

          The shares to be issued in connection with its proposed subordinated
          loan facility are not at a discount from the market price of the
          Registrant's common stock (i.e. are not "in the money") and,
          accordingly, no additional expense is required to be recorded in
          accordance with EITF 98-5.

          ADDITIONAL ICE FINANCING

          The Company has loaned approximately $200,000 to ICE pursuant to an
          unsecured promissory note payable on July 4, 2000 bearing interest at
          an annual rate of 10% to commence on July 1, 2000.

          The Company has paid approximately $48,400 for the right of first
          refusal on any and all phone cards that the ICE may choose to market.

          The Company expects to invest approximately $121,000 per card for
          design, artwork, impression, printing, testing and delivery of
          satisfactory network delivery and support capabilities. In exchange,
          the Company is to receive 50% of ICE's gross revenue monthly until it
          has received twice its original investment, and subsequently, 25% of
          gross monthly revenues for as long as the contract is in force,
          including renewals.

                                       26
<PAGE>

                                                                         FS-4


                          REGENT LUCK HOLDINGS LIMITED

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 1997

<PAGE>

                                 C O N T E N T S

<TABLE>
<CAPTION>

<S>                                                                          <C>
Independent Auditors' Report................................................ 3

Balance Sheet............................................................... 4

Statements of Operations.................................................... 5

Statements of Stockholders' Equity (Deficit)................................ 6

Statements of Cash Flows.................................................... 7

Notes to the Financial Statements........................................... 8
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
Regent Luck Holdings Limited
(A Development Stage Company)
Vancouver, B.C. Canada


We have audited the accompanying balance sheet of Regent Luck Holdings Limited
(a development stage company) as of December 31, 1997 and the related statements
of operations, stockholders' equity, and cash flows for the year ended December
31, 1997 and from inception on December 18, 1996 through December 31, 1996 and
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 financial statements referred to above present fairly, in
all material respects, the financial position of Regent Luck Holdings Limited (a
development stage company) as of December 31, 1997 and the results of its
operations and its cash flows for the year ended December 31, 1997 and from
inception on December 18, 1996 through December 31, 1996 and 1997 in conformity
with generally accepted accounting principles.



Jones, Jensen & Company
Salt Lake City, Utah
July 8, 1999


<PAGE>

                          REGENT LUCK HOLDINGS LIMITED
                          (A Development Stage Company)
                                  Balance Sheet


                                     ASSETS

<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                                     1997
                                                                                               -----------------
CURRENT ASSETS
<S>                                                                                            <C>
   Cash                                                                                        $           1,292
                                                                                               -----------------

     Total Current Assets                                                                                  1,292
                                                                                               -----------------
     TOTAL ASSETS                                                                              $           1,292
                                                                                               =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable                                                                            $          -
                                                                                               -----------------

     Total Current Liabilities                                                                            -
                                                                                               -----------------
STOCKHOLDERS' EQUITY

   Common stock 10,000 shares authorized, no par value,
    10,000 shares issued and outstanding                                                                   1,292
   Deficit accumulated during the development stage                                                       -
                                                                                               -----------------
     Total Stockholders' Equity                                                                            1,292
                                                                                               -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                $           1,292
                                                                                               =================
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                       4

<PAGE>

                          REGENT LUCK HOLDINGS LIMITED
                          (A Development Stage Company)
                            Statements of Operations

<TABLE>
<CAPTION>

                                                                  From Inception on
                                                                  December 18, 1996
                                                                       Through                         For the
                                                                     December 31,                     Year Ended
                                                       --------------------------------------        December 31,
                                                              1996                1997                    1997
                                                       ------------------  ------------------     ------------------
<S>                                                    <C>                 <C>                    <C>
REVENUES                                               $           -       $          -           $           -
                                                       ------------------  ------------------     ------------------

EXPENSES

   General and administrative                                      -                   -                      -
                                                       ------------------  ------------------     ------------------

     Total Expenses                                                -                   -                      -
                                                       ------------------  ------------------     ------------------

NET LOSS                                               $           -       $           -          $           -
                                                       ==================  ==================     ==================

BASIC LOSS PER SHARE                                                       $           (0.00)     $       (0.00)
                                                                           ==================     ==================

WEIGHTED AVERAGE SHARES
 OUTSTANDING                                                                          10,000             10,000
                                                                           ==================     ==================

</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                       5

<PAGE>

                          REGENT LUCK HOLDINGS LIMITED
                          (A Development Stage Company)
                       Statements of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                             COMMON STOCK
Accumulated                                                              --------------------
                                                              SHARES              AMOUNT             DEFICIT
                                                       ------------------  ------------------    ------------------
<S>                                                    <C>                 <C>                   <C>
Inception on December 18, 1996                                     -       $           -         $           -

Common stock issued for cash at
 $0.13 per share                                                   10,000               1,292                -

Net loss from inception on
 December 18, 1996 through
 December 31, 1996                                                 -                   -                     -
                                                       ------------------  ------------------    ------------------

Balance, December 31, 1996                                         10,000               1,292                -

Net loss for the year ended
 December 31, 1997                                                 -                   -                     -
                                                       ------------------  ------------------    ------------------

Balance, December 31, 1997                                         10,000  $            1,292      $         -
                                                       ==================  ==================    ==================
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                       6

<PAGE>

                          REGENT LUCK HOLDINGS LIMITED
                          (A Development Stage Company)
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                  From Inception on
                                                                  December 18, 1996
                                                                       Through                       For the
                                                                     December 31,                   Year Ended
                                                       --------------------------------------       December 31,
                                                              1996                1997                 1997
                                                       ------------------  ------------------  ------------------
<S>                                                    <C>                 <C>                   <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES
   Net (loss)                                          $           -       $           -         $         -
   Adjustments to reconcile net (loss) to
    net cash flows from operating activities                       -                   -                   -
                                                       ------------------  ------------------  ------------------

     Net Cash (Used) by Operating Activities                       -                   -                   -
                                                       ------------------  ------------------  ------------------
CASH FLOWS FROM INVESTING
 ACTIVITIES                                                        -                   -                   -
                                                       ------------------  ------------------  ------------------

CASH FLOWS FROM FINANCING
 ACTIVITIES

   Common stock issued for cash                                     1,292              -                   -
                                                       ------------------  ------------------  ------------------

     Net Cash Provided by Financing
      Activities                                                    1,292              -                   -
                                                       ------------------  ------------------  ------------------

NET INCREASE (DECREASE) IN CASH                                     1,292              -                   -

CASH AT BEGINNING OF PERIOD                                        -                    1,292          1,292
                                                       ------------------  ------------------  ------------------

CASH AT END OF PERIOD                                  $            1,292  $            1,292      $   1,292
                                                       ==================  ==================  ==================

CASH PAID DURING THE PERIOD FOR:

   Interest                                            $           -       $           -           $       -
   Income taxes                                        $           -       $           -           $       -
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                       7

<PAGE>

                          REGENT LUCK HOLDINGS LIMITED
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1997


NOTE 1 - HISTORY AND ORGANIZATION

              Regent Luck Holdings Limited (the Company) was incorporated in
              Hong Kong on December 18, 1996. The Company is a development stage
              company as defined in SFAS 7.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Accounting Method

              The Company's financial statements are prepared using the accrual
              method of accounting. The Company has elected a December 31 year
              end.

              b.  Cash Equivalents

              The Company considers all highly liquid investments with a
              maturity of three months or less when purchased to be cash
              equivalents.

              c.  Basic Loss Per Share

              The computation of basic loss per share of common stock is based
              on the weighted average number of shares outstanding at the date
              of the financial statements. Fully diluted net loss per common
              share is not materially different from basic loss per share.

              d.  Provision for Taxes

              At December 31, 1997, the Company had net operating loss
              carryforwards of approximately $-0- that may be offset against
              future taxable income through 2012. No tax benefit has been
              reported in the financial statements because the Company believes
              that there is a 50% chance the net operating loss carryforwards
              will expire unused, therefore, the potential tax benefits of the
              loss carryforwards are offset by a valuation allowance of the same
              amount.

              e.  Estimates

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

              f.  Property and Equipment

              Property and equipment are stated at cost. Expenditures for small
              tools, ordinary maintenance and repairs are charged to operations
              as incurred. Major additions and improvements are capitalized.
              Depreciation is computed using the straight-line method over
              estimated useful lives as follows:

                                       8

<PAGE>

                          REGENT LUCK HOLDINGS LIMITED
                          (A Development Stage Company)
                        Notes to the Financial statements
                                December 31, 1997


NOTE 2 - SUMMARY OF SIGNIFICANT POLICIES (Continued)

              f.  Property and Equipment (Continued)

                                   Equipment     5 years

              Depreciation expense for the year ended December 31, 1998
              was $8.

              g.  Advertising

              The Company follows the policy of charging the costs of
              advertising to expense as incurred.

NOTE 3 - SUBSEQUENT EVENTS

              On April 16, 1998, the Company entered into a Share Exchange
              Agreement with Global Telecommunications, Inc. (Global), a Utah
              corporation, with offices in Vancouver, British Columbia, whereby
              Global acquired all the issued and outstanding shares of the
              Company by issuing and exchanging 4,950,000 shares of Global to
              the shareholders of the Company.

              The Company also acquired a ninety percent (90%) ownership and
              interest in a joint venture company, Shenzhen Global Net Computer
              Information Co. Ltd., organized under the laws of The Peoples
              Republic of China, with Shenzhen Newsnet Co. Ltd.

              Shenzhen Newsnet Co. Ltd. and the joint venture company,
              Shenzhen Global Net Computer Information Co. Ltd. had
              entered into an exclusive agency agreement for Shenzhen
              Global Net Computer Information Co. Ltd. to act as
              exclusive agents to conduct all telecommunications and
              internet business and services in Shenzhen, Guangdong
              Province, PRC.

              As part of the Share Exchange Agreement, Global agreed to provide
              funds as capital for the joint venture in the amount of
              $1,300,000. As of December 31, 1998, Global has provided $90,465
              to the joint venture through the Company.

                                       9

<PAGE>

                                                                          FS-5


                        PACIFIC ASSET INTERNATIONAL, LTD.
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                FEBRUARY 28, 1999


<PAGE>


                                 C O N T E N T S

<TABLE>
<CAPTION>

<S>                                                                        <C>
Independent Auditors' Report...............................................3

Balance Sheet..............................................................4

Statement of Operations....................................................5

Statement of Stockholders' Equity (Deficit)................................6

Statement of Cash Flows....................................................7

Notes to the Financial Statements..........................................8
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Pacific Asset International, Ltd.
(A Development Stage Company)
Hong Kong

We have audited the accompanying balance sheet of Pacific Asset International,
Ltd. (a development stage company) as of February 28, 1999 and the related
statements of operations, stockholders' equity (deficit) and cash flows from
inception on January 11, 1999 through February 28, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pacific Asset International,
Ltd. (a development stage company) as of February 28, 1999 and the results of
its operations and its cash flows from inception on January 11, 1999 through
February 28, 1999 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.


HJ & Associates, LLC
Salt Lake City, Utah
June 22, 2000

<PAGE>

                           PACIFIC ASSET INTERNATIONAL
                          (A Development Stage Company)
                                  Balance Sheet

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                                   February 28,
                                                                                                     1999
                                                                                               -----------------
<S>                                                                                            <C>
CURRENT ASSETS

   Cash                                                                                        $          -
                                                                                               -----------------
     Total Current Assets                                                                                 -
                                                                                               -----------------
     TOTAL ASSETS                                                                              $          -
                                                                                               =================


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                                                            $           3,079
                                                                                               -----------------

     Total Current Liabilities                                                                             3,079
                                                                                               -----------------
     TOTAL LIABILITIES                                                                                     3,079
                                                                                               -----------------
STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock: 10,000 shares authorized of $0.125
    par value, 9,999 shares issued and outstanding                                                         1,290
   Subscription receivable                                                                                (1,290)
   Deficit accumulated during the development stage                                                       (3,079)
                                                                                               -----------------

     Total Stockholders' Equity (Deficit)                                                                 (3,079)
                                                                                               -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      $          -
                                                                                               =================
</TABLE>

                    The accompanying notes are an integral part
                        of these financial statements.

                                       4
<PAGE>

                        PACIFIC ASSET INTERNATIONAL, LTD.
                          (A Development Stage Company)
                             Statement of Operations

<TABLE>
<CAPTION>

                                                                                                     From
                                                                                                 Inception on
                                                                                                  January 11,
                                                                                                 1999 Through
                                                                                                  February 28,
                                                                                                      1999
                                                                                               -----------------
<S>                                                                                            <C>
REVENUES                                                                                       $           -

EXPENSES

   General and administrative                                                                              3,079
                                                                                               -----------------
     Total Expenses                                                                                        3,079
                                                                                               -----------------
NET LOSS                                                                                       $          (3,079)
                                                                                               =================

BASIC LOSS PER SHARE                                                                           $           (0.31)
                                                                                               =================

BASIC WEIGHTED AVERAGE SHARES                                                                              9,999
                                                                                               =================
</TABLE>

                    The accompanying notes are an integral part
                        of these financial statements.

                                       5
<PAGE>

                        PACIFIC ASSET INTERNATIONAL, LTD.
                          (A Development Stage Company)
                   Statement of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                                                                                Deficit
                                                                                                              Accumulated
                                                Common Stock               Additional                          During the
                                      ---------------------------------      Paid-in        Subscription       Development
                                           Shares           Amount           Capital         Receivable          Stage
                                      ---------------  ----------------  ---------------  ----------------  ---------------
<S>                                   <C>               <C>               <C>              <C>               <C>
Balance at inception on
 January 11, 1999                              -       $         -       $        -       $         -       $        -

Issuance of common stock for
 subscription receivable at
 approximately $0.125 per share                 9,999             1,290           -                 (1,290)          -

Net loss from inception on
 January 11, 1999 through
 February 28, 1999                             -                 -                -                 -                (3,079)
                                      ---------------  ----------------  ---------------  ----------------  ---------------

Balance, February 28, 1999                      9,999  $          1,290  $        -       $         (1,290) $        (3,079)
                                      ===============  ================  ===============  ================  ===============
</TABLE>

                    The accompanying notes are an integral part
                        of these financial statements.

                                       6

<PAGE>

                        PACIFIC ASSET INTERNATIONAL, LTD.
                          (A Development Stage Company)
                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                                    From
                                                                                                 Inception on
                                                                                                  January 11,
                                                                                                 1999 Through
                                                                                                  February 28,
                                                                                                      1999
                                                                                               -----------------
<S>                                                                                            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                                                    $          (3,079)
   Change in operating assets and liabilities:
     Increase (decrease) in accounts payable                                                               3,079

       Net Cash (Used) by Operating Activities                                                            -
                                                                                               -----------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                                      -
                                                                                               -----------------
CASH FLOWS FROM FINANCING ACTIVITIES                                                                      -
                                                                                               -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                 -
                                                                                               -----------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                          -
                                                                                               -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                     $          -
                                                                                               =================

CASH PAID FOR:

   Interest                                                                                    $          -
   Income taxes                                                                                $          -
</TABLE>

                    The accompanying notes are an integral part
                        of these financial statements.

                                       7

<PAGE>

                        PACIFIC ASSET INTERNATIONAL, LTD.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                February 28, 1999


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              This summary of significant accounting policies of Pacific Asset
              International, Ltd. is presented to assist in understanding the
              Company's financial statements. The financial statements and notes
              are representations of the Company's management, which is
              responsible for their integrity and objectivity. These accounting
              policies conform to generally accepted accounting principles and
              have been consistently applied in the preparation of the financial
              statements.

              a.  Organization and Business Activities

              The name of the Company is Pacific Asset International, Ltd. (the
              Company). The Company was incorporated in Hong Kong on January 11,
              1999 to engage in any lawful activity, but more particularly to
              assist companies in marketing their goods and services on the
              internet.

              On March 7, 1999, the Company entered into a share exchange
              agreement with Global Telephone Communication, Inc., whereby the
              Company acquired 600,000 shares of common stock of Global
              Telephone Communication, Inc. in exchange for 51% of the
              outstanding shares of the Company. This agreement was rescinded on
              January 13, 2000.

              b.  Fiscal Year

              The Company operates on a calendar year basis.

              c.  Revenue Recognition

              The Company currently has no source of revenues. Revenue
              recognition policies will be determined when principal operations
              begin.

              d.  Estimates

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

              e.  Income Taxes

              No provision for income taxes has been accrued because the Company
              has net operating losses from inception. The net operating loss
              carryforwards of approximately $3,000 at February 28, 1999 will
              expire in 2019. No tax benefit has been reported in the financial
              statements because the Company is uncertain if the carryforwards
              will expire unused. accordingly, the potential tax benefits are
              offset by a valuation account of the same amount.

                                       8

<PAGE>

                        PACIFIC ASSET INTERNATIONAL, LTD.
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                February 28, 1999


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              f.  Cash and Cash Equivalents

              The Company considers all highly liquid investments with a
              maturity of three months or less when purchased to be cash
              equivalents.

              g.  Basic Loss Per Share

              The computations of basic loss per share of common stock are based
              on the weighted average number of common shares outstanding during
              the period of the consolidated financial statements.

NOTE 2 -      GOING CONCERN

              The Company's financial statements are prepared using generally
              accepted accounting principles applicable to a going concern which
              contemplates the realization of assets and liquidation of
              liabilities in the normal course of business. However, the Company
              does not have significant cash or other material assets, nor does
              it have an established source of revenues sufficient to cover its
              operating costs and to allow it to continue as a going concern.
              The Company is seeking additional financing from a private
              placement of common stock. In the interim, a shareholder has
              committed to meeting the Company's cash needs for a term of at
              least twelve (12) months from the date fo these financial
              statements or until the Company establishes an active business
              operation.

NOTE 3 -      SUBSEQUENT EVENTS

              On January 13, 2000, the Company signed a Mutual Recission
              Agreement to rescind the acquisition of 600,000 shares of common
              stock of Global Telephone Communication, Inc. The agreement was
              signed and effective on January 13, 2000. The 600,000 shares have
              not been returned and Global Telephone Communication, Inc. has
              placed a stop on the shares.

                                       9
-<PAGE>

                                                                         FS-6


                               CYBER 2000 LIMITED
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 1999

<PAGE>

<TABLE>
<CAPTION>
                                 C O N T E N T S


<S>                                                                        <C>
Independent Auditors' Report...............................................3

Balance Sheet..............................................................4

Statement of Operations....................................................5

Statement of Stockholders' Equity (Deficit)................................6

Statement of Cash Flows....................................................7

Notes to the Financial Statements..........................................8
</TABLE>


<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Cyber 2000 Limited
(A Development Stage Company)
Hong Kong


We have audited the accompanying balance sheet of Cyber 2000 Limited (a
development stage company) as of December 31, 1999 and the related statements of
operations, stockholders' equity and cash flows from inception on August 2, 1999
through December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cyber 2000 Limited (a
development stage company) as of December 31, 1999 and the results of its
operations and its cash flows from inception on August 2, 1999 through December
31, 1999 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.



HJ & Associates, LLC
Salt Lake City, Utah
June 22, 2000

<PAGE>

                               CYBER 2000 LIMITED
                          (A Development Stage Company)
                                  Balance Sheet

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                                  December 31,
                                                                                                     1999
                                                                                               -----------------
<S>                                                                                            <C>
CURRENT ASSETS

   Cash                                                                                        $          -
                                                                                               -----------------
     Total Current Assets                                                                                 -
                                                                                               -----------------
     TOTAL ASSETS                                                                              $          -
                                                                                               =================


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                                                            $              64
                                                                                               -----------------

     Total Current Liabilities                                                                                64
                                                                                               -----------------
     TOTAL LIABILITIES                                                                                        64
                                                                                               -----------------
STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock: 10,000 shares authorized of $0.125
    par value; 2 shares issued and outstanding                                                            -
   Deficit accumulated during the development stage                                                          (64)
                                                                                               -----------------

     Total Stockholders' Equity (Deficit)                                                                    (64)
                                                                                               -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                      $          -
                                                                                               =================
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       4

<PAGE>

                               CYBER 2000 LIMITED
                          (A Development Stage Company)
                             Statement of Operations

<TABLE>
<CAPTION>
                                                                                                     From
                                                                                                  Inception on
                                                                                                    August 2,
                                                                                                 1999 Through
                                                                                                 December 31,
                                                                                                     1999
                                                                                               -----------------
<S>                                                                                            <C>
REVENUES                                                                                       $               -

EXPENSES

   General and administrative                                                                                 64
                                                                                               -----------------
     Total Expenses                                                                                           64
                                                                                               -----------------
NET LOSS                                                                                       $             (64)
                                                                                               =================

LOSS PER SHARE                                                                                 $             (32)
                                                                                               =================
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       5
<PAGE>

                               CYBER 2000 LIMITED
                          (A Development Stage Company)
                        Statement of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                                  Deficit
                                                                                                 Accumulated
                                                    Common Stock                Additional       During the
                                        ---------------------------------       Paid-In          Development
                                             Shares             Amount          Capital             Stage
                                        ---------------     -------------    -------------     ----------------
<S>                                      <C>                 <C>              <C>               <C>
Balance at inception on
 August 2, 1999                                  -          $      -         $      -          $         -

Common stock issued for
 cash at $0.00 per share                              2            -                -                    -

Net loss from inception on
 August 2, 1999 through
 December 31, 1999                               -                 -                -                       (64)
                                        ---------------     -------------    -------------     ----------------

Balance, December 31, 1999                       -          $      -         $      -          $            (64)
                                        ===============     =============    =============     ================
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       6
<PAGE>

                               CYBER 2000 LIMITED
                          (A Development Stage Company)
                             Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                                                   From
                                                                                                Inception on
                                                                                                  August 2,
                                                                                                1999 Through
                                                                                                 December 31,
                                                                                                     1999
                                                                                               -----------------
<S>                                                                                            <C>

CASH FLOWS FROM OPERATING ACTIVITIES

   Net (loss)                                                                                  $             (64)
   Change in operating assets and liabilities:
     Increase (decrease) in accounts payable                                                                  64
                                                                                               -----------------
     Net Cash (Used) by Operating Activities                                                              -
                                                                                               -----------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                                      -
                                                                                               -----------------
CASH FLOWS FROM FINANCING ACTIVITIES                                                                      -
                                                                                               -----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                 -

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                          -
                                                                                               -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                     $          -
                                                                                               =================

CASH PAID FOR:

   Interest                                                                                    $          -

   Income taxes                                                                                $          -
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       7
<PAGE>

                               CYBER 2000 LIMITED
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1999


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              This summary of significant accounting policies of Cyber 2000
              Limited is presented to assist in understanding the Company's
              financial statements. The financial statements and notes are
              representations of the Company's management, which is responsible
              for their integrity and objectivity. These accounting policies
              conform to generally accepted accounting principles an have been
              consistently applied in the preparation of the financial
              statements.

              a.  Organization and Business Activities

              The name of the Company is Cyber 2000 Limited (the Company). The
              Company was incorporated in Hong Kong on August 2, 1999 to engage
              in any lawful activity, but more particularly to assist
              companies in marketing their goods and services on the internet.

              b.  Fiscal Year

              The Company operates on a calendar year basis.

              c.  Revenue Recognition

              The Company currently has no source of revenues. Revenue
              recognition policies will be determined when principal operations
              begin.

              d.  Estimates

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

              e.  Income Taxes

              No provision for income taxes has been accrued because the Company
              has net operating losses from inception. The net operating loss
              carryforwards of approximately $2,000 at December 31, 1999 will
              expire in 2019. No tax benefit has been reported in the financial
              statements because the Company is uncertain if the carryforwards
              will expire unused. Accordingly, the potential tax benefits are
              offset by a valuation account of the same amount.

              f.  Cash and Cash Equivalents

              The Company considers all highly liquid investments with a
              maturity of three months or less when purchased to be cash
              equivalents.

                                       8

<PAGE>

                               CYBER 2000 LIMITED
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1999


NOTE 2 -      GOING CONCERN

              The Company's financial statements are prepared using generally
              accepted accounting principles applicable to a going concern which
              contemplates the realization of assets and liquidation of
              liabilities in the normal course of business. However, the Company
              does not have significant cash or other material assets, nor does
              it have an established source of revenues sufficient to cover its
              operating costs and to allow it to continue as a going concern.
              The Company is seeking additional financing from a private
              placement of common stock. In the interim a shareholder has
              committed to meeting the Company's cash needs for a term of at
              least twelve (12) months from the date of these financial
              statements or until the Company establishes an active business
              operation.

NOTE 3 -      SUBSEQUENT EVENTS

              On January 29, 2000, Nano Technology Limited a 100% owned
              subsidiary of Global Telephone Communication (BVI) Ltd.,
              which in turn is a 100% subsidiary of Global Telephone
              Communication, Inc. acquired a 70% ownership of the Company.

              On April 4, 2000, the Company has, in cooperation with Teleinfo
              Co. Ltd., a wholly-owned subsidiary of China Telecom (11K) Ltd.,
              signed a Service Agreement with AT&T Asia/Pacific Group (AT&T) in
              Hong Kong pursuant to which AT&T has agreed to provide certain
              professional and managerial services to implement Cyber 2000's
              VOIP Program in Greater China, the US, Europe and other markets.

                                       9
<PAGE>

                                                                         FS-7


                             NANO TECHNOLOGY LIMITED
                          (A DEVELOPMENT STAGE COMPANY)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 1999

<PAGE>

                                 C O N T E N T S
<TABLE>
<CAPTION>

<S>                                                                       <C>
Independent Auditors' Report............................................. 3

Balance Sheet............................................................ 4

Statement of Operations.................................................. 5

Statement of Stockholders' Equity........................................ 6

Statement of Cash Flows.................................................. 7

Notes to the Financial Statements........................................ 8
</TABLE>

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Nano Technology Limited
(A Development Stage Company)
Hong Kong

We have audited the accompanying balance sheet of Nano Technology Limited (a
development stage company) as of December 31, 1999 and the related statements of
operations, stockholders' equity and cash flows from inception on December 1,
1999 through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nano Technology Limited (a
development stage company) as of December 31, 1999 and the results of its
operations and its cash flows from inception on December 1, 1999 through
December 31, 1999 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of the uncertainty.



HJ & Associates, LLC
Salt Lake City, Utah
July 26, 2000

<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                                  Balance Sheet

<TABLE>
<CAPTION>
                                     ASSETS
                                                                                                 December 31,
                                                                                                      1999
                                                                                               -----------------
<S>                                                                                            <C>
CURRENT ASSETS

   Cash                                                                                        $           6,004
   Other receivable, net (Note 3)                                                                         -
                                                                                               -----------------

     Total Current Assets                                                                                  6,004
                                                                                               -----------------
     TOTAL ASSETS                                                                              $           6,004
                                                                                               =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable                                                                            $           1,910
                                                                                               -----------------

     Total Current Liabilities                                                                             1,910
                                                                                               -----------------
     TOTAL LIABILITIES                                                                                     1,910
                                                                                               -----------------
STOCKHOLDERS' EQUITY

   Common stock: 10,000 shares authorized of $0.125
    par value; 6,000 shares issued and outstanding                                                           750
   Additional paid-in capital                                                                              5,250
   Deficit accumulated during the development stage                                                       (1,906)
                                                                                               -----------------

     Total Stockholders' Equity                                                                            4,094
                                                                                               -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                $           6,004
                                                                                               =================
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       4
<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                             Statement of Operations
<TABLE>
<CAPTION>
                                                                                                     From
                                                                                                  Inception on
                                                                                                  December 1,
                                                                                                 1999 Through
                                                                                                 December 31,
                                                                                                      1999
                                                                                               -----------------

<S>                                                                                            <C>
REVENUES                                                                                       $              -

EXPENSES

   General and administrative                                                                              1,910
                                                                                               -----------------
     Total Expenses                                                                                       (1,910)
                                                                                               -----------------
OTHER INCOME

   Interest income                                                                                             4
                                                                                               -----------------
     Total Other Income                                                                                        4
                                                                                               -----------------

NET LOSS                                                                                       $          (1,906)
                                                                                               =================

BASIC LOSS PER SHARE                                                                           $           (0.52)
                                                                                               =================

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING                                                              3,677
                                                                                               =================
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       5
<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                        Statement of Stockholders' Equity

<TABLE>
<CAPTION>

                                                                                                   Deficit
                                                                                                 Accumulated
                                                   Common Stock                Additional        During the
                                        ---------------------------------       Paid-In          Development
                                             Shares             Amount          Capital              Stage
                                        ---------------     -------------    -------------     ----------------
<S>                                     <C>                 <C>               <C>               <C>
Balance at inception on
 December 1, 1999                                -          $      -         $      -          $         -

Common stock issued for
 cash at $1.00 per share                          4,000               500            3,500               -

Common stock issued for
 cash at $1.00 per share                          2,000               250            1,750               -

Net loss from inception on
 December 1, 1999 through
 December 31, 1999                               -                 -                -                    (1,906)
                                        ---------------     -------------    -------------     ----------------

Balance December 31, 1999                         6,000     $         750    $       5,250     $         (1,906)
                                        ===============     =============    =============     ================
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       6

<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                                     From
                                                                                                 Inception on
                                                                                                  December 1,
                                                                                                 1999 Through
                                                                                                  December 31,
                                                                                                      1999
                                                                                               -----------------
<S>                                                                                            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                                    $          (1,906)
   Adjustment to reconcile net loss to net cash provided
    (used) by operating activities:
     Bad debt expense                                                                                      1,910
   Changes in operating assets and liabilities:
     Increase (decrease) in accounts payable                                                               1,910
     (Increase) in other receivable                                                                       (1,910)
                                                                                               -----------------
       Net Cash (Used) by Operating Activities                                                                 4
                                                                                               -----------------

CASH FLOWS FROM INVESTING ACTIVITIES                                                                      -
                                                                                               -----------------
CASH FLOWS FROM FINANCING ACTIVITIES

   Common stock issued for cash                                                                            6,000
                                                                                               -----------------
       Net Cash Provided by Financing Activities                                                           6,000
                                                                                               -----------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                                  6,004

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                          -
                                                                                               -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                     $           6,004
                                                                                               =================

CASH PAID FOR:

   Interest                                                                                    $          -
   Income taxes                                                                                $          -
</TABLE>

                    The accompanying notes are an integral part
                          of these financial statements.

                                       7

<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1999


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              This summary of significant accounting policies of Nano Technology
              Limited is presented to assist in understanding the Company's
              financial statements. The financial statements and notes are
              representations of the Company's management, which is responsible
              for their integrity and objectivity. These accounting policies
              conform to generally accepted accounting principles an have been
              consistently applied in the preparation of the financial
              statements.

              a.  Organization and Business Activities

              The name of the Company is Nano Technology Limited (the Company).
              The Company was incorporated in the British Virgin Islands on
              December 1, 1999 to engage in any lawful activity, but more
              particularly to assist companies in marketing their goods and
              services on the internet.

              b.  Fiscal Year

              The Company operates on a calendar year basis.

              c.  Revenue Recognition

              The Company currently has no source of revenues. Revenue
              recognition policies will be determined when principal operations
              begin.

              d.  Estimates

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

              e.  Income Taxes

              No provision for income taxes has been accrued because the Company
              has net minimal gains since inception. No tax benefit has been
              reported in the financial statements because the Company is
              uncertain if any carryforwards will expire unused. Accordingly,
              the potential tax benefits are offset by a valuation account of
              the same amount.

              f.  Cash and Cash Equivalents

              The Company considers all highly liquid investments with a
              maturity of three months or less when purchased to be cash
              equivalents.

                                       8
<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1999

NOTE 2 -      GOING CONCERN

              The Company's financial statements are prepared using generally
              accepted accounting principles applicable to a going concern which
              contemplates the realization of assets and liquidation of
              liabilities in the normal course of business. However, the Company
              does not have significant cash or other material assets, nor does
              it have an established source of revenues sufficient to cover its
              operating costs and to allow it to continue as a going concern.
              The Company is seeking additional financing from a private
              placement of common stock. In the interim a shareholder has
              committed to meeting the Company's cash needs for a term of at
              least twelve (12) months from the date of these financial
              statements or until the Company establishes an active business
              operation.

NOTE 3 -      OTHER RECEIVABLES

              The Company has committed to pay operating expenses for Cyber 2000
              Limited (Cyber) (a subsidiary that was purchased in January 2000)
              until Cyber can reimburse the Company. At year end, the Company
              had recorded a payable of $1,910 for expenses incurred by Cyber
              and a related receivable. At year end it was determined that Cyber
              did not have the ability to reimburse the Company, therefore, an
              allowance for the entire receivable was made.

<TABLE>
<CAPTION>
                                                                                                  December 31,
                                                                                                      1999
                                                                                               -----------------
<S>                                                                                            <C>
              Other Receivables                                                                $           1,910

              Less: Allowance for bad debt                                                                (1,910)
                                                                                               -----------------
              Net Other Receivables                                                            $          -
                                                                                               =================
</TABLE>

NOTE 4 -      SUBSEQUENT EVENTS

              On January 28, 2000, the Company acquired 100% of the issued and
              outstanding capital stock of Cyber 2000 Ltd. (Cyber 2000), a Hong
              Kong company for a consideration of $1,910 which was expensed as
              organization costs. On the same date, 70% of the Company's issued
              and outstanding shares of capital stock were acquired by Global
              Telephone Communication (BVI) Inc., a British Virgin Islands
              Company (GTCI-BVI). GTCI-BVI is a wholly-owned subsidiary of
              Global Telephone Communication, Inc.

                  -   3,000 shares of the Company were acquired from
                      existing shareholders in exchange for $350,000 cash
                      and 500,000 shares of the Global Telephone
                      Communication, Inc.'s common stock valued at $2.50
                      per share for a total consideration of $1,600,000
                      which is allocated to goodwill and is amortized over
                      a three-year life using the straight-line method;

                  -   Further, 4,000 shares of the Company were acquired by
                      way of a share subscription agreement whereby
                      GTCI-BVI would pay $1,000,000 to the Company for
                      4,000 new shares.

                                       9

<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
                        Notes to the Financial Statements
                                December 31, 1999

NOTE 4 -      SUBSEQUENT EVENTS (Continued)

              As of March 31, 2000, $500,000 of the subscription is unpaid. Such
              unpaid amount is due to an affiliate and is eliminated in
              consolidation.

              Cyber 2000 is a Hong Kong based company which is developing voice
              over internet protocol (VOIP) and is to become a provider of VOIP
              re-sale services with major international telephone carriers, and
              also intends to build its own internet provider backbone network.
              Cyber 2000 has established arrangements with major carriers to
              implement VOIP in Hong Kong and the Peoples Republic of China.

              Cyber 2000 will be a facilities-based provider that will own or
              lease a substantial portion of the property, plant and equipment
              necessary to offer a broad range of integrated communication
              services. Cyber 2000 will focus on international wholesale
              telecommunication requirements and will sell both origination and
              termination services.

              The following is an unaudited consolidated proforma balance sheet
              and statement of operations:

<TABLE>
<CAPTION>
                                     ASSETS

                                                               Nano
                                                             Technology         Cyber 2000           Proforma
                                                              Limited              Ltd.            Consolidated
                                                        ------------------  -----------------  -------------------
<S>                                                     <C>                 <C>                 <C>
CURRENT ASSETS
   Cash                                                 $            6,004  $           -       $            6,004
                                                        ------------------  -----------------  -------------------
     Total Assets                                       $            6,004  $           -       $            6,004
                                                        ==================  ==================  ==================


                  LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                     $            1,910  $               64  $            1,974
                                                        ------------------  ------------------  ------------------

     Total Current Liabilities                                       1,910                  64               1,974
                                                        ------------------  ------------------  ------------------

STOCKHOLDERS' EQUITY

   Share capital                                                       750              -                      750
   Paid-in capital                                                   5,250              -                    5,250
                                                        ------------------  ------------------  ------------------

     Total Stockholders' Equity (Deficit)                           (1,906)                (64)             (1,970)
                                                        ------------------  ------------------  ------------------

     TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIT)                    $            6,004  $           -       $            6,004
                                                        ==================  ==================  ==================
</TABLE>

                                       10

<PAGE>

                             NANO TECHNOLOGY LIMITED
                          (A Development Stage Company)
            Consolidated Proforma Statement of Operations (Unaudited)
                                December 31, 1999

<TABLE>
<CAPTION>

NOTE 4 -  SUBSEQUENT EVENTS (Continued)

                                                                Nano
                                                              Technology         Cyber 2000           Proforma
                                                              Limited             Ltd.               Consolidated
                                                        ------------------  ------------------  ------------------
<S>                                                     <C>                    <C>              <C>

REVENUES                                                $               (4) $           -       $               (4)

EXPENSES                                                             1,910                  64               1,974
                                                        ------------------  ------------------  ------------------

OPERATING LOSS                                                      (1,906)                (64)             (1,970)
                                                        ------------------  ------------------  ------------------

NET INCOME (LOSS)                                       $           (1,906) $              (64) $           (1,970)
                                                        ==================  ==================  ==================

DEFICIT, DECEMBER 31, 1999                              $           (1,906) $              (64) $           (1,970)
                                                        ==================  ==================  ==================
</TABLE>

                                       11