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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

Form 10-KSB/A

(Mark one)[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2007

Commission file number:0-26307



Nettel Holdings, Inc.(Exact name of small business issuer as specified in its charter)

Florida
     
     65-0827278(State or other jurisdiction of incorporation or
     
     (IRS Employer Identification No.)organization)


12655 SW Center Street, Beaverton, Oregon 97005(Address of principal executive offices) (Zip Code)

360-369-6367(Issuers telephone number)

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

Common Stock, Par Value $.01(Title of class)

Indicate by check mark whether the registrant (1) has 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 as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO  ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the 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.  ̈

Issuers revenues for its most recent fiscal year: $21,505,122.





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As of March 31, 2008, there were 53,679,833 shares of the issuer's common stock issued and outstanding. There is only a limited trading market in the shares of the issuers common stock at the date of the filing of the Form 10-KSB. Affiliates of the Issuer own 13,576,290 shares of the Issuer issued and outstanding common stock. 40,103,543 shares are held by non-affiliates. Affiliates for the purposes of this Annual Report refer to the officers, directors and/or persons or firms owning 5% or more of Issuers common stock, both of record and beneficially and affiliates thereof.

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., PartI, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 31, 2007). No documents are incorporated by reference.

This amendment to the Companys 10-KSB, originally filed on May 14, 2008, is being submitted in response to comments from the SEC requesting specific disclosures pertaining to the evaluation of the managements internal control over financial reporting. Please see Item 9A.





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TABLE OF CONTENTS



PART I

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

PART II

Item 5. Market for Common Equity and Related Stockholder Matters 
Item 6. Management's Discussion and Analysis 
Item 7. Financial StatementsItem 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons 
Item 10. Executive Compensation 
Item 11. Security Ownership of Certain Beneficial Owners and Management 
Item 12. Certain Relationships and Related Transactions 
Item 13. Exhibits and Reports on Form 8-KItem 14. Control and Procedures



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PART I

ITEM 1. DESCRIPTION OF BUSINESS.Safe Harbor Statement

This Form 10-KSB contains forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions that are not statements of historical facts. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimates," "forecast," "project" and similar expressions identify forward-looking statements.

The forward-looking statements in this document are based upon various assumptions, many of which are based on management's discussion and analysis or plan of operation and elsewhere in this report. Although we believe that these assumptions were reasonable when made, these statements are not guarantees of future performance and are subject to certain risks and uncertainties, some of which are beyond our control, and are difficult to predict. Actual results could differ materially from those expressed in forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements, which reflect management's view only as of the date of this report. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequence events or circumstances. Readers are also encouraged to review the Company's publicly available filings with the Securities and Exchange Commission.

General

On May 1, 2003, the Board of Directors declared a fifty to one reverse stock split of the Company's common stock. An amount equal to the par value of the common shares affected by the reverse split was transferred from the common stock account to the additional paid-in capital account. All references to number of shares, except shares authorized, and to per share information in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive basis.

On May 23, 2003, the Company entered into an Agreement of Merger with NetTel Globalcommunication, Inc. ("NetTel"), a Delaware corporation. Pursuant to the Merger Agreement, the Company issued 10,596,290 shares of its common stock to the NetTel's shareholders in exchange for all the issued and outstanding shares of the NetTel's common stock and issued 2,250,000 shares of its common stock to consultants facilitating the merger transaction.

The merger of the Company with NetTel has been accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of NetTel obtained control of the consolidated entity. Accordingly, the merger of the two companies has been recorded as a recapitalization of the NetTel, with NetTel being treated as the continuing entity. The continuing company has retained December 31 as its fiscal year end. The historical results for the year ended December 31, 2003 include NetTel and the Company (from the acquisition date), while the historical results for the year ended December 31, 2002 include only the NetTel.

At a board meeting duly called and held on May 23, 2003, authorized and approved the change of the name of the Company from Bio Standard Corporation to Nettel Holdings, Inc. The Company's new symbol "NTTL" became effective on May, 2003.

NetTel began operations in March 2001 selling wireless communication devices and service activation with various providers. During 2002, the Company began reselling used computer equipment and providing retail internet access. In April 2003, the Company discontinued retail wireless and internet access sales. Additionally, the Company began development of telecommunications software as well as a web security and financial software



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packages. In July 2003, the Company began marketing telecommunication minutes to a limited test market. In October 2003, in response to requests from customers concerned about technical support and customer service, the Company suspended telecommunication sales and marketing efforts to upgrade the infrastructure. In August 2004 the Company began selling telecommunication minutes and prepaid calling cards to the wholesale market using its upgraded technology to a limited test market. In April 2005, the Company began providing service to major suppliers and carriers.

The Company is currently pursuing three businesses areas:

Telecommunications Services

Wholesale Telecommunication Minute Sales

The Company purchases telecommunication minutes directly form in-country telecom companies and resells these minutes to worldwide carriers. The Companys software system routes minutes from buyer to seller and monitors systems loads and payment settlements. We sell the majority of our minutes to tier 1 carriers worldwide.

Advanced Voice Order Processing

AVOP Direct acts as a single point of contact, posting the rate each carrier charges to terminate calls in its country and then offers those rates to all other carriers who wish to terminate the calls.

By joining AVOP Direct, carriers and service providers will be able to avoid the time and expense of negotiating and managing one-time agreements with other carriers or telecom providers.

AVOP Direct handles routing management, settlements, billing and administration, allowing carriers to save on staff and administration costs. Here are a few key features with AVOP Direct that set us apart from hard to deal with typical exchanges, and their procedures:

Any destinations posted on AVOP Direct can be purchased immediately. Instant Financial Settlement for seller.

Buyers would be able to view not only the rates but also in real time ASR, PDD, ACD, and Voice Quality ratings. This is very important because most of the time, rate is not the only factor in deciding which carrier to purchase from. As long as the buyer maintains a positive account balance, they could at any time be able to immediately purchase and use any minutes that are posted in our exchanges.

We have made purchasing minutes from AVOP Direct very simple. To purchase any route listed on AVOP Direct, buyer would simply enter the Route ID + Country Code + City Code in to the dialing plan. Members will be able to view CDR in real time, review all account information, network information, and settlement data. They will now be able to furnish a computerized summation from start to finish!

Sales and marketing began in 2005.

Voice over Internet Protocal ("VoIP")

The Company is a cutting edge telephony company in the exploding VoIP industry. Planned products and services include residential and commercial long distance, prepaid calling card, PC to phone, unified messaging, and teleconferencing.

The VoipXchange.net division of the Company has partnered with major VoIP network termination partners worldwide to access their network infrastructure. This allows VoipXchange.net to provide high-quality, low-cost any-distance'' call termination to over 250 countries and territories. We operate our own, or in cooperation with other providers, a network of VoIP gateways throughout the world. These gateways are located mostly in difficult-to-reach countries or regions and provide local termination of international calls. VoipXchange.net offers this



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service to any international carrier, which is interested in reliable and inexpensive completion of its traffic to the VoipXchange.net's On-Net destinations.

Telecommunication Products and Service Summary:Gateway Termination for ITSP

The Company plans to market its IP telephony services to other international long distance carriers and wholesale customers that have a need for large blocks of long distance telephone time between selected locations. Although margins at the wholesale level are lower than retail margins, the sale of blocks of long distance time to other carriers will enable The Company to generate revenues with only a limited number of Gateways installed. The company is in the process of pre-marketing its services and has identified several potential wholesale resellers of block minutes.

Broadband Telephone  Local Phone Services  Domestic and International Market

SIPZOO is a comprehensive global Broadband Telephone service. SIPZOO Broadband Telephone service uses a technology called Voice-over-IP to allow consumers to make and receive calls. However, with SIPZOO a computer is not required to make or receive the calls. The only requirement to use the service is a DSL or Cable Internet connection and an ATA (Analog Terminal Adapter). An ATA adapter can be provided by SIPZOO. To use the service the customer plugs one end of the ATA device into a telephone and the other end into the broadband service; the customer will immediately get a regular dial tone. SIPZOO provides customers with a local U.S telephone number which includes many call options such as Call Forwarding, Caller ID, Three-way calling, Call Transfer, Call Waiting, Call Return, , Speed Dial, Anonymous Call Rejection, Hunt group, and Voicemail

Unified Messaging  FaxZoo

To Receive Faxes: The customers receive a FaxZoo local U.S or International telephone number. Faxes received are automatically forwarded to the customers personal computer as an email attachment. The customer can also forward the email to a fax machine.

Receive Voice Messages: SIPZOO will automatically forward voice messages to the customer PC via email. The customer can listen to them on the computer over the internet.

Web to Fax: A web page enables registered users to fax from any browser from any location.

PC to Fax: PC to fax acts like a printer on the customers PC. PC to Fax enables the customer to fax any document they can print. PC to fax also provides for real-time status reporting of each fax sent on the customers PC and offers additional features such as an address book and resend capabilities.

Computer Equipment Sales

The Nettel Trading division of the Company is currently exporting qualified computer electronics equipment. The Company established connections and cooperative relations with over 1,000 companies in more than 40 countries and regions in the world. Through these important connections the Company plans to expand into other importing and exporting activities, but has no agreements or contracts at this time.

Software Programming

The Entec division is currently developing Accounting, Finance, Project Management, Inventory System, Database Management, Presentation Tools, E-mail, Voice Recognition, and Word Processing software that will have an entry level price point ranging from $9.95 to $49.95 U.S. dollars.

Entec Voice XML is a next generation telecom application service provider. The Company will provide customers with value-added voice services that are unique in their user utility, ease of application and use, presentation to users



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and cost advantage. Talking Technologies is making IVR technology more affordable and accessible to customers through standards-based technology. Talking Technologies next-generation IVR -- using VoiceXML enables companies to easily and quickly deploy automated phone services that can improve employee productivity, reduce costs, increase customer satisfaction, and create new revenue opportunities. This IVR allows companies to extend existing or new Web applications to be accessible by any phone at the lowest total cost of ownership. Entec games division is a developer of interactive entertainment software and technology for a variety of consoles and computer platforms.

Employees

As of December 31, 2007, the Company had three employees working in the Portland office; two administrative and one engineer. The Company also has approximately sixty software engineers, system monitors and customer service personnel contracted through a company in Vietnam. Additionally, the Company has contracts for consulting services with six development engineers in the U.S.

RISK FACTORS

You should carefully consider the following risks relating to our business and our common stock, together with the other information described elsewhere in this Form 10-KSB. If any of the following risks actually occur, our business, results of operations and financial condition could be materially affected, the trading price of our common stock could decline, and you might lose all or part of your investment. We have experienced losses and we expect future losses and we may not become profitable.

|* | We may not be able to expand our revenue and achieve profitability. Our future success depends on the growth in the use of the internet as a means of communications.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|* | If we fail to establish marketing relationships that provide us visibility, we may not be able to sufficiently increase our sales.                                   
| 
|* | We may be unable to manage our expansion and anticipated growth effectively.                                                                                         
| 
|* | Intense competition could reduce our market share and harm our financial performance.                                                                                
| 
|* | Our network may not be able to accommodate our capacity needs.                                                                                                       
| 
|* | We face a risk of failure of computer and communications systems used in our business. Our computer systems and operations may be vulnerable to security breaches.   
| 
|* | Our services may infringe on the intellectual property rights of others.                                                                                             
| 
|* | Operating internationally exposes us to additional and unpredictable risks.                                                                                          
| 

ITEM 2. DESCRIPTION OF PROPERTY

In May 2007, the Company leased 1,300 square feet of office space at 12655 SW Center Street, Beaverton,Oregon. We believe that our office space is adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

There are no legal proceedings presently pending or threatened against the Company.

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

None.



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PART II

ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS

(A) Market Information

Our shares of common stock are traded over-the-counter in what is referred to as the OTC: Bulletin Board under the symbol NTTL. As of March 31, 2008, there were 16 market makers submitting quotations on the OTC:BB. However, the trading volume during the past months has been sporadic. The following information with respect to the high and low bid price of our shares was obtained from the National Quotation Bureau. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. In May 2002, our shares were subject to a one for ten recapitalization and in May 2003, our shares were subject to one for fifty recapitalization. The table below reflects such information.

High
     
     LowFiscal Year 2006First Quarter Ending March 31,
     $
     0.11
     $
     0.11Second Quarter Ending June 30,
     $
     0.11
     $
     0.10Third Quarter Ending September 30,
     $
     0.09
     $
     0.08Period Ending December 31,
     $
     0.11
     $
     0.10Fiscal Year 2007First Quarter Ending March 31,
     $
     0.74
     $
     0.10Second Quarter Ending June 30,
     $
     074
     $
     0.42Third Quarter Ending September 30,
     $
     0.58
     $
     0.30Period Ending December 31,
     $
     0.38
     $
     0.18Fiscal Year 2008First Quarter Ending March 31,
     $
     0.18
     $
     0.17


(B) Holders

As of March 31, 2008, there 116 were shareholders.

(C) Dividends

Holders of common stock are entitled to dividends when, as, and if declared by the Board of Directors, out of funds legally available therefore. The Company has never paid cash dividends on its common stock. The Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends to retain future earnings to finance the growth of the Company's businesses.

(1) We relied upon Section 4(2) of the Act as the basis for the exemption from the registration requirements of the Act and there was no public solicitation involved. The shares of restricted common stock were sold to private



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investors. All recipients either received adequate information about the Company or had access, through employment or other relationships, including business and personal relationships with the Company's management to such information.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

The Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

The Company's net revenues for the year ended December 31, 2007 were $21,505,122 compared to $7,832,916 for the year ended December 31, 2006. All revenues for 2007 were from telecommunication minutes sales. For the year ended December 31, 2006, telecommunication minute sales were $7,486,296 and used equipment sales were $467,500.

Gross margin was 5.1 percent of revenue for the telecommunication sales for year ended December 31, 2007 compared to 7.1 percent for the same period ended December 31, 2006. The sales in 2007, which were a 287% increase over 2006, were at competitive rates with realistic long-term gross margins. The gross margin on used equipment sales for the year ended December 31, 2006 was 50% related primarily to one high margin sale in 2006 that is not likely to reoccur.

Operating expenses consisting primarily of research and development expense and general and administrative expense increased $3,797,270 to $5,267,460 for the year ended December 31, 2007 compared to $1,470,190 for the same period ended December 31, 2006. Research and development expense was $3,096,675 for the year ended December 31, 2007 compared to $1,090,332 in the same period in 2006. These costs are primarily personnel and consulting costs for engineers upgrading and maintaining software. $2,696,391 of this expense was a non-cash charge for the market value of the Company's common stock issued to engineers for their services during the year ended December 31, 2007 as compared to $710,201 for the year ended December 31, 2006. The $2,006,373 increase in 2007, relates to software upgrades and maintenance to accommodate the 287% increase in sales in 2007. Additionally, approximately $1,000,000 of the non-cash charge for common stock issued to consultants was for a new generation of software that is still in the development stage.

General and administrative expense was $2,103,885 in the period ended December 31, 2007 as compared $369,904 for the same period ended December 31, 2006. The $1,733,988 increase in 2007 resulted primarily from $1,702,000 non-cash charge for the market value of the Companys common stock issued to investor relations consultants and the $25,000 fee paid to cancel the facilities lease which reduced the monthly facilities expense by 65%. The new facilities, which have considerably less square footage, is more appropriate for the needs of the Company.

Liquidity and Capital Resources

The cash flow from operations for the year ended December 31, 2007 is primarily attributable to the net loss of $4,176,773 offset by the $4,444,706 non-cash charge for the common stock issued for services. The negative cash flow from operations in 2006 resulted from the net loss of $783,527 and the $449,827 decrease in customer deposits and deferred revenue which were recognized as revenue, offset by the $710,201 non-cash charges for common stock issued for services.

The Company invested $253,854 in property and equipment during the year ended December 31, 2007 compared to $2,236 for the same period ended December 31, 2006. The equipment increase is for servers and related equipment for which installation is in process to accommodate higher sales volume.

The Company made a $60,000 payment on the outstanding loan balance in 2007. Cash flow was provided by financing activities in 2006 from a $225,000 loan.



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The Company has incurred an accumulated deficit as of December 31, 2007 of $11,144,484. As shown in the accompanying consolidated financial statements, the Company has incurred losses in years ended December 31, 2007 and 2006. The future of the Company is dependent on its ability to generate cash from operations. There can be no assurance that the Company will be able to implement its current operating plan.





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ITEM 7. FINANCIAL STATEMENTS.



NETTEL HOLDINGS, INCConsolidated Financial StatementsYears Ended December 31, 2007 and 2006

****

ContentsPageReport of Independent Registered Public Accounting Firm
     F
     -1Financial Statements:Consolidated Balance Sheet as of December 31, 2007
     F
     -2Consolidated Statements of Operations for the years endedDecember 31, 2007 and 2006
     F
     -3Consolidated Statements of Stockholders' Equity (Deficit) for the years endedDecember 31, 2007 and 2006
     F
     -4Consolidated Statements of Cash Flows for the years endedDecember 31, 2007 and 2006
     F
     -5Notes to Consolidated Financial Statements
     F
     -6






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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders and Board of DirectorsNettel Holdings, Inc.

We have audited the accompanying consolidated balance sheet of Nettel Holdings, Inc. as of December 31, 2007, and the related consolidated statements of operations, consolidated shareholders' Equity (Deficit), and consolidated cash flows for the years ended December 31, 2007 and 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits of these consolidated statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in all material respects, the financial position of Nettel Holdings, Inc. as of December 31, 2007, and the results of their operations and cash flows for the years ended December 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. During the year ended December 31, 2007, the Company incurred net losses of $4,176,773 and has accumulated deficit of $11,144,484 as of December 31, 2007. These factors, among others, as discussed in Note 13 to the consolidated financial statements, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 13. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Kabani & Company, Inc.Certified Public AccountantsLos Angeles, CaliforniaMay 1, 2008



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NETTEL HOLDINGS, INC.CONSOLIDATED BALANCE SHEETDECEMBER 31, 2007ASSETSCURRENT ASSETS:Cash & cash equivalents
     $
     215,324Accounts receivable, net
     
     38,630Prepaid expenses
     
     695,007Total current assets
     
     948,961PROPERTY AND EQUIPMENT, net
     
     281,413Deposits
     
     6,804TOTAL ASSETS
     $
     1,237,178LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES:Accounts payable
     $
     148,510Payroll liabilities
     
     50,309Accrued expenses
     
     97,180Customer Deposits
     
     437,735Notes payable
     
     165,000Total current liabilities
     
     898,734STOCKHOLDERS' EQUITYPreferred stock, $10 par value, 1,000 shares authorized,1,000 shares issued and outstanding
     
     10,000Common stock, $0.001par value; 250,000,000 shares authorized;51,607,119 shares issued and outstanding
     
     51,607Additional paid-in capital
     
     12,799,621Shares issued for security deposit on equipment
     
     (1,313,000
     )Shares issued for future purchases
     
     (65,300
     )Deficit accumulated
     
     (11,144,484
     )Total stockholders' equity
     
     338,444TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY
     $
     1,237,178


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



F-2

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NETTEL HOLDINGS, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDED DECEMBER 31, 2007 AND 20062007
     
     2006Net revenues
     $
     21,505,122
     $
     7,832,916Cost of goods sold
     
     20,418,041
     
     7,130,755Gross profit
     
     1,087,081
     
     702,161Operating expenses:Research and development
     
     3,096,675
     
     1,090,332Sales and marketing
     
     66,900
     
     9,954General and Administrative
     
     2,103,885
     
     369,904Total operating expenses
     
     5,267,460
     
     1,470,190Loss from Operations
     
     (4,180,379
     )
     (768,029
     )Other Income (Expense)Gain on settlement of debt
     
     28,152
     
     -Interest Expense
     
     (24,546
     )
     (15,498
     )Total Other Income (Expense)
     
     3,606
     
     (15,498
     )Net loss
     $
     (4,176,773
     )   $
     (783,527
     )Basic and diluted net loss per share*
     $
     (0.09
     )   $
     (0.02
     )Basic and diluted weighted average sharesoutstanding
     
     47,952,108
     
     36,254,029 * Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive.


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



F-3

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NETTEL HOLDINGS, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006Preferred Stock
     Common Stock
     
     
     
     
     
     
     
     TotalStockholdersNumber of
     
     
     
     Number of
     
     
     
     Paid In
     
     Prepaid
     
     Accumulated
     
     EquityShares
     
     
     Amount
     Shares
     
     Amount
     
     Capital
     
     Expense
     
     Deficit
     
     (Deficit)Balance atDecember 31,2005
     1,000
     
     $
     10,000
     33,701,499
     $
     33,701
     $
     6,341,010
     $
     (266,000
     )
     $
     (6,184,184
     )
     $
     (65,473
     )Shares issuedfor services
     -
     
     
     -
     6,053,334
     
     6,054
     
     704,147
     
     -
     
     -
     
     710,201Shares issuedfor prepaidexpense
     -
     
     
     -
     -
     
     -
     
     -
     
     200,700
     
     -
     
     200,700Net loss for theyear
     -
     
     
     -
     -
     
     -
     
     -
     
     -
     
     (783,527
     )
     (783,527
     )Balance atDecember 31,2006
     1,000
     
     $
     10,000
     39,754,833
     $
     39,755
     $
     7,045,157
     $
     (65,300
     )
     $
     (6,967,711
     )
     $
     61,901Shares issuedfor services
     -
     
     
     -
     9,511,286
     
     9,511
     
     4,435,195
     
     -
     
     -
     
     4,444,706Shares issued inpayment of debt
     -
     
     
     -
     41,000
     
     41
     
     8,569
     
     -
     
     -
     
     8,610Shares issued asa deposit onequipment
     -
     
     
     -
     2,300,000
     
     2,300
     
     1,310,700
     
     (1,313,000
     )
     -
     
     -Net loss for theyear
     -
     
     
     -
     -
     
     -
     
     -
     
     -
     
     (4,176,773
     )
     (4,176,773
     )Balance atDecember 31,2007
     1,000
     
     $
     10,000
     51,607,119
     $
     51,607
     $
     12,799,621
     $
     (1,378,300
     )
     $
     (11,144,484
     )
     $
     338,444The accompanying notes are an integral part of these consolidated financial statements




F-4

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NETTEL HOLDINGS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2007 AND 20062007
     
     
     2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
     $
     (4,176,773
     )
     $
     (783,527
     )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
     
     
     
     
     -Depreciation and amortization
     
     71,383
     
     
     82,038Gain on extinguishment of debt
     
     (28,152
     )Common shares issued for services
     
     4,444,706
     
     
     710,210Amortized shares issued for prepaid expense
     
     -
     
     
     200,700(Increase) decrease in current assets:Accounts receivables
     
     24,522
     
     
     119,008Prepaid telecommunication minutes
     
     (400,438
     )
     
     (65,489
     )Deposits
     
     (6,804
     )
     
     2,200Increase (decrease) in current liabilities:Accounts payable
     
     12,901
     
     
     (139,619
     )Accrued payroll and expense
     
     20,949
     
     
     (42,743
     )Customer deposits and deferred revenue
     
     435,385
     
     
     (449,827Total Adjustments
     
     4,574,452
     
     
     416,469Net cash provided by (used in) operating activities
     
     397,679
     
     
     (367,058
     )CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property & equipment
     
     (253,854
     )
     
     (2,236
     )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from borrowings
     
     -
     
     
     225,000Principal payments on debt obligations
     
     (60,000
     )
     
     (6,000
     )Net cash provided by (used in) financing activities
     
     (60,000
     )
     
     219,000NET INCREASE IN CASH & CASH EQUIVALENTS
     
     83,825
     
     
     (150,294
     )CASH & CASH EQUIVALENTS, BEGINNING BALANCE
     
     131,499
     
     
     281,793CASH & CASH EQUIVALENTS, ENDING BALANCE
     $
     215,324
     
     $
     131,499SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid
     $
     -
     
     $
     -Income taxes
     $
     -
     
     $
     -SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ANDFINANCING ACTIVITIES:Common shares issued to extinguish debt
     $
     8,610
     
     $
     -Common shares issued as a deposit
     
     1,313,000
     
     
     266,000The accompanying notes are an integral part of these consolidated financial statements




F-5

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NETTEL HOLDINGS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006



1. DESCRIPTION OF BUSINESS

NetTel Globalcommunication, Inc. (NetTel) was incorporated on December 10, 1999 in the state of Delaware. On May 23, 2003, the NetTel entered into an Agreement of Merger with Nettel Holdings, Inc. (formerly Bio Standard Corporation), (the Company), a Florida corporation. Pursuant to the Merger Agreement, the Company issued 10,596,290 shares of its common stock to the NetTels shareholders in exchange for all the issued and outstanding shares of the NetTels common stock and issued 2,250,000 shares of its common stock to consultants facilitating the merger transaction.

The merger of the Company with NetTel was accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of NetTel obtained control of the consolidated entity. Accordingly, the merger of the two companies was recorded as a recapitalization of the NetTel, with NetTel being treated as the continuing entity. The continuing company has retained December 31 as its fiscal year end.

In October, 2003, the Company created a wholly owned subsidiary in the State of Delaware by the name of Entec Software, Inc. (ENTEC). There are currently no operations in ENTEC.

In October, 2005, the Company created another wholly owned subsidiary in the State of Delaware by the name of IPXC, Inc (IPXC).

Business operations

The Company primary operations are the purchase of telecommunication minutes directly from in-country telecom companies and then resell these minutes to worldwide carriers. The Companys software system routes minutes from buyer to seller and monitors systems loads and payment settlements.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES & REALIZATION OF ASSETS

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.

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. The Company maintains its cash in bank deposit accounts that may exceed federally insured limits. The company has not experienced any losses in such accounts.

Allowance for doubtful accounts

In determining the allowance to be maintained, management evaluates many factors including industry and historical loss experience. The allowance for doubtful accounts is maintained at an amount management deems adequate to cover estimated losses. Allowance for doubtful accounts is $106,399 as at December 31, 2007.

Property & Equipment

F-6

---

Capital assets are stated at cost. Depreciation of equipment is provided using the straight-line method over the estimated useful lives (3 years) of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. Expenditures for maintenance and repairs are charged to expense as incurred.

Long-lived assets

In accordance with SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company reviews the carrying value of its long-lived assets to assess recoverability and impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An evaluation of the recovery of the long-lived assets was performed as of the year ended December 31, 2007. No impairments were recorded for the years ended December 31, 2007 and December 31, 2006.

Revenue Recognition

Revenue is recognized when earned. The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. The Company recognizes revenue from telecommunications and internet services as services are provided; the Company recognizes sales from equipment when, price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue. Deferred revenue (customer deposits) as of December 31, 2007 is $437,735.

Cost of sales includes the cost of equipment sold and the cost of capacity for internet and wholesale minutes associated with the revenue recognized within the corresponding time period.

Payments to vendors for wholesale telecommunication minutes made prior to the delivery of service to customers are recorded as a prepaid. The prepaid balance as of December 31, 2007 is $695,007.

Advertising

The Company expenses advertising costs as incurred. Advertising expenses for the years ended December 31, 2007 and 2006 were $0 and $2,068, respectively.

Research and Development

Expenditures for telecommunication software development costs and research are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such software has been short. Consequently, costs otherwise capitalized after technological feasibility is achieved are generally expensed because they are insignificant. The Company recorded research and development cost of $3,096,675 and $1,090,332 in the years ended December 31, 2007 and 2006, respectively, for development of software products.

Issuance of shares for service

The Company accounts for the issuance of equity instruments to acquire goods and services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably measurable.

Income taxes

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.



18

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FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109(FIN 48) requires the accrual of interest and potential penalties on unrecorded tax liabilities. Interest and penalties are accounted for as tax expense.

Fair value of financial instruments

Statement of financial accounting standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Basic and diluted net loss per share

Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), Earnings per share. SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The company did not issue any options or warrants during the years ended December 31, 2007 and 2006.

Comprehensive Loss

SFAS No. 130, "Reporting Comprehensive Loss," establishes standards for the reporting and display of comprehensive income and its components in the financial statements. For the years ended December 31, 2007 and 2006, the Company does not have items that represented other comprehensive income and, accordingly, has not included in the statement of stockholders' equity the change in comprehensive loss.

Stock-Based Compensation

The Company adopted SFAS No. 123 (Revised 2004), Share Based Payment (SFAS No. 123R), under the modified-prospective transition method on January 1, 2007. SFAS No. 123R requires companies to measure and recognize the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value. Share-based compensation recognized under the modified-prospective transition method of SFAS No. 123R includes share-based compensation based on the grant-date fair value determined in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation, for all share-based payments granted prior to and not yet vested as of January 1, 2006 and share-based compensation based on the grant-date fair-value determined in accordance with SFAS No. 123R for all share-based payments granted after January 1, 2006. SFAS No. 123R eliminates the ability to account for the award of these instruments under the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and allowed under the original provisions of SFAS No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our stock option plans using the intrinsic value method in accordance with the provisions of APB Opinion No. 25 and related interpretations.

There were no stock based compensations in the years ended December 31, 2007and 2006, respectively.

Segment Reporting

Statement of financial accounting standards No. 131, Disclosures about segments of an enterprise and related information (SFAS No. 131), which superseded statement of financial accounting standards No. 14, Financial reporting for segments of a business enterprise, establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. SFAS No. 131 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how



19

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to allocate resources and in assessing performances. The Company allocates its resources and assesses the performance of its sales activities based upon revenue by product line and services (see Note 10).

Recent Pronouncements

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements(SFAS 157), which is effective for fiscal years beginning after November 15, 2008. This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. The Company does not expect the adoption of this statement to have a material effect on this consolidated financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits all entities to choose, at a specified election date, to measure eligible items at fair value (the fair value option). This statement is effective for our fiscal year beginning December 30, 2007. The Company does not expect the adoption of this statement to have a material effect on its consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R),Business Combinations.This statement replaces SFAS 141. SFAS 141(R) expands the assets acquired and liabilities assumed which are measured at fair value as of the acquisition date, changes the method of recording contingent consideration and requires expensing of all acquisition-related costs as incurred. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of this statement to have a material effect on its consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARP No, 51.This statement replaces the term minority interest with noncontrolling interest and includes noncontrolling interest in the equity section of the financial statements. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. The Company does not expect the adoption of this statement to have a material effect on this consolidated financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133.SFAS No. 161 amends and expands the disclosure requirement of SFAS No. 133 to enhance the understanding of how the derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flow. The Company does not expect the adoption of this statement to have a material effect on this consolidated financial position, results of operations or cash flows.

3. PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of Nettel Holdings, Inc., (the Company) and its 100% wholly-owned subsidiaries NetTel Globalcommunication, Inc. (NetTel), Entec Software, Inc (ENTEC) and IPXC, Inc. (IPXC). All significant inter-company accounts and transactions have been eliminated in consolidation.

4. PROPERTIES AND EQUIPMENT

Property and equipment at December 31, 2007 consisted of the following:

2007Equipment
     
     $
     274,444Software
     
     
     8,615Furniture and fixtures
     
     
     3,082Construction in progress
     
     
     251,193537,334Less: accumulated depreciation & amortization
     
     
     (255,921
     )Property & Equipment (net)
     
     $
     281,413




20

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Depreciation expense for the years ended December 31, 2007 and 2006 was $71,383 and $82,038 respectively. Construction in progress includes $251,193 in equipment and related accessories.

5.  PAYROLL LIABILITIES

The Company has not paid a salary to its officer and has accrued $13,100 in payroll liabilities for the past three years. $4,616 in payroll tax liabilities are payable at December 31, 2007. $32,593 of the payroll liability balance was assumed by the Company from Bio Standard during the recapitalization transaction. As at December 31, 2007, $50,309 was accrued as payroll liabilities.

6.  NOTES PAYABLE-CURRENT

In June 2006, the Company borrowed $225,000 from an individual for working capital. The note was due on July 1, 2007, is unsecured and has an annual interest rate of 12% on the unpaid principal balance. The Company repaid $60,000 on the principal balance in August 2007 and is in process of renewing the terms, and hence, the note has been classified as a current liability.

In January 2007, the Company issued 41,000 shares of Common Stock with a value of $8,610 (see Note 7) to repay a note payable of $22,000 and the accrued interest payable of $14,762. A $28,152 gain on extinguishment of debt was recorded for the three-month period ended March 31, 2007.

Interest expense for these notes for the years ended December 31, 2007 and 2006 was $24,546 and $15,498 respectively.

7.  STOCKHOLDERS' EQUITY

In January 2006, the Company issued 1,133,334 shares of Common Stock to consultants for engineering services for a combined value of $176,900. In April 2006, the Company issued 1,000,000 shares of Common Stock to a consultant for engineering services for a combined value of $105,000. In August 2006, the Company issued 1,500,000 shares of Common Stock to a consultant for engineering services for a combined value of $150,000; and in December 2006, the Company issued 2,420,000 shares of Common Stock to consultants for engineering and marketing services for a combined value of $278,300. The valuation of shares was based upon market value of the shares at the time of the consummation of the transaction.

In January 2007, the Company issued 1,548,000 shares of Common Stock to consultants for services for a combined value of $169,830 and 41,000 shares of Common Stock with a value of $8,610 to repay a note payable and related interest payable (see Note 6). In February 2007, the Company issued 1,027,500 shares of Common Stock to consultants for services for a combined value of $655,150. In March 2007, the Company issued 1,854,715 shares of Common Stock to consultants for services for a combined value of $1,064,885.

In April 2007, the Company issued 2,427,000 shares of Common Stock to consultants for services for a combined value of $1,428,570 and 1,300,000 shares of Common Stock with a combined value of $793,000 as a deposit for the purchase of computer equipment. In May 2007, the Company issued 319,071 shares of Common Stock to consultants for services for a combined value of $161,571. In June 2007, the Company issued 605,000 shares of Common Stock to consultants for services for a combined value of $ $302,600 and 1,000,000 shares of Common Stock with a value of $520,000 as a deposit on the purchase of computer and other equipment. In September 2007, the Company issued 1,670,000 shares of Common Stock to consultants for services for a combined value of $651,300. In December 2007, the Company issued 60,000 shares of Common Stock to consultants for services for a combined value of $10,800. The valuation of shares was based upon market value of the shares at the time of the consummation of the transaction.

The 2,300,000 shares of Common Stock issued on April 16, 2007 and June 5, 2007, is a security deposit on the purchase of equipment with the vendor while the vendor sources and assembles the computer systems. When the Company has made full payment for all installed equipment, the security deposit will be returned to the Company. The $1,313,000 value of the shares is recorded as contra equity on the balance sheet.



21

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8. INCOME TAXES

For federal income tax purposes, the Company has available net operating loss carryforwards of approximately $10,876,000 and $6,786,000 for the years ended December 31, 2007 and 2006, respectively. The federal net operating loss carryforwards expire through 2027 and are available to offset future income tax liabilities. The state net operating loss carryforwards expire through 2022 and are available to offset future income tax liabilities.

Deferred tax assets are comprised of the following at December 31, 2007:

|                                 |   | December 31, |  
|-------------------------------- | - | ------------ | -
|                                 |   | 2007         |  
|                                
|Allowance for doubtful accounts  | $ | 40,900       |  
|Unpaid liabilities               |   | 17,875       |  
|Net operating loss carryforwards |   | 4,099,400    |  
|                                 |   | 4,158,175    |  
|Valuation Allowance              |   | (4,158,175   | )
|Net deferred taxes               | $ | -            |  



|                                                                                             |   | December 31, |  
|-------------------------------------------------------------------------------------------- | - | ------------ | -
|                                                                                             |   | 2007         |  
|                                                                                            
|Income tax expense (benefit) for the years ended December 31, 2007 is summarized as follows: |  
|                                                                                            
|                                                                                             |   | 2007         |  
|Current:                                                                                     |   |              |  
|Federal                                                                                      | $ | (1,287,200   | )
|State                                                                                        |   | (270,000     | )
|Deferred taxes                                                                               |   | 8,100        |  
|Valuation allowance                                                                          |   | 1,549,100    |  
|Income tax expense (benefit)                                                                 | $ | -            |  



The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Consolidated Statements of Operations:

|                                               | December 31, |    | December 31, |   
|---------------------------------------------- | ------------ | -- | ------------ | --
|                                               | 2007         |    | 2006         |   
|                                              
|Tax expense (credit) at statutory rate-federal | (34.0        | %) | (34.0        | %)
|State tax expense (credit) net of federal tax  | (4.4         | )  | (4.4         | ) 
|Graduated federal rate                         | 0.3          |    | 1.5          |   
|Valuation allowance                            | 38.1         |    | 36.9         |   
|Tax expense at actual rate                     | -            |    | -            |   



22

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9. EMPLOYEE BENEFIT PLANS

The 2003 Employee Benefit Plan (the Plan) adopted by the Board of Directors on April 30, 2003, provides for the granting of either a stock award or non-qualified stock options to purchase shares of the Companys Common Stock to employees, officers, directors and consultants of the Company. Information relating to the Plan during 2007 and 2006 is as follows:

SharesBalance of shares available to issue or grant at December 31,2005
     144,854Shares reserved and registered under Form S8 during 2006
     3,400,000Shares issued during 2006
     -Options granted during 2006
     -Balance of shares available to issue or grant at December 31,2006
     3,544,854Shares reserved and registered under Form S8 during 2007
     -Shares issued during 2007
     (3,256,286
     )Options granted during 2007
     -Balance of shares available to issue or grant at December 31,2007
     288,568


On February 15, 2001, the Company adopted a 2001 Stock Option Plan (the Option Plan) for employees, officers, directors and consultants. Information relating to the Plan is as follows:

WeightedShares
     
     
     Average
     
     Aggregatesubject to
     
     
     Exercise
     
     Intrinsic valueoption
     
     
     priceOptions outstanding December 31, 2005
     700
     
     $
     225.00
     $
     -Options exercised
     -
     
     $
     -Options cancelled
     -
     
     $
     -Options issued
     -
     
     $
     -Balance, December 31, 2006
     700
     
     $
     225.00
     $
     -Options exercised
     -
     
     $
     -Options cancelled
     (700
     )
     $
     -Options issued
     -
     
     $
     -$
     
     $Balance, December 31, 2007
     -
     
     
     -
     
     -


10. SEGMENTS

The Company has two reportable segments consisting of (1) Equipment Sales and (2) Telecommunications long distance and prepaid calling card minutes. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on sales, gross profit margins and operating profit before income taxes. Unallocated assets and loss from continuing operations are primarily related to software development in the ENTEC subsidiary.

The following is information for the Companys reportable segments for the years ended December 31, 2007 and 2006:





23

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Equipment
     
     Telecommunications(in thousands)
     
     Segment
     
     Segment
     
     Unallocated
     
     TotalRevenue2007
     $
     0
     $
     21,505
     
     $
     0
     
     $
     21,5052006
     
     347
     
     7,486
     
     
     0
     
     
     7,833Gross margin2007
     
     0
     
     1,087
     
     
     0
     
     
     1,0872006
     
     172
     
     530
     
     
     0
     
     
     702Depreciation and amortization2007
     
     0
     
     71
     
     
     0
     
     
     712006
     
     0
     
     82
     
     
     0
     
     
     82Profit (Loss) from continuingoperations before interest &tax2007
     
     0
     
     (991
     )
     
     (3,189
     )
     
     (4,180
     )2006
     
     169
     
     (689
     )
     
     (248
     )
     
     (768
     )Interest expense2007
     
     0
     
     0
     
     
     0
     
     
     252006
     
     16
     
     0
     
     
     250
     
     
     16Identifiable assets2007
     
     0
     
     1,013
     
     
     224
     
     
     1,2372006
     
     0
     
     455
     
     
     133
     
     
     588Capital expenditures2007
     
     0
     
     254
     
     
     0
     
     
     2542006
     
     0
     
     2
     
     
     0
     
     
     2


12. COMMITMENTS

In June 2006, the Company entered into a three year lease for office and warehouse space in Portland, Oregon. In May 2007, the Company entered into a two year lease for office space in Beaverton, Oregon and negotiated a termination of the Portland lease for a one-time fee of $25,000 which in included in the total rent expense of $59,291 for fiscal 2007. Lease commitments are as follows:

|2008 | 21,648
|---- | ------
|2009 | 9,020 

13. GOING CONCERN

The Company's consolidated financial statements are prepared using the 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 has accumulated deficit of $11,144,484 including net losses of $4,176,773 and $783,527 for the years ended December 31, 2007 and 2006, respectively. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying



24

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balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Companys ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken various steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue on in the subsequent year. Management devoted considerable effort during the year ended December 31, 2007, towards management of liabilities and improving the operations. The management believes that these actions will allow the Company to continue its operations through the next fiscal year.





25

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

None

PART III

ITEM 9A. INTERNAL CONTROL OVER FINANCIAL REPORTING

We maintain disclosure controls and procedures designed to ensure that material information related to our company is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Evaluation of Disclosure Controls and ProceduresNETTEL HOLDINGS INC's management is responsible for establishing and maintaining effective internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act). Even an effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error and circumvention or overriding of controls and therefore can provide only reasonable assurance with respect to reliable financial reporting. Furthermore, the effectiveness of an internal control system in future periods can change with conditions.

NETTEL HOLDINGS INC's management, under the direction of the Chief Executive Office and Chief Financial Officer, assessed the effectiveness of NETTEL HOLDINGS INC's internal controls over financial reporting as of September 2, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, inInternal ControlIntegrated Framework.Based on this assessment, management believes that sufficient evidence exists, as of September 2, 2008, to support a conclusion that NETTEL HOLDINGS, INC's internal controls over financial reporting are effective.

Changes in Internal controls over Financial ReportingThere were no changes in NETTEL HOLDINGS INC's internal controls over financial reporting that occurred during the fiscal year ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, NETTEL HOLDINGS INC's internal control over financial reporting.



ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following sets forth certain information with respect to directors and executive officers of the Company.

|Name           | Age | Position with the Company                      
|-------------- | --- | -----------------------------------------------
|Michael Nguyen | 37  | President, Chief Financial Officer and Director
|Tyroe Chhim    | 40  | Director                                       
|Larry Olson    | 57  | Director                                       

Directors serve for a term of one year or until their successors are elected and qualified. Executive officers are appointed by and serve at the will of the Board of Directors. Each of the officers serves at the discretion of the Board of Directors.

At a board meeting on May 1, 2003 duly held and called, Tam Bui and Tina Phan were elected to the board of directors by majority vote of the board of directors. Following the election of Mr. Bui and Ms. Phan to the board of directors of the Company, Thomas J. Craft, Jr. and Richard Rubin submitted their resignation as directors and officers of the Company. At a board meeting on May 23, 2003 duly held and called, Michael Nguyen was elected to the board of directors and In June 2003, Ms. Phan submitted her resignation as an officer and a director of the



26

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Company. In August 2004, Mr. Bui submitted his resignation as a director of the Company. The current board of directors of the Company consists of Michael Nguyen, Chairman.

Michael Nguyen, President and Chairman

Mr. Nguyen holds a Bachelor of science degree from Portland State University; he also served six years in the Oregon Army National Guard. Mr. Nguyen has over 10 years experience in the telecommunications industry. He founded NetTel Globalcommunication Inc. in 1999 and has served as its chief executive officer since the Company was founded.

Tyroe Chhim, Director

Mr. Chhim holds a Bachelor of Science degree from Portland State University. Mr. Chhim has over 12 years experience in the finance industry. Since 1993, he has been in Corporate Cash/Treasury Management. From 2000 to 2006, he owned the House of Asia restaurant chain. Since 2007 to the present, he has been the President of Stoneleigh Investment.

Larry Olson, Director

Mr. Olson has a Business Degree and Engineering Degree. In 1973, Mr. Olson started Olson Precast of Arizona, a multi million dollar company employing 130 people. This venture spearheaded Olson Precast of Las Vegas, now owned by Mr. Olson's son. Mr. Olson also created and developed Olson Precast, Nevada which is also a multimillion dollar company with over 100 employees. From 2002 to 2005, Mr. Olson was part owner and director of the Phoenix National Bank until it was sold to Northern Trust. Presently, he is serving as Director of Azco Mining, a public company, He became a director in 1999 and has held position of Chairman since 2000. Mr. Olson was also President and CEO until October 2003. As of 2007, he has also served as Director of Providential Holdings, a public company, and Education 20/20 a private company from 2004 to 2006. Since 2005, Mr. Olson is also Chairman and founding Director of LoveWorks International, an African Non-Governmental Organization which oversees the operation of New Hope Orphanage and school. New Hope provides a home and education to 800 children who have lost a parent to AIDS.



ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth compensation earned by the Companys executive officer:

AllNon-Equity
     otherStock
     Option
     Incentive Plan
     CompenName and Principal
     
     Salary Bonus
     Awards
     Awards
     Compensation
     sation
     TotalPosition
     Year
     ($)
     ($)
     ($)
     ($)
     ($)
     ($)
     ($)Michael Nguyen,President and Chief
     2007
     0
     0
     0
     0
     0
     0
     0Executive Officer
     2006
     0
     0
     0
     0
     0
     0
     02005
     0
     0
     0
     0
     0
     0
     0




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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of March 31, 2007, with respect to the number of shares beneficially owned by individuals, directors and officers and by all directors and officers of the Company as a group, and by persons known to own more than 5% of the Company's shares.

|Name and Address of Beneficial  | Number of       | Percentage |  
|------------------------------- | --------------- | ---------- | -
|Owner                           | Shares Held (1) |            |  
|Michael Nguyen, President and   |                 |            |  
|Chairman                        | 10,596,290      | 19.7       | %
|4701 NE Portland Hwy, Portland, |                 |            |  
|Oregon 97218                    |                 |            |  

(1) Based upon shares 53,679,833 issued and outstanding as of March 31, 2008.

(B) Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's officers and directors, and persons who own more that ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and with any exchange on which the Company's securities are traded. Officers, directors and persons owning more than ten percent of such securities are required by Commission regulation to file with the Commission and furnish the Company with copies of all reports required under Section 16(a) of the Exchange Act. Based solely upon its review of the copies of such reports received from officers, directors and greater than ten percent shareholders, the Company reports the following failures to file reports under Section 16(a) of the Exchange Act:



|                           |  | Beneficial Owner of |   |                                
|-------------------------- |  | ------------------- | - | -------------------------------
|Name                       |  | class of Securities |   | Forms filed under Section 16(a)
|                           |  | (%)(1)              |   |                                
|Michael Nguyen, President  |  |                     |   |                                
|610 SW Broadway, Suite 405 |  | 19.7                | % | Form 5                         
|Portland, Oregon 97205     |  |                     |   |                                
|Tran Le                    |  |                     |   |                                
|536 Widgeon Lane           |  | 5.6                 | % | SC -13G                        
|Bloomingdale, IL 30108     |  |                     |   |                                

(1) Based upon shares 53,679,833 issued and outstanding as of March 31, 2008.





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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit No. Description

|3(i)  |  | Articles of Incorporation (filed as an exhibit to Form 10-SB/12g on June 9, 1999)          
|----- |  | -------------------------------------------------------------------------------------------
|3(i)  |  | Articles of Incorporation, as amended, previously filed                                    
|3(ii) |  | By-laws (filed as an exhibit to Form 10-SB/12g on June 9, 1999)                            
|31.1  |  | Rule 13a-14a/15d-14(a) Certification of Chief Executive Officer and Chief Financial Officer
|32.1  |  | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer          

(b) Reports on Form 8-KNone

ITEM 14. CONTROL AND PROCEDURES

As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of our disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

SIGNATURES

In accordance with Section 12 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.

Nettel Holdings, Inc. Date: September 2, 2008



/s/Michael Nguyen, PresidentMichael Nguyen, Chief Executive Officer and Chairman



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