SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-KSB

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

                  For the fiscal year ended September 30, 1998

                                                   Commission File No 2-97278-NY

                           INTERCOM TECHNOLOGIES CORP.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

         New York                                          13-2932511
--------------------------------                      -------------------
(State or other jurisdiction                          (I.R.S. Employer
of incorporation or organization)                     Identification No.)

 195 Tenth Avenue,  New York, New York                       10011
---------------------------------------                    ----------
(Address of principal executive offices                    (Zip Code)

Issuer's Telephone Number (212) 924-7597

Securities registered under Section 12(b) of the Act:   NONE
                                                     ----------
Securities registered under Section 12(g) of the Act:   NONE
                                                     ----------

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  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    NO X

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X]

The Issuer's revenues for its fiscal year ended September 30, 1998 were
$490,180.

The average bid and asked  price of the  Company's  stock as of February 1, 1999
was $4.50 bid, $4.50 ask.
<PAGE>

The  number  of shares  outstanding  of the  registrant's  common  stock,  as of
September  30,  1997,  was  128,311,223,   and  the  number  of  shares  of  the
registrant's common stock outstanding as of September 30, 1998 was 120,239,  all
of one class of Common Stock, $.0001 par value.

DOCUMENTS INCORPORATED BY REFERENCE  See "Item 13."
Transitional Small Business Disclosure Format     Yes      No  X























<PAGE>

                                     PART I

Item 1. Description of Business

     Intercom  Technologies  Corp. (the  "Company") was  incorporated in October
1977 under the name L.J. L. Intercom  Services  Corp.  The Company was formed to
acquire certain assets and rights to the name of L.J.  Loeffler Inc.,  which had
filed a petition for bankruptcy.  L.J.  Loeffler Inc. had been a manufacturer of
signaling and telephone  systems for  apartment  houses since 1898.  The Company
changed its name to Intercom Technologies Corp. in April 1985.

     The Company's  business to date has  consisted of servicing and  installing
intercom  systems and signaling  devices  manufactured  by the Company and other
manufacturers.  The intercom  systems and  signaling  devices are  installed and
serviced by the Company in residential and commercial buildings. During the past
fiscal  year,  the  Company's  primary  activity   consisted  of  servicing  and
installing  the Loeffler line of products.  The Company's  primary market is the
New York Metropolitan Area.

     The Company, which presently has 8 employees, is greatly dependent upon the
active  participation  of Mr. Dominick Pope,  Chairman of the Board,  President,
Treasurer, principal stockholder and founder of the Company.

Product Line

     The  Company's  product  line  consists  of  intercom  systems,   signaling
communication  devices,  and  security  signaling  devised for use  primarily in
multiple family dwellings and commercial  establishments.  However,  the Company
also  manufactures  and installs  customized  intercom systems to meed customers
special requirements.

     The  Company  manufactures  a variety of  apartment  intercom  units  (also
referred  to as  "suite  stations"),  including  the  "Loud  Talker,"  watchcase
receiver and suspended handset models. Each type of intercom is available with a
variety of  modification,  including  bell,  buzzer or tone signals,  and may be
adapted to respond to more than one location.
<PAGE>


"Loud Talker" System

     "Loud Talker"  systems and suite stations are telephonic  units that enable
users to have  two-way  conversations  by  depressing  one  button,  and open an
electrically  operated door by depressing another button. The system consists of
a  vestibule  entry  panel,  power  supply,  electric  door  release  and remote
apartment  suite  stations.  Most  components are  manufactured  by the Company,
except for the electric door release, speakers, transformers, telephone handsets
and watchcase receivers, which according to management of the Company, have been
readily obtained from many sources. There can be no assurance, however that such
components will continue to be readily obtainable in the future. 
     The Loud Talker  system can be modified in a number of ways,  including the
following:

Handset suite stations: The handset suite stations are similar to the basic Loud
Talker except that a telephone  receiver replaces the buttons on each station. A
security guard,  concierge,  doorman or switchboard operator announces a caller.
Similarly,  a tenant  alerts the lobby  attendant  or  switchboard  operator  to
request services.  Switchboards  allow multiple  channels of communication.  For
example,  a tenant may contact the garage  attendant,  superintendent or doorman
for services.

Watchcase  receiver  suite  stations:  Users of this  type of  system  listen to
callers from a telephone  receiver  earpiece and speak into a plate. This system
may be modified to call a  switchboard  or, with the  addition of a  pushbutton,
release an electric door opener.

Security Systems

     The Company manufactures two lines of security systems, the Guardsman Alarm
System, a central alarm system, and the Tenant Controlled Security System.

     The Guardsman  Alarm System is a supervisory  controlled  system located at
the  concierge or  doorman's  station,  whereby a tenant of a multiple  dwelling
informs  the  doorman  that he is leaving and the  doorman  then  activates  the
electronically  controlled  Guardsman Alarm System.  When the doorman does so, a
light bulb  representing  each  apartment  will be lit on a panel.  If the light
becomes very bright,  and aloud beep is heard,  it indicates to the doorman that
an intruder is tampering with the door.
<PAGE>

     The  Tenant  Controlled  Security  System  allows a tenant to set the alarm
device in his  apartment by key and has an indicator  lamp to indicate  that the
system has been activated. The system is connected to a panel, usually kept at a
supervisory location such as a superintendent's station. The alarm will be heard
both in the  apartment and at the  supervisory  location if the door is tampered
with.

     In addition,  the Company has been requested by an electrical contractor to
make special  signaling panels,  which indicate,  with signal lamps and auditory
signals,  every  entry and  departure  from  specified  doors in large  multiple
dwellings and private and commercial buildings.

Closed Circuit Television

     The Company has  installed  and  serviced  many closed  circuit  television
systems  manufactured by others.  Such systems  consist of a television  monitor
connected to a camera that covers a specific  location,  for example,  a service
area,  elevator,  basement,  laundry room,  garage  level,  and entrance or exit
locations,  which images are displayed on the television screen in a supervisory
location to be seen by a doorman or guard. The Company  purchases the components
of these systems from a variety of suppliers.

Video Intercom Systems

     The Company presently services video intercom systems manufactured by other
companies.  These systems employ a camera,  usually concealed behind a vestibule
entryway,  that shows a visitor on a monitor which is located in each  apartment
of the  building.  Each  tenant can see and hear  visitors  when they signal the
apartment  by the entry  panel,  or when the tenant  activates  the system.  The
visitor cannot see the tenant.

The Booster Amplifier

     The Company  believes that is the sole  manufacturer  of an in-line booster
amplifier  utilized to increase volume from the apartment to the vestibule entry
area of the Loud Talker system. The Company has installed amplifiers in existing
installations  thereby  revitalizing the existing system and saving the cost and
inconvenience of a new installation.  The Company intends to apply its marketing
capabilities to increasing the number of installations of this device as well as
to the expansion of the sales of this device nationwide.
<PAGE>

Competition

     The intercom  and  signaling  device  industry is highly  competitive.  The
Company  competes with a large number of companies  which  manufacture,  install
and/or service intercom and signaling devices. Many of the Company's competitors
are larger and have greater  manufacturing  capacity,  experience  and financial
resources than the Company. Although many of the Company's principal competitors
produce modular design units for the intercom market, to management's knowledge,
the  Company  is  the  only  one in the  Greater  New  York  City  market  which
manufactures,  distributes, installs and services its product line. In addition,
to  management's  knowledge,  the Company is the only one in its market which is
engaged in the manufacture of custom installations.

Suppliers

     Raw  materials  required  in the  manufacture  of the  Company's  principal
products  are  presently  readily  available  from a variety of sources  and the
Company is not presently  dependent on any one supplier for more than 10% of its
raw material.

Customers

     The Company is not dependent on any one or a few major customers.

Government Regulation

     Intercom  and  security  systems use low voltage  wiring and are subject to
applicable local building codes. Although no assurance can be given, the Company
management  does not believe that such  regulation  will  materially  affect the
Company's business.  The extent of potentially adverse governmental  regulations
which might arise from future  legislation  or  administrative  action cannot be
predicted.

Employees

     The Company  presently has 8 employees,  of which 2 are executive and sales
personnel,  1 is a clerical employee,  4 are engaged in service and installation
work, and 1 is engaged in production work.
<PAGE>


Item 2.  Properties

     The Company presently leases  approximately  2,250 square feet at 195 Tenth
Avenue,  New York, New York 10011. The rental is presently $1,750 per month plus
utilities.  The Company believes the facilities are adequate for the foreseeable
future.  The lease expires  December 31, 1999.  The Company has an option for an
additional five year lease at $2,000 per month.

Item 3.  Legal Proceedings

     There are  currently  no material  legal  proceedings  pending  against the
Company.

Item 4.  Submission of Matters to a Vote of Security Holders

     The  Company  held a Special  Meeting of  Shareholders  on October 3, 1997,
pursuant  to Notice  thereof,  for the purpose of voting on the  proposed  3,400
share for 1 share reverse split of the Company's outstanding shares. The reverse
split was approved by a vote of 80,936,126 in favor,  464,500 shares opposed and
21,500 shares abstained.
<PAGE>

                                     PART II

Item 5.  Market Information

     The   Company's   Common   Stock   $.0001   par  value  is  traded  on  the
over-the-counter market (OTC Bulletin Board Symbol ICTM).

     A. There was no trading of the Company's common stock for the past two full
years until October  1998,  when limited  trading in the Company's  common stock
commenced on a sporadic basis.  The following table sets forth the range of high
ask and low bid prices for the  Company's  Common Stock on a quantity  basis for
the past two full years,  as reported by the National  Quotation  Bureau  (which
reflect inter-dealer prices, without retail mark-up,  mark-down,  or conversion,
and  may  not  represent  actual  transactions).  The  foregoing  and  following
information  should  not  be  taken  as an  indication  of the  existence  of an
established public trading market for the Company's Common Stock.


  Common Stock                                        High Ask      Low Bid
  ------------                                        --------      -------

  Period - Fiscal Year 1996
  First Quarter ending March 31, 1996                  No trading occurred 
  Second Quarter ending June 30, 1996                  No trading occurred 
  Third Quarter ending September 30, 1996              No trading occurred 
  Fourth Quarter ending December 31, 1996              No trading occurred

  Period - Fiscal Year 1997
  First Quarter ending March 31, 1997                  No trading occurred 
  Second Quarter ending June 30, 1997                  No trading occurred 
  Third Quarter ending September 30, 1997              No trading occurred 
  Fourth Quarter ending December 31, 1997              No trading occurred

  Period - Fiscal Year 1998
  First Quarter ending March 31, 1998                  No trading occurred 
  Second Quarter ending June 30, 1998                  No trading occurred 
  Third Quarter ending September 30, 1998              No trading occurred 
  Fourth Quarter ending December 31, 1998              5-1/2          3/8

<PAGE>

     B. Holders The approximate number of record holders of the Company's Common
Stock as of January 31, 1999 was 750 inclusive of those  brokerage  firms and/or
clearing  houses holding the Company's  common shares for their  clientele (with
each such brokerage house and/or clearing house being considered as one holder).
The  aggregate  number of shares of Common Stock  outstanding  as of January 31,
1999 was 120,239 shares.

     The  following  unregistered  securities of the Company have been issued in
the past three years:

     (a) On December 12,  1997,  the Company  sold 20,000  restricted  shares of
     common stock for consideration of $2,000 to a non-affiliate;

     (b) On December 12,  1997,  the Company  sold 30,000  restricted  shares of
     common stock for consideration of $3,000 to a non-affiliate;

     (c) On December 12,  1997,  the Company  sold 30,000  restricted  shares of
     common stock for consideration of $3,000 to a non-affiliate;

     (d) On December  1997, the Company sold 2,500  restricted  shares of common
     stock for consideration of $250 to a director.

     C. The Company has not paid or declared  dividends upon its common stock to
date, and it does not anticipate paying dividends in the foreseeable future.


<PAGE>


Item 6. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations

Results of Operations

     A.  1998 Fiscal Year Compared to 1997 Fiscal Year:

     The Company  experienced  net  loss  from operations of $871  during fiscal
year 1998  compared to net loss from  operations of $21,269 in fiscal year 1997.
Sales of  $490,180 in fiscal  year 1998  represent  an increase of $19,612 or 4%
over the prior fiscal year. The sales increase is the result of increased  sales
efforts.

     The Company's  gross profit margin was 59.8% in fiscal 1998, an increase of
1.4% over  fiscal  1997.  The  increase  in gross  profit  margin in fiscal 1998
resulted primarily from increased sales.

     General and administrative expenses decreased in fiscal 1998 by 1.4%.

     B.  1997 Fiscal Year Compared to 1996 Fiscal Year:

     The Company  experienced  net loss from operations of $21,269 during fiscal
year 1997  compared  to  net income from  operations  of  $19,813 in fiscal year
1996.  Sales of $470,568 in fiscal year 1997 represent an decrease of $42,433 or
9% over the prior  fiscal  year.  The sales  decrease  is the  result of general
business conditions and failure to close as many sales as in previous years.

     The  Company's  gross profit margin was 58.4% in fiscal 1997, a decrease of
4.7% over  fiscal  1996 The  decrease  in gross  profit  margin  in fiscal  1997
resulted primarily from decreased sales.

     General and administrative expenses increased in fiscal 1997 by 1.2%.

     C.  1996 Fiscal Year Compared to 1995 Fiscal Year:

     The Company experienced net income from operations of $19,813 during fiscal
year 1996 compared to net income from  operations of $7,600 in fiscal year 1995.
Sales of $513,001  in fiscal  year 1996  represent a decrease of $21,001 or 3.9%
over the prior fiscal year. The sales decrease is the result of general business
conditions and failure to close as many sales as previously.
<PAGE>

     The Company's  gross profit margin was 63.1% in fiscal 1996, an increase of
 .7% over  fiscal  1995.  The  increase  in gross  profit  margin in fiscal  1996
resulted primarily from increased sales.

     General and administrative expenses decreased in fiscal 1996 by 5.7%.

Liquidity and Capital Resources

     A.  1998 Fiscal Year:

     In  fiscal  year  1998,  the  Company  realized  a net  loss  of  $871  and
experienced an increase in working  capital of $18,306.  The increase in working
capital resulted primarily from increase in accounts receivable and inventory.

     B.  1997 Fiscal Year:

     In fiscal 1997, the Company  realized a net loss of $21,269 and experienced
a decrease  in working  capital of  $33,558.  The  decrease  in working  capital
resulted primarily from decreased sales.

     C.  1996 Fiscal Year:

     In fiscal  1996,  the  Company  realized  a net  increase  of  $19,813  and
experienced an increase in working  capital of $73,594.  The increase in working
capital  resulted   primarily  from  decreased  costs  and  increased  cash  and
inventory.
<PAGE>


Item 7.  Selected Financial Data

     The  following  financial  data  is  derived  from  the  Company's  audited
financial statements for the fiscal years ended September 30, 1997 and September
30, 1998.  This selected  financial data should be read in conjunction  with the
financial  statements  of the  Company and the related  notes  thereto  included
elsewhere in the financial statements.

Operating data:                           Year Ended September 30
---------------                           ------------------------
                                            1997            1998
                                          --------       ---------

Revenues ............................. $ 470,568        $ 490,180
Income (Loss) before provision
     for income taxes ................   (18,919)             (71)
Net income (loss) ....................   (21,269)            (871)
Earnings per share ...................   (.00017)          (.0072)

Condensed Balance Sheet Data:                   September 30
-----------------------------            -------------------------
                                            1997            1998
                                         ---------       ---------
Current assets .......................  $ 95,228         $100,676
Total assets .........................   224,930          219,451
Current liabilities ..................    35,059           22,201
Stockholders' equity .................   189,871          197,250

Item 8.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosure

         NONE




Item 9.  Directors and Executive Officers of the Registrant

     The term of each director is one year or until his successor is elected and
shall have qualified. The term of each officer is at the discretion of the Board
of Directors.

     The officers and directors of the Company are set forth below:

     Name            Age                     Office
-------------        ---        --------------------------------

Dominick Pope        67         President, Chairman of the Board
                                of Directors and Treasurer

David Lutzker        43         Secretary & Director

Marvin Sands         71         Director

     Dominick  Pope  has  served  as  President  and  Chairman  of the  Board of
Directors of the Company since 1977 and as Treasurer  since March 1985. Mr. Pope
purchased the L.J. Loeffler, Inc. trade name and certain material assets of that
firm in 1997, after L.J. Loeffler Inc. had filed a petition for bankruptcy.  The
assets were subsequently  assigned to the Company. In 1975, Mr. Pope became Vice
President  and Sales  Manager of L.J.  Loeffler  Inc.,  when  American  Intercom
Distributors, a Company Mr. Pope founded in 1972, merged with L.J. Loeffler Inc.
Mr. Pope  attended the Baruch  School of Business at the City  University of New
York. Mr. Pope may be deemed a founder of the Company.
<PAGE>

     David  Lutzker has served as Secretary of the Company  since 1984,  and has
been a director of the Company  since 1998.  Prior to joining the  Company,  Mr.
Lutzker served,  from 1982 until 1984, as office manager for Bruno Kaiser Corp.,
a supplier  of  plastic  monofilaments  and  resins to the brush and  commercial
fishing  industry.  From 1980 until 1982, Mr. Lutzker served as purchasing agent
for Sunny Suzy & Co.  Inc.,  an import  company and  supplier of dried fruit and
nuts. Mr. Lutzker  received a Bachelor of Arts degree from the State  University
of New York at Albany in 1977.

     Marvin Sands has served as a director of the Company since 1983.  Mr. Sands
was  President  of Sand  Supply  Company  from 1949 to 1977,  and has  served as
President  of its  successor,  Bilmar  Products  Corporation  from  1977  to the
present.  Bilmar Products  Corporation is in the commercial  hardware  business,
specializing in custom designed products built to customer  specifications.  Mr.
Sands  received  a  Bachelor  of  Science  degree  in  accounting  from New York
University in 1949.

Item 10.  Executive Compensation

     The following table shows all the cash  compensation paid by the Company as
well as certain other  compensation  paid during the fiscal years indicated,  to
the  Chief  Executive  Officer  for such  period in all  capacities  in which he
served.  No other  Executive  Officer  received total annual salary and bonus in
excess of $100,000. LONG TERM COMPENSATION

<TABLE>
<CAPTION>

                              Annual   Compensation       Awards        Payouts
(a)             (b)             (c)     (d)     (e)         (f)            (g)          (h)     (i)
                                                Other                   Securities
Name                                            Annual   Restricted     Underlying              All other
and                                             Compen-  stock          Options/        LTIP    compen-
Principal                                       sation   Awards(s)      SARs(#)       Payouts   sation
Position       Year          Salary($) Bonus($)   ($)      ($)                          ($)     ($)
---------------------------------------------------------------------------------------------------------
<S>            <C>           <C>       <C>      <C>      <C>            <C>           <C>       <C>   
Dominick Pope  1998          65,000    N/A      N/A      N/A            N/A           N/A       N/A
</TABLE>
<PAGE>

Item 11.  Security Ownership of Certain Beneficial Owners
                and Management

     The  following  table sets  forth,  as of  January 1, 1999,  the number and
percentage of shares of the  Company's  Common Stock  beneficially  held by each
officer and director of the Company,  by each person known by the Company to own
in  excess  of five  (5%)  percent  of the  Company's  Common  Stock  and by all
executive officers and directors as a group.

                                      Amount and Nature
                                        of Beneficial         Percentage
Name and Address                        Ownership (1)          of Class
----------------                      -----------------       ----------
Dominick Pope                            21,365 (2)             17.77
144 Voorhis Avenue
New Milford, N.J. 07646


David Lutzker                             2,500                  2.08
327 West 21st Street
New York, NY  10011

Marvin Sands                                530                     *
117 East 26th Street
New York, New York 10010

All officers and directors
As a Group (3 persons)                   24,395                 19.86

* Less than .005%
-------------------
(1)  To  the  Company's  knowledge,   ownership  consists  of  sole  voting  and
     investment power unless otherwise indicated

(2)  Includes  5,295 shares issued to Mr. Pope's wife and 2,649 shares issued to
     Mr.  Pope's  children.  Dominick Pope may be deemed a founder and parent of
     the Company.

Item 12.  Certain Transactions and Related Transactions

          NONE.
<PAGE>

                                     Part IV

Item 13.  Exhibits and Reports on Form 8-K

(a)  3.a  Certificate of Incorporation of the Company (3)
     3.d  By-Laws of the Company (3)

(b)  There  were no reports  filed on Form 8-K  during  the last  quarter of the
     period covered by this report.


--------------------
(3)  Previously filed as an Exhibit to the  Registration  Statement on Form S-18
     File No. 2-97278-NY filed with the Commission and declared effective by the
     Commission on August 1, 1995.
<PAGE>
   




                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                                INTERCOM TECHNOLOGIES CORP.


                                        By:  \s\ Dominick Pope
                                             -----------------------------------
                                             Dominick Pope, Principal Executive,
                                             Accounting and Financial Officer
                                             and Chairman of the Board
Dated:  March 3, 1999

        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.

Date:  March 3, 1999                  By: \s\ Dominick Pope
                                          ---------------------------------
                                          Dominick Pope, Director



Date:  March 3, 1999                  By: \s\ David Lutzker
                                          ---------------------------------
                                          David Lutzker, Director



Date:  March 3, 1999                  By: \s\ Marvin Sands
                                          ---------------------------------
                                          Marvin Sands, Director




SUPPLEMENTAL  INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

        No annual  report  has been sent to the  registrant's  security  holders
covering the registrant's last fiscal year. 



                        


<PAGE>







                           Intercom Technologies Corp.
                          Audited Financial Statements
                               September 30, 1998


















<PAGE>








                               Table of Contents


     Independent Auditor's Report ......................... 1

     Balance Sheet ........................................ 2

     Income Statement ..................................... 3

     Statement of Cash Flows............................... 4

     Statement of Changes to Stockholders Equity .......... 5

     Notes to Financial Statements ........................ 6-10







<PAGE>



                                     [Logo]

                         Nelson, Mayoka & Company, P.C.

                          CERTIFIED PUBLIC ACCOUNTANTS
                                 551 5th Avenue
                               New York, New York
                                   10176-0001


                              Tel. (212) 697-7979
                               Fax (212) 697-8997

                                  DIRECT LINE

                          INDEPENDENT AUDITOR'S REPORT


To The Board of Directors and Shareholders
Intercom Technologies Corp.


     We have audited the  accompanying  balance  sheet of Intercom  Technologies
Corp. as of September 30, 1998, and the related statements of income, cash flows
and statement of changes to stockholder's  equity for the year then ended. 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.

     Except as discussed in the  following  paragraph 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.

     We did not observe the taking of the physical  inventories at September 30,
1997 and 1998  (stated at $30,707 and $31,640  respectively).  We were unable to
satisfy  ourselves  about  inventory  quantities  by  means  of  other  auditing
procedures.

     In our  opinion,  except for the  effects of such  adjustments,  if any, as
might have been  determined  to be  necessary  had we been able to  observe  the
physical  inventories  taken as of September  30, 1997 and 1998,  the  financial
statements  referred to in tile first paragraph  present fairly, in all material
respects, the financial position of Intercom Technologies Corp., as of September
30,  1998,  and the  results  of its  operations  for the  year  then  ended  in
conformity with generally accepted accounting principles.


Nelson, Mayoka & Company
CERTIFIED PUBLIC ACCOUNTANT'S
New York, New York
February 4, 1999


                                       1
<PAGE>

                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                                BALANCE SHEET
                                -------------
                              SEPTEMBER 30, 1998
                              ------------------

CURRENT ASSETS:
        Cash ......................................................   $  22,013
        Accounts receivable net of allowance
        for doubtful accounts .....................................      47,023
        of $9,000 
        Inventory .................................................      31,640

        TOTAL CURRENT ASSETS ......................................     100,676
                                                                      ---------
PROPERTY AND EQUIPMENT ............................................       3,108

OTHER ASSETS ......................................................     115,667
                                                                      ---------
                                                                      $ 219,451
                                                                      =========
LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
        Accounts payable and accrued expenses .....................   $  22,201

STOCKHOLDER'S EQUITY
        Common stock - Par value $.OOO1; 250,000,000
        shares authorized 120,239 shares issued and outstanding ...   $  14,304
        Treasury stock ............................................      (2,500)
        Paid - in capital .........................................     373,299
        Accumulated Deficit .......................................    (187,853)
                                                                      ---------
           TOTAL STOCKHOLDER'S EQUITY .............................     197,250
                                                                      ---------
                                                                      $ 219,451
                                                                      =========




The Accompanying Notes are an Integral Part of These Financial Statements
                                       2
<PAGE>

                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                                INCOME STATEMENT
                                ----------------
                     FOR THE YEAR ENDING SEPTEMBER 30,1998
                     -------------------------------------

Sales ......................................................          $ 490,180

Cost of sales ..............................................            196,982
                                                                      ---------
        Gross profit .......................................            293,198

Selling general and administration .........................            304,529

Other income (expense) net .................................             11,260

Net income (loss) before taxes .............................                (71)

Provision for income taxes .................................                800
                                                                      ---------
        Net income (loss) ..................................          $    (871)
                                                                      =========

Net income (loss) per share ................................            (0.0072)
                                                                      ---------
Average number of shares outstanding .......................            120,239
                                                                      ---------








   The Accompanying Notes are an Integral Part of These Financial Statements
                                       3
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                            STATEMENT OF CASH FLOWS
                            -----------------------
                     FOR THE YEAR ENDING SEPTEMBER 30,1998
                     -------------------------------------

CASH FLOW FROM OPERATING ACTIVITIES:
        Net income (loss) ........................................    $    (871)

Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
            Depreciation .........................................        1,458

        Changes in assets and liabilities
            Decrease (increase) in accounts receivable ...........       (3,126)
            Decrease (increase) in inventory .....................         (933)
            Decrease (increase) in other assets ..................       10,575
            Increase (Decrease) in accounts payable...............      (12,858)
                                                                      ---------
        CASH PROVIDED (USED) BY OPERATING ACTIVITIES .............       (5,755)
                                                                      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
        Capital expenditures .....................................       (1,106)
                                                                      ---------
        CASH PROVIDED (USED) BY INVESTING ACTIVITIES .............       (1,106)
                                                                      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
        Issuance of Common Stock .................................        8,250
                                                                      ---------
        CASH PROVIDED (USED) BY FINANCING ACTIVITIES .............        8,250
                                                                      ---------
NET INCREASE (DECREASE) IN CASH 1,389

CASH AT BEGINNING OF YEAR ........................................       20,624
                                                                      ---------
CASH AT END OF YEAR ..............................................       22,013
                                                                      =========







   The Accompanying Notes are an Integral Part of These Financial Statements
                                       4
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                  STATEMENT OF CHANGES TO STOCKHOLDERS EQUITY
                  -------------------------------------------
                               SEPTEMBER 30,1998
                               -----------------
<TABLE>
<CAPTION>

                                       Common stock                                 
                                  ------------------------                        Additional
                                  Number of                         Treasury       paid in      Accumulated  
                                   shares           Amount           stock         capital       (deficit)         Total
                                  ---------       ---------       ------------     ---------    ----------     -----------
<S>                             <C>             <C>            <C>             <C>            <C>             <C>         
Balance - October 1, 1997 ...    128,311,223    $     14,296   $     (2,500)   $    365,057   $   (186,982)   $    189,871

Net Income ..................                              8                          8,242           (871)          7,379
Reverse 3400 to 1 Stock Split   (128,273,234)
Shares Issued ...............         82,250
                                 -----------    ------------   ------------    ------------   ------------    ------------
Balance - September 30, 1998         120,239    $     14,304         (2,500)   $    373,299       (187,853)   $    197,250
                                 ===========    ============   ============    ============   ============    ============

</TABLE>






   The Accompanying Notes are an Integral Part of These Financial Statements
                                       5
<PAGE>

                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1998
                               ------------------

1    -ORGANIZATION AND SIGNIFICANT  ACCOUNTING POLICIES  

     ORGANIZATION On October

     10, 1977 L.J.L.  Intercom Services Corp. was incorporated under the laws of
     New York State, to engage in the business of  Manufacturing  and Installing
     Intercom systems and to provide maintenance and repair to existing Intercom
     systems.

2    -CHANGE IN CORPORATE NAME

     On March 31, 1985, the board of directors of L.J.L. Intercom Services Corp.
     adopted a resolution to change the corporate name to Intercom  Technologies
     Corp. (The Company) The stockholders of the Company approved this change on
     April 22, 1985.

     SIGNIFICANT ACCOUNTING POLICIES

     A. Cash and Cash Equivalents

     The  Company  considers all instruments  with maturities of three months or
     less to be cash and cash equivalents.

     B. Accounts Receivable

     Accounts receivable is represented net of an allowance for bad debt of 
     $9,000.

     C. Inventory

     Inventory is  stated at the  lower of cost or  market  using  the  first-in
     first-out method.





                                       6
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1998
                               ------------------
     D. Property and equipment

     Property  and  equipment  are  carried at cost.  The Company  provides  for
     depreciation base on estimated useful lives of the assets.  Depreciation is
     provided  principally on the straight-line  method.  Maintenance and repair
     costs  are  charged  to  expense  as  incurred.  Cost of  replacements  and
     improvements are generally capitalized. The range of estimated useful lives
     used for depreciation is as follows:

                                                                      Years

         Machinery and Equipment .................................    3-10
         Furniture  and  Fixtures ................................    5-10
         Leasehold Improvements ..................................    5

3    -INVENTORY
     Inventory consists of the following:

        Parts ....................................................   $26,640
        Finished Goods ...........................................     5,000
                                                                     -------
        Total ....................................................   $31,640
                                                                     =======
4    -PROPERTY AND EQUIPMENT 
     Property and equipment consists of:

     Shop equipment ..............................................   $ 6,284
     Furniture & fixtures ........................................     3,785
     Show room ...................................................     7,957
     Leasehold improvements ......................................     2,779
     Auto ........................................................     3,250
                                                                     -------
        Total cost ...............................................   $24,055

     Accumulated depreciation                                         20,947
                                                                     -------
Total ............................................................   $ 3,108
                                                                     =======
                                       7
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1998
                               ------------------

5    - OTHER ASSETS

     Other  assets  include  loans to related  parties in the amount of $115,667
     bearing interest at 8% and IO% respectively.

6    - COMMITMENTS AND CONTINGENCIES

     The Company  leases its office  space under a five-year  lease with monthly
     payments.  The Company also has operating  leases for an automobile  with a
     duration's of four years.

     Minimum annual rentals under these leases are:

     September 30
                   1999                                         29,370
                   2000                                         11,100
                                                              --------
        Total                                                 $ 40,470
                                                              ========

     Rent expense for the year ended September 30, 1998 amounted to $20,250.

7    -Stockholders Equity

     On October 3, 1997 the Board of Directors of The Company approved a reverse
     split of 3,400 to 1, so that  each  3,400  shares  issued  and  outstanding
     became  one  share,  and that any  fractional  shares be  rounded up to the
     nearest whole share.
<TABLE>
<CAPTION>

     Issued and outstanding                              Issued and outstanding
     Shares prior to 3,400 to 1 reverse stock split.     Shares post reverse stock split

<S>  <C>                                                 <C>    
     128,311,223                                         37,989*

*All fractional shares were rounded up to the nearest share.
</TABLE>

                                   (Continued)


                                       8
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1998
                               ------------------

     On  December  12,  1997  the  Directors  of  Intercom   Technologies  Corp.
     Unanimously  consented  to  authorizing  the  issuance of 82,500  shares of
     restricted common stock under Rule 144, to the following individuals for an
     aggregate consideration of $8,250.

     Sapphire Consultants Inc.   20,000 shares

     RCA Trading Co., Inc. ...   30,000

     TLT (Investments) Ltd. ..   30,000

     David Lutzker ...........    2,500
                                 ------

     Total ...................   82,500

8    - NET EARNINGS (LOSS) PER SHARE

     Net  earnings  (loss)  per  share of common  stock are based on the  shares
     outstanding as of the balance sheet date of 120,239.

     Net Income (Loss) ......................   $    (871)

     Shares outstanding at balance sheet date     120,239

     Net (Loss) per share ...................   $ (0.0072)







                                       9
<PAGE>

                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1998
                               ------------------

9    - INCOME TAXES

     Income taxes are provided for the tax effects of  transactions  reported in
     the financial  statements and consist of taxes  currently due plus deferred
     taxes related primarily to differences  between the recorded book basis and
     tax basis of assets and liabilities for financial and income tax reporting.
     The deferred  tax assets and  liabilities  represent  the future tax return
     consequences  of  those  differences,  which  will  either  be  taxable  or
     deductible  when the assets  and  liabilities  are  recovered  or  settled.
     Deferred taxes are also recognized for operating  losses that are available
     to offset  future  taxable  income and tax credits  that are  available  to
     offset federal income taxes.  
     Due to the Company's net operating  losses in excess of $150,000  there are
     no income taxes  currently  due. As of September 30, 1998 the company has a
     deferred tax asset of $ 0. Due to  recurring  losses the company has a zero
     valuation allowance.

10    - SUBSEQUENT EVENTS

     The  Company as of the report  date has not  entered  into any  significant
     business transactions which would impair the balance sheet.




<PAGE>
                               
                         





                           Intercom Technologies Corp.
                          Audited Financial Statement
                               September 30, 1997














<PAGE>







                               Table of Contents








        Independent Auditor's Report                         1
        
        
        Balance Sheet                                        2
        
        
        Income Statement                                     3
        
        
        Statement of Cash Flows                              4
        
        
        Statement of Changes to Stockholders Equity          5


        Notes to Financial Statements                        6-10





<PAGE>

                                     [Logo]

                         Nelson, Mayoka & Company, P.C.

                          CERTIFIED PUBLIC ACCOUNTANTS

                                 551 5TH Avenue
                               New York, New York
                                   10176-0001
        

                              Tel. (212) 697-7979
                               Fax (212) 697-8997

                                  DIRECT LINE


                          INDEPENDENT AUDITOR'S REPORT

To The Board of Directors and Shareholders
Intercom Technologies Corp.

     We have audited the  accompanying  balance  sheet of Intercom  Technologies
Corp. as of September 30, 1997, and the related statements of income, cash flows
and statement of changes to stockholder's  equity for the year then ended. 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.

     Except as discussed in the  following  paragraph 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.

     We did not observe the taking of the physical  inventories at September 30,
1996 and 1997 (stated at $22,257 and $30,707,  respectively).  We were unable to
satisfy  ourselves  about  inventory  quantities  by  means  of  other  auditing
procedures.

     In our  opinion,  except for the  effects of such  adjustments,  if any, as
might have been  determined  to be  necessary  had we been able to  observe  the
physical  inventories  taken as of September  30, 1996 and 1997,  the  financial
statements  referred to in the first paragraph  present fairly,  in all material
respects, the financial position of Intercom Technologies Corp., as of September
30,  1997,  and the  results  of its  operations  for the  year  then  ended  in
conformity with generally accepted accounting principles.

Nelson, Mayoka & Company
CERTIFIED PUBLIC  ACCOUNTANT'S
New York, New York
February 4, 1999

                                       1

<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                                 BALANCE SHEET

                               SEPTEMBER 30, 1997


ASSETS

CURRENT ASSETS:
  Cash ............................................................   $  20,624
  Accounts receivable net of allowance for doubtful accounts ......      43,897
  of $9,000
  Inventory .......................................................      30,707

     TOTAL CURRENT ASSETS .........................................      95,228
                                                                      ---------
PROPERTY AND EQUIPMENT ............................................       3,460

OTHER ASSETS ......................................................     126,242
                                                                      ---------
                                                                      $ 224,930
                                                                      =========
LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
  Accounts payable and accrued expenses ...........................   $  35,059


STOCKHOLDER'S EQUITY
  Common stock - Par value $.0001; 250,000,000 shares authorized
  128,311,223 shares issued and outstanding .......................   $  14,296
  Treasury stock ..................................................      (2,500)
  Paid - in capital ...............................................     365,057
  Accumulated Deficit .............................................    (186,982)

     TOTAL STOCKHOLDER'S EQUITY ...................................     189,871
                                                                      ---------
                                                                      $ 224,930
                                                                      =========




   The Accompanying Notes are an Integral Part of These Financial Statements
                                       2

<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                               INCOME STATEMENT
                               ----------------
                     FOR THE YEAR ENDING SEPTEMBER 30, 1997
                     --------------------------------------



  Sales                                                $     470,568

  Cost of sales                                              195,593
                                                       -------------
    Gross profit                                             274,975

  Selling general and administration                         308,973

  Other income (expense) net                                  15,079

  Net income (loss) before taxes                             (18,919)

  Provision for income taxes                                   2,350
                                                       -------------
    Net income (loss)                                  $     (21,269)
                                                       =============
  Net income (loss) per share                          $    (0.00017)
                                                       -------------
  Average number of shares outstanding                   128,311,223
                                                       -------------






   The Accompanying Notes are an Integral Part of These Financial Statements
                                       3

<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                            STATEMENT OF CASH FLOWS
                            -----------------------
                     FOR THE YEAR ENDING SEPTEMBER 30, 1997
                     --------------------------------------


CASH FLOW FROM OPERATING ACTIVITIES:
  Net income (loss)                                        $  (21,269)

Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
    Depreciation                                                6,310

  Changes in assets and liabilities
    Decrease (Increase) in accounts receivable                (14,491)
    Decrease (Increase) in inventory                           (8,450)
    Decrease (Increase) in other assets                        12,650
    Increase (Decrease) in accounts payable                    12,266
                                                           ----------

  CASH PROVIDED (USED) BY OPERATING ACTIVITIES                (12,984)
                                                           ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                         (1,250)
                                                           ----------

  CASH PROVIDED (USED) BY INVESTING ACTIVITIES                 (1,250)
                                                           ----------

NET INCREASE (DECREASE) IN CASH                               (14,234)

CASH AT BEGINNING OF YEAR                                      34,858
                                                           ----------

CASH AT END OF YEAR                                        $   20,624
                                                           ==========






   The Accompanying Notes are an Integral Part of These Financial Statements
                                       4



<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                  STATEMENT OF CHANGES TO STOCKHOLDERS EQUITY
                  -------------------------------------------
                              SEPTEMBER 30, 1997
                              ------------------


<TABLE>
<CAPTION>

                                        Common stock                   
                                --------------------------                      Additional 
                                 Number of                       Treasury        paid in      Accumulated
                                   shares          Amount          stock         capital       (deficit)       Total
                                -----------     ----------      ----------     ------------   -----------   ----------
                               
                               
<S>                            <C>              <C>             <C>            <C>            <C>           <C>      
Balance - October 1, 1996      128,311,223      $  14,296       $ (2,500)      $ 365,057      $(165,713)     $ 211,140
                               
                               
Net Loss                                                                                        (21,269)       (21,269)
                               
                               -----------      ---------       --------       ---------      ---------      ---------
                            
Balance - September 30, 1997   128,311,223      $  14,296         (2,500)      $ 365,057      $(186,982)     $ 189,871

</TABLE>







   The Accompanying Notes are an Integral Part of These Financial Statements
                                       5

<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1997
                               ------------------


1    - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION

     On October 10, 1977 L.J.L.  Intercom Services Corp. was incorporated  under
     the laws of New York State, to engage in the business of Manufacturing  and
     Installing  Intercom  systems  and to  provide  maintenance  and  repair to
     existing Intercom systems.

2    - CHANGE IN CORPORATE NAME

     On March 31, 1985, the board of directors of L.J.L. Intercom Services Corp.
     adopted a resolution to change the corporate name to Intercom  Technologies
     Corp. (The Company) The stockholders of the Company approved this change on
     April 22, 1985.

     SIGNIFICANT ACCOUNTING POLICIES

     A. Cash and Cash Equivalents

     The Company  considers all  instruments  with maturities of three months or
     less to be cash and cash equivalents.

     B. Accounts Receivable

     Accounts  receivable  is  represented  net of an allowance  for bad debt of
     $9,000.

     C. Inventory

     Inventory  is  stated at the  lower of cost or  market  using the  first-in
     first-out method.








                                       6
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1997
                               ------------------

     D. Property and equipment

     Property  and  equipment  are  carried at cost.  The Company  provides  for
     depreciation based on estimated useful lives of the assets. Depreciation is
     provided  principally on the straight-line  method.  Maintenance and repair
     costs  are  charged  to  expense  as  incurred.  Cost of  replacements  and
     improvements is generally capitalized.  The range of estimated useful lives
     used for depreciation is as follows:

                                                               Years

Machinery and Equipment ..............................          3-10
Furniture and Fixtures ...............................          5-10
Leasehold Improvements ...............................          5

3    - INVENTORY
     Inventory consists of the following:

     Parts ............................................      $10,133
     Finished Goods ...................................       20,574
                                                             -------

          Total .......................................      $30,707
                                                             =======
4    - PROPERTY AND EQUIPMENT

     Property and equipment consists of:

     Shop equipment ...................................      $ 7,021
     Furniture & fixtures .............................        1,922
     Show room ........................................        7,957
     Leasehold improvements ...........................        2,799
     Auto .............................................        3,250
                                                             -------
          Total cost ..................................      $22,949

     Accumulated depreciation .........................       19,489
                                                             -------
          Total .......................................      $ 3,460
                                                             =======

                                        7

<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1997
                               ------------------

5    - OTHER ASSETS

     Other  assets  include  loans to related  parties in the amount of $126,242
     bearing interest at 8% and 10% respectively.

6    - COMMITMENTS AND CONTINGENCIES

     The Company  leases its office  space under a five-year  lease with monthly
     payments.  The Company also has two operating  leases for automobiles  with
     duration's of three and four years.

     Minimum annual rentals under these leases are:

     September 30            
                  1998                             28,279
                  1999                             29,370
                  2000                             11,100
                                                 --------
         Total                                   $ 68,749
                                                 ========

     Rent expense for the year ended September 30, 1997 amounted to $17,250.

7    - NET EARNINGS (LOSS) PER SHARE

     Net  earnings  (loss)  per  share of common  stock are based on the  shares
     outstanding as of the balance sheet date of 128,311,223.

     Net Income (Loss)                                              $   (21,269)

     Shares outstanding at balance sheet date                       128,311,223

     Net (Loss) per share                                           $  (0.00017)




                                       8

<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1997
                               ------------------
8    - INCOME TAXES

     Income taxes are provided for the tax effects of  transactions  reported in
     the financial  statements and consist of taxes  currently due plus deferred
     taxes related primarily to differences  between the recorded book basis and
     tax basis of assets and liabilities for financial and income tax reporting.
     The deferred  tax assets and  liabilities  represent  the future tax return
     consequences  of  those  differences,  which  will  either  be  taxable  or
     deductible  when the assets  and  liabilities  are  recovered  or  settled.
     Deferred taxes are also recognized for operating  losses that are available
     to offset  future  taxable  income and tax credits  that are  available  to
     offset federal income taxes.  Due to the Company's net operating  losses in
     excess of $150,000 there are no income taxes currently due. As of September
     30,  1998 the  company  has a deferred  tax asset of $ 0. Due to  recurring
     losses the company has a zero valuation allowance.


9    - SUBSEQUENT EVENTS

     On October 3, 1997 the Shareholders of The Company approved a reverse split
     of 3,400 to 1, so that each 3,400 shares issued and outstanding  became one
     share,  and that any  fractional  shares be rounded up to the nearest whole
     share.  
<TABLE>
<CAPTION>

     Issued and outstanding                              Issued and outstanding 
     Shares prior to 3,400 to 1 reverse stock split.     Shares post reverse stock split

<S>  <C>                                                 <C>    
     128,311,223                                         37,989*
</TABLE>

*All fractional shares were rounded up to the nearest share.

(Continued)







                                       9
<PAGE>
                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (Formerly L.J.L. Intercom Services Corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1997
                               ------------------

     On  December  12,  1997  the  Directors  of  Intercom   Technologies  Corp.
     Unanimously  consented  to  authorizing  the  issuance of 82,500  shares of
     restricted common stock under Rule 144, to the following individuals.

     Sapphire Consultants Inc. ........................    20,000 shares

     RCA Trading Co., Inc. ............................    30,000

     TLT (Investments) Ltd. ...........................    30,000

     David Lutzker ....................................     2,500

     Shares were issued in consideration of $8,250.























                                       10

<PAGE>



                            MATATIA, MAYOKA & COHEN 
                          ----------------------------
                          Certified Public Accountants

Joseph V. Matatia CPA, JD
Mark L. Mayoka CPA, JD                                       Tel: (212) 758-7400
Itzhak, Cohen CPA, NLBA                                      Fax: (212) 697-8997

            551 Fifth Avenue, Suite 1120, New York, New York 10176
--------------------------------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT

August 1, 1997

To The Stockholder
Intercom Technologies Corp.
New York, New York

     We have audited the  accompanying  balance  sheet of Intercom  Technologies
Corp. as of September 30, 1996, and the related statements of income, cash flows
and statement of changes to stockholder's  equity for the year then ended. 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.

     Except as discussed in the  following  paragraph 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.

     We did not observe the taking of the physical  inventories at September 30,
1996 and 1995 (stated at $22,257 and $19,917,  respectively),  since those dates
were prior to the time we were initially engaged as auditors for the Company. We
were unable to satisfy  ourselves about  inventory  quantities by means of other
auditing procedures.

     In our  opinion,  except for the  effects of such  adjustments,  if any, as
might have been  determined  to be  necessary  had we been able to  observe  the
physical  inventories  taken as of September  30, 1996 and 1995,  the  financial
statements  referred to in the first paragraph  present fairly,  in all material
respects, the financial position of Intercom Technologies Corp., as of September
30,  1996,  and the  results  of its  operations  for the  year  then  ended  in
conformity with generally accepted accounting principles.


Matatia, Mayoka & Cohen
CERTIFIED PUBLIC ACCOUNTANT'S
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                                 BALANCE SHEET
                                 -------------
                               SEPTEMBER 30, 1996
                               ------------------

<TABLE>
<CAPTION>

                                     ASSETS
                                     ------
CURRENT ASSETS:

<S>                                                                       <C>      
        Cash ..........................................................   $  34,858
        Accounts receivable net .......................................      59,405
        Inventory .....................................................      22,257
                                                                          ---------
             TOTAL CURRENT ASSETS .....................................     116,520

PROPERTY MACHINERY AND EQUIPMENT ......................................       8,520

OTHER ASSETS ..........................................................     127,914
                                                                          ---------
                                                                            252,954
                                                                          =========
                 LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
        Accounts payable and accrued expenses .........................   $  22,793


STOCKHOLDER'S EQUITY
        Common stock - Par value $.OOO 1; 250,000,000 shares authorized
        142,957,634 shares issued and outstanding .....................   $  14,296

        Treasury stock ................................................      (2,500)

        Paid - in capital .............................................     365,057
        Retained earnings .............................................    (146,692)
                                                                          ---------
             TOTAL STOCKHOLDER'S EQUITY ...............................     230,161
                                                                          ---------
                                                                          $ 252,954
                                                                          =========
</TABLE>








   The Accompanying Notes are an Integral Part of These Financial Statements


<PAGE>

                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                              STATEMENT OF INCOME
                              -------------------
                          YEAR ENDED SEPTEMBER 30, 1996
                          -----------------------------

Sales .....................................................   $    513,001

Cost of sales .............................................        189,065
                                                              ------------
        Gross profit ......................................        323,936

Selling general and administration ........................        305,343

Other income (expense) net ................................          2,590

Net income (loss) before taxes ............................         21,183

Provision for income taxes ................................          1,370
                                                              ------------
        Net income (loss) .................................   $     19,813
                                                              ============

Net income (loss) per share ...............................   $   0.000139
                                                              ------------
Average number of shares outstanding ......................    142,957,634
                                                              ------------








   The Accompanying Notes are an Integral Part of These Financial Statements
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                            STATEMENT OF CASH FLOWS
                            -----------------------
                          YEAR ENDED SEPTEMBER 30, 1996
                          -----------------------------

CASH FLOW FROM OPERATING ACTIVITIES:
        Net income (loss) ..................................   $ 19,813

Adjustments to reconcile net income (loss) to net cash
        provided by operating activities:
             Depreciation ..................................      4,208

        Changes in assets and liabilities
             Decrease (Increase) in accounts receivable ....      9,321
             Decrease (Increase) in inventory ..............     (2,340)
             Decrease (Increase) in other assets ...........     (3,888)
             Increase (Decrease) in accounts payable .......     (3,196)
                                                               --------
        CASH PROVIDED (USED) BY OPERATING ACTIVITIES .......     23,918
                                                               --------
CASH FLOWS FROM INVESTING ACTIVITIES:
        Capital expenditures ...............................          -
                                                               --------
        CASH PROVIDED (USED) BY INVESTING ACTIVITIES .......          -
                                                               --------
CASH FLOWS FROM FINANCING ACTIVITIES:                                 -
                                                               --------

        CASH PROVIDED (USED) BY FINANCING ACTIVITIES ......           -
                                                               --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT .......      23,918

CASH AT BEGINNING OF YEAR .................................      10,940
                                                               --------
CASH AT END OF YEAR .......................................    $ 34,858
                                                               ========
SUPPLEMENT DISCLOSURE OF CASH
        FLOW INFORMATION
        Cash paid during the year for:

             Interest .....................................    $    235
                                                               ========
             Taxes ........................................    $  1,370
                                                               ========








   The Accompanying Notes are an Integral Part of These Financial Statements
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                  STATEMENT OF CHANGES TO STOCKHOLDER'S EQUITY
                  --------------------------------------------
                          YEAR ENDED SEPTEMBER 30, 1996
                          -----------------------------
<TABLE>
<CAPTION>

                                         Common  stock                        
                                    ------------------------                     Additional      Retained
                                    Number of                        Treasury     paid in        earnings
                                     shares           Amount          stock       capital        (deficit)        Total
                                     ------           ------        ---------    --------       ---------         -----

<S>                                                  <C>           <C>          <C>           <C>             <C>      
Balance - October 1, 1994          ***********       $ 14,296      $  (2,500)   $ 365,057     $ (166,505)     $ 210,348

Net Income                                                                                        19,813         19,813

                                   -----------       --------      ---------    ---------     ----------      ---------
Balance - September 30, 1995       ***********       $ 14,296         (2,500)   $ 365,057     $ (146,692)     $ 230,161
                                   ===========       ========      =========    =========     ==========      =========

</TABLE>







   The Accompanying Notes are an Integral Part of These Financial Statements
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1996
                               ------------------

1    -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A. Cash and Cash Equivalents

     The Company  considers all  instruments  with maturities of three months or
     less to be cash and cash equivalents.

     B. Accounts Receivable

     Accounts receivable are represented net of allowance for bad debt.

     C. Inventory

     Inventory  is  stated at the  lower of cost or  market  using the  first-in
     first-out method.

     D. Property and equipment

     Property  and  equipment  are  carried at cost.  The Company  provides  for
     depreciation based on estimated useful lives of the assets. Depreciation is
     provided  principally on the straight-line  method.  Maintenance and repair
     costs  are  charged  to  expense  as  incurred.  Cost of  replacements  and
     improvements  is generally &  capitalized.  The range of  estimated  useful
     lives used for depreciation is as follows:

                                                                      Years

        Machinery and Equipment .................................     3-10
        Furniture and Fixtures ..................................     5-10
        Leasehold Improvements ..................................     5

2    - CHANGE IN CORPORATE NAME

     On March 31, 1985, the board of directors of L.J.L. Intercom Services Corp.
     adopted a resolution to change the corporate name to Intercom  Technologies
     Corp.  The  stockholders  of the Company  approved this change on April 22,
     1985.
<PAGE>

                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1996
                               ------------------

3    - INVENTORY

     Inventory consists of the following:

        Parts ...........................................   $ 7,500
        Finished Goods ..................................    14,757
                                                            -------
        Total ...........................................   $22,257
                                                            =======
4    - PROPERTY AND EQUIPMENT 

     Property plant and equipment consists of

     Shop equipment .....................................   $12,788
     Furniture & fixtures ...............................     7,836
     Show room ..........................................     7,957
     Leasehold improvements .............................     2,779
     Auto ...............................................     2,400
                                                            -------
     Total cost .........................................   $33,760

     Accumulated depreciation ...........................    25,240
                                                            -------
     Total ..............................................   $ 8,520
                                                            =======
5    - OTHER ASSETS

     Other assets include a loan to related parties in the amount of $ 119,927

6    - COMMITMENTS AND CONTINGENCIES

     The Company  leases its office  space under a five year lease with  monthly
     payments.  The Company also has two operating  leases for automobiles  with
     durations of three and four years.
<PAGE>


                          INTERCOM TECHNOLOGIES CORP.
                          ---------------------------
                   (formerly L.J.L. intercom services corp.)
                   -----------------------------------------
                       NOTES TO THE FINANCIAL STATEMENTS
                       ---------------------------------
                               SEPTEMBER 30, 1996
                               ------------------


     Minimum annual rentals under these leases are:

        September 30       97.................. $ 27,951
                           98..................   28,279
                           99..................   29,370
                          100..................   11,100
                                                --------
        Total                                   $ 96,700
                                                ========

     Rent expense for the years ended September 30, 1995 amounted to $14,250.

7    - NET EARNINGS (LOSS) PER SHARE

     Net  earnings  (loss)  per share of common  stock is based on the  weighted
     average number of shares outstanding.

8    - SUBSEQUENT EVENTS

     On July 1997 the Company  entered into  negotiations,  with  Megastar  S.A.
     Panama "MEGA", to purchase all of the shares of MEGA,  through the issuance
     of 35,000,000 shares of the Company on a post split basis.

     Prior to the  acquisition  the Company  will have a reverse  split of 3,400
     shares to one, and will spin off all of it's assets and liabilities, to the
     Company's president and majority stock holders.