UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549










x Annual report
under section 13 or 15(d) of the Securities Exchange Act of 1934


For the
fiscal year ended December 31,
2007





o Transition report
under section 13 or 15(d) of the Securities Exchange Act  of
1934


For the
transition period
from        to





Commission
file number 000-304799





eTELCHARGE.COM


(Name of
small business issuer in its charter)





NEVADA
            75-2847699(State
      or other jurisdiction
            (I.R.S.
      Employer Identification No.)of
      incorporation or organization)




1636
      N. HAMPTON, SUITE 270, DESOTO, TEXAS
            75115(Address
      of principal executive offices)
            (Zip
      Code)Issuer’s
      telephone number       (972)
      298-3800





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


NONE




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





Common
Stock, $0.003 Par Value


(Title of
each class)





Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.o





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yesx
 ; Noo





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





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yeso Nox





Revenues
for the fiscal year ended December 31, 2007 were $44,170.





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates as of March 20, 2008 was $16,630,144 (based on the closing price
of $.058 per share on March 20, 2008 as reported on the over-the counter
Bulletin Board).





As of
March 20, 2008, there were 286,726,624 outstanding shares.





Transitional
Small Business Disclosure Format (Check one): Yeso Nox


-1-


eTelcharge.com


Annual
Report on Form 10-KSB


For
the Fiscal Year Ended December 31, 2007




TABLE
OF CONTENTS





PagePART
      IItem
      1                                Description
      of Business
            3Item
      2                                Description
      of Property
            8Item
      3                                Legal
      Proceedings
            8Item
      4                                Submission
      of Matters to a Vote of Security Holders
            8PART IIItem
      5                                Market
      for Common Equity, Related Stockholder Matters and Small Business
      IssuerPurchases
      of Equity Securities
            9Item
      6                                Management’s
      Discussion and Analysis or Plan of Operation
            12Item
      7                                Financial
      Statements
            F1Item
      8                                Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
            15Item
      8A(T)                      
      Controls and Procedures
            15Item
      8B                             Other
      Information
            16PART IIIItem
      9                                Directors,
      Executive Officers, Promoters and Control Persons and
      CorporateGovernance;
      Compliance with Section 16(a) of the Exchange Act
            17Item
      10                             
      Executive Compensation
            20Item
      11                              Security
      Ownership of Certain Beneficial Owners and Management and
      RelatedStockholder
      MattersItem
      12                              Certain
      Relationships and Related Transactions, and Director
      Independence
            23Item
      13                              Exhibits
            25Item
      14                              Principal
      Accountant Fees and Services
            26Signatures
            27





-2-





PART
I.




Item 1. Description of
Business.





HISTORY





eTELCHARGE.com
(“eTelcharge”), was incorporated under the laws of the State of Nevada on June
7, 1999. Its offices are located at 1636 N. Hampton Road, Suite 270 DeSoto,
Texas 75115. eTelcharge has an Internet web site, www.etelcharge.com and its
stock symbol is: ETLC.





BUSINESS
DEVELOPMENT





eTelcharge
was organized in June 1999 to provide customers of online merchants the ability
to charge their online purchases to their local telephone bill. In May of 2003,
eTelcharge expanded its service by offering credit card processing for merchants
and becoming a merchant service company.





eTelcharge
currently has two core business units in its portfolio:





eTelcharge,
the New Online Way to PayTM





·
            Online-to-phone
      bill purchasing


·
            Online
      digital stored value card





eTelcharge
Traditional Merchant Services


·
              Retail
      Transaction Services
 ·
              Credit
      cards, Loyalty cards, EBT, Check authorization and
      guarantee ·
                Government-to-People
      Transaction Processing Service ·
                  Government-grade
      merchant services


eTelcharge
entered into an agreement with AT&T in February of 2006 for provision of
billing and collection services which was amended in April 2006, and which
allows it to process, subject to AT&T’s prior approval, non-credit card
transactions for AT&T customers and have those transactions applied to their
AT&T land-line telephone bills.  This agreement authorizes billing
in the SW region of the United States and covers all other regions of the US in
roll out phases from the SE region to the West Coast territory within AT&T
markets.  Under the April 2006 amendment, eTelcharge and AT&T
entered into a trial of billing information and  entertainment type
charges on the AT&T Telco End User monthly bill.





eTelcharge
concurrently developed a Traditional Merchant Services business unit, leveraging
its expertise in transaction processing to provide persistently high value to
its merchant services customers.  Within this business unit,
Etelcharge has penetrated the growing market segment of Government-to-People
payment services.


-3-





In June
2007, Rob Howe joined eTelcharge as its President and CEO, and in August 2007
Mr. Howe became Chairman of the Board.  Under Mr. Howe's guidance,
eTelcharge evaluated its ongoing development efforts, and its old technology and
current development efforts, and replaced them with an entirely new,
internally-developed online payment technology based on Web 2.0
standards.  eTelcharge fully discontinued all old versions of its
proprietary Online billing software solution, and in September, 2007, eTelcharge
completed work on and launched its new technology platform.





We rely
on a combination of patent, trademark, copyright and trade secret law, as well
as confidentiality agreements and other contractual relationships with our
employees, affiliates, distributors and others to protect our intellectual
property rights.





STRATEGY





eTelcharge’s
strategy is to provide billing through home phone bill to online merchants,
build its membership base and provide its technology to other online billing
users, such as cable companies, utilities and in other
geographies.  By accomplishing the three prongs of the strategy,
eTelcharge will monetize virtually every touch with its customers.





MARKETING





eTelcharge
seeks to market its services to online merchants for its inclusion among their
payment options.  Additionally eTelcharge will offer digital online
stored value cards—specific-use stored value cards like gift cards, and
general-use stored value cards such as VISA, MasterCard, American Express, which
can be loaded through the eTelcharge membership.  By providing this
flexibility in purchase options, eTelcharge expects to appeal to a variety of
online purchasers.  Additionally, because of the very nature of the
eTelcharge membership, eTelcharge expects to attract online purchasers who are
concerned about identity theft, as the eTelcharge membership is inherently safer
from the identity theft perspective.




COMPETITION





There are
few competitors in the market today who provide online consumers with the
options for payment provided by eTelcharge as its core
business.  eTelcharge believes its “first mover advantage” is,
however, subject to being eroded, and eTelcharge expects to need to continue to
be aggressive in its marketing efforts.  The two main competitors to
eTelcharge are BSG, Inc. of San Antonio, TX and PaymentOne, Inc. of San Jose,
CA.  There can be no assurance that competitors will not develop
software in the future that will allow them to include the same or similar
products and services for online purchasing.





GOVERNMENT
REGULATION





eTelcharge
is not directly regulated by any governmental agencies nor is it subject to
statutes, rules or regulations, which regulate the manner in which it does
business. However, eTelcharge’s online merchants are subject to numerous
governmental regulations required of merchants in general such as truth in
advertising requirements, product safety and the like. eTelcharge does not
believe that it would be held liable for violations by its merchants of any such
government regulations or with respect to disputes between its merchants and
online customers. Nevertheless, it may be named in such proceedings; in which
case, it could be required to expend substantial fees in defending itself and
could be liable for substantial money judgments.


-4-





EMPLOYEES





As of
March 21, 2008 eTelcharge has 4 full-time employees and 2 part-time
employees.





Risk
Factors





An
investment in shares of our common stock involves various
risks.  Before deciding to invest in our common stock, you should
carefully consider the risks described below in conjunction with the other
information in this Form 10-KSB, including the items included as
exhibits.  Our business, financial condition and results of operations
could be harmed by any of the following risks or by other risks that have not
been identified or that we may believe are immaterial or
unlikely.  The value or market price of our common stock could decline
due to any of these risks, and you may lose all or part of your
investment.  The risks discussed below also include forward-looking
statements, and our actual results may differ substantially from those discussed
in these forward-looking statements.





Risks
related to our operations





Our
auditors have expressed doubt about, and their opinion contains an explanatory
paragraph regarding, our ability to continue as a going concern.  If
we do not generate substantial revenue from our operations and are also unable
to obtain capital from other sources, we will significantly curtail our
operations or halt them entirely.





Historically,
we have been dependent on financings to fund our development and working capital
needs.  As of December 31, 2007, we had cash and cash equivalents
equal to $230,227.  As described below under “Recent Sales of
Unregistered Securities” in Item 5, Golden Gate Investors (“GGI”) has purchased
a convertible debenture for $200,000 cash and a $1.3 million note, and, is
committed, subject to certain contingencies, to purchase up to three additional
identical debentures.  We believe that our existing capital resources
will be sufficient to provide needed capital for approximately three
months.  If GGI provides additional amounts under its investment,
those cash reserves will allow us to provide for our capital needs for an
additional period of time, depending upon how much capital is
provided.  We do not expect to generate significant revenues from
customers in the immediate future.  Accordingly, if we do not raise
additional funds from other sources, we would have to continue to severely
diminish our operations or halt them entirely.  Additional financing
may not be available to us on acceptable terms, or at all.





We
have experienced relatively large losses during our development and, without
significant increases in the market penetration of our services and improvements
to our operating margins, we will not achieve profitability.





Since
inception, we have incurred significant net losses as set forth in the financial
information included elsewhere in this report.  We anticipate that we
will continue to incur significant losses for at least the
short-term.  We will not achieve profitable operations until we
successfully attract and retain a significant number of customers for our
services and generate revenues from these sources that are sufficient to offset
the substantial up-front expenditures and operating costs associated with
developing and commercializing our services.  We may never be able to
accomplish these objectives. -5-


It
will be difficult for you to evaluate us based on our past performance because
we are a relatively new company with a limited operating history.





eTelcharge
is currently a development stage company and, accordingly, has only limited
financial results on which you can evaluate eTelcharge and
operations.  We are subject to, and have not been successful in
addressing, the risks typically encountered by new enterprises and companies
operating in the merchant services industry, including those risks relating
to:





·
            the
      failure to develop brand name recognition and
  reputation;





·
            the
      failure to achieve market acceptance of our
  services;





·
            an
      inability to grow and adapt our business and technology to evolving
      consumer demand.





Because
of our small size, our management may be unable to successfully manage our
business.





In order
to successfully execute our business plan, our management must succeed in all of
the following critical areas:





·
            Developing
      and maintaining our current products and
  services;





·
            Marketing
      and selling our products and
services;





·
            Obtaining
      additional capital for development, maintenance, and marketing of our
      products and services; and





·
            Managing
      our business as it grows.





We
currently have only six employees, four of whom are full time and two are part
time.  The greatest burden of succeeding in the above areas,
therefore, falls on our three executive officers.  Focusing on any one
of these areas may divert their attention from our other areas of concern and
could affect our ability to manage other aspects of our business.  We
cannot assure you that our management will be able to succeed in all of these
areas or, even if we do so succeed, that our business will be successful as a
result.  Our small size and limited operating history may make it
difficult for us to attract and retain employees, which could further divert
management’s attention from the operation of our business.





We
Rely Upon Key Personnel.





Our
success will depend, to a great extent, upon the experience, abilities and
continued services of our executive officers.  If we lose the services
of our executive officers, our business could be harmed.  Our success
also will depend upon our ability to attract and retain other highly qualified
managerial, technology, and sales personnel and their ability to develop and
maintain strategic relationships.  We may not be able to continue to
attract and retain qualified personnel.





Our
inability to maintain our current, and establish new, strategic relationships
could impair our revenue growth.





In
accordance with our business model, we plan and have entered into strategic
relationships in order to facilitate or accelerate our penetration into the
merchant service market.  The termination of our relationship with
AT&T or our failure to develop additional strategic relationships in the
future may limit our ability to develop markets or to sell our services, and
thereby impair our revenue growth. -6-


Our
ability to compete depends on our continuing right to use, and our ability to
protect, our intellectual property rights.





Our
success and ability to compete depend in large part on using our intellectual
property and proprietary rights to protect the technology we use and the
products we make.  We rely on a combination of patent, trademark,
copyright and trade secret law, as well as confidentiality agreements and other
contractual relationships with our employees, customers, affiliates,
distributors and others to protect our intellectual property rights.





The
measures we have taken to protect our technology and products may not be
sufficient to prevent their misappropriation by third parties or independent
development by others of similar technologies or products.  In order
to protect our technology and products and enforce our proprietary rights, we
may need to initiate litigation against third parties.  These legal
and administrative proceedings could be expensive and occupy significant
management time and resources.





Our
products may infringe the intellectual property rights of others.





It is not
possible to know with certainty whether the development or sale of our products
and services or other intellectual property includes rights owned by third
parties.  There may, for example, be patent applications pending at
the moment, which if granted, may cover products that we have just developed or
are developing.  In certain other jurisdictions there is no
publication of the subject matter of patents until the patents are
issued.  Third parties may from time to time claim that our current or
future products infringe their patent or other intellectual property
rights.  Any intellectual property claim could involve time-consuming
and disruptive litigation and, if determined adversely to us, could prevent us
from selling our products and services, and subject us to substantial monetary
damages or require us to seek licenses.





Our
shares of common stock are considered a “penny stock”, and any investment in our
shares will be considered a high-risk investment and be subject to restrictions
on marketability.





Since the
price of our shares is below $5.00, our common shares are deemed to be “penny
stock” for the purposes of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).  Brokers effecting transactions in a penny stock are
subject to additional customer disclosure and record keeping
obligations.  The additional obligations include disclosure of the
risks associated with low price stocks, stock quote information and broker
compensation.  In addition, brokers making transactions in penny
stocks are subject to additional sales practice requirements under the Exchange
Act.  These additional requirements include making inquiries into the
suitability of penny stock investments for each customer or obtaining the prior
written agreement of the customer for the penny stock purchase.  These
rules may restrict the ability of brokers or dealers to sell our common stock
and may affect the ability of our investors to sell their
shares.  Some brokers will not effect transactions in our
securities.  In addition, because our common stock is traded on the
OTC Bulletin Board, investors may find it difficult to obtain accurate
quotations of the stock and may experience a lack of buyers to purchase such
stock or a lack of market makers to support the stock price.





Our stock price is likely to be
volatile.





There is
generally significant volatility in the market prices and limited liquidity of
securities of early stage companies.  Contributing to this volatility
are various events that can affect our stock price in a positive or negative
manner.  These events include, but are not limited to: market
acceptance and sales growth of our products; litigation involving eTelcharge or
our industry; developments or disputes concerning our proprietary rights;
departure of key personnel; future sales of our securities; fluctuations in our
financial results or those of companies that are perceived to be similar to us;
investors’ general perception of us; and general economic, industry and market
conditions. If any of these events occur, it could cause our stock price to
fall. -7-


Our
stockholders could experience dilution of their ownership interest if we issue
more shares that are purchased by third parties.





Under
Nevada law, stockholders in public companies such as the registrant do not have
preemptive rights.  This means that our stockholders do not have the
legal right to purchase shares in a new issue before they are offered to third
parties.  In addition, our board of directors may approve the issuance
of shares in many instances without stockholder approval.  As a
result, our stockholders could experience dilution of their ownership interest
if we decide to raise additional funds by issuing more shares and these shares
are purchased by third parties.





We
may be unable to maintain an effective system of internal controls and
accurately report our financial results or prevent fraud, which may cause our
current and potential stockholders to lose confidence in our financial reporting
and adversely impact our business and our ability to raise additional funds in
the future.




Effective
internal controls are necessary for us to provide reliable financial statements
and effectively prevent fraud.   As disclosed elsewhere in the
annual report, management has assessed the effectiveness of our internal control
over financial reporting as of December 31, 2007, and has determined that it is
not effective as the result of a lack of segregation of duties and lack of
formal financial reporting procedures.  If we cannot provide reliable
financial statements or prevent fraud, our operating results and our reputation
could be harmed as a result, causing stockholders and/or prospective investors
to lose confidence in management and making it more difficult for us to raise
additional capital in the future.





We
failed to make certain Exchange Act filings.





We
previously determined and announced that certain “Information Statements”
required to be filed with the Securities and Exchange Commission (“SEC”) under
Regulation 14C of the Exchange Act, in connection with certain actions taken by
written consent of our stockholders in 2000, 2005 and 2007, were not so
filed.  As a result of this non-compliance, we may be subject to civil
and administrative proceedings brought by the SEC, which may include the
possible imposition of monetary penalties.





Item
2. Description of Property.





eTelcharge
currently leases 3,000 square feet of office space on a three-year lease
expiring January 31, 2010 at 1636 N. Hampton Road, Suite 270, DeSoto, Texas
75115.  The base rent is $4,098 per month.  We believe our
facilities are adequate and suitable for our current level of operations. Our
management believes that the leased property is adequately covered by
insurance.





Item
3. Legal Proceedings





None.




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





No matter
was submitted during the fourth quarter of the fiscal year covered by this Form
10-KSB to a vote of eTelcharge’s security holders.


-8-


PART
II.




Item
5. Market for Common Equity, Related Stockholder Matters and Small Business
Issuer Purchases of Equity Securities.




Market
Information





Our
common stock is currently quoted on the OTC Bulletin Board (“OTCBB”) under the
symbol “ETLC”.  The OTCBB is a regulated quotation service that
displays real-time quotes, last-sale prices and volume information in
over-the-counter equity securities.  OTCBB securities are traded by a
community of market makers that enter quotes and trade reports.  This
market is extremely limited and any prices quoted may not be a reliable
indication of the value of our common stock.





The
following table sets forth the range of high and low bid quotations for our
common stock for each of the periods indicated as reported by the
OTCBB.  These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual
transactions.




Fiscal
      Year ended December 31, 2007QUARTER
      ENDED
            
            
            LOW
            
            HIGHOctober
      1, 2007 – December 31, 2007
            
            
            .05
            
            .11July
      1, 2007 – September 30, 2007
            
            
            .03
            
            .12April
      1, 2007 – June 30, 2007
            
            
            .01
            
            .04January
      1, 2007 – March 31, 2007
            
            
            .02
            
            .03Fiscal
      Year ended December 31, 2006QUARTER
      ENDED
            
            
            LOW
            
            HIGHOctober
      1, 2006- December 31, 2006
            
            
            .02
            
            .07July
      1, 2006 - September 30, 2006
            
            
            .05
            
            .17April
      1, 2006- June 30, 2006
            
            
            .04
            
            .11January
      1, 2006 - March 31, 2006
            
            
            .05
            
            .18




As of
March 21, 2008, we had approximately 628 holders of record of voting common
stock.




We have
not paid dividends on our common stock and do not anticipate the payment of cash
dividends in the foreseeable future. We anticipate all earnings, if any, over
the next 12 to 24 months will be retained for future investments in business.
Any future determination to pay cash dividends will be at the discretion of the
Board of Directors and will be dependent upon our results of operations,
financial conditions, contractual restrictions, and other factors deemed
relevant by the Board of Directors. We are under no collateral restrictions in
declaring or paying dividends to our common stockholders. There are no material
restrictions limiting, or that are likely to limit, eTelcharge’s ability to pay
dividends on our securities, except for any applicable limitations under Nevada
corporate law. -9-




Recent
Sales of Unregistered Securities





As
described in the chart below, the Company issued to six “accredited investors”
shares of its common stock (“Common Stock”), par value $.003 per share, for
cash.  These shares were issued without registration in reliance upon
the exemption afforded by the provisions of Section 4(2) of the Securities Act
of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder,
based on the fact that the issued shares were not sold or offered pursuant to
general solicitation, and in reliance upon the representations of such investors
as to such investor’s status as an accredited investor and investment
experience, that such investor had access to information about the Company, that
such investor was purchasing such securities for its own account and not with a
view to resale or distribution or any part thereof in violation of the
Securities Act and an acknowledgement by such investor that resale of such
securities may not be made unless registered under the Securities Act or another
exemption from registration is available.  In addition, such shares
bear a legend indicating such restrictions on transferability.





Date
              Number
      of Shares Issued
              Consideration
      ($)February
      13, 2007
              1,366,400
              6,782February
      21, 2007
              4,000,000
              20,000April
      24, 2007
              8,000,000
              40,000May
      15, 2007
              8,000,000
              40,000August
      17, 2007
              1,500,000
              30,000August
      23, 2007
              2,000,000
              40,000August
      27, 2007
              688,572
              13,763August
      28, 2007
              1,500,000
              20,000August
      31, 2007
              4,000,000
              20,000September
      5, 2007
              4,070,338
              81,406.75September
      17, 2007
              5,880,532
              117,611October
      2, 2007
              3,721,011
              74,404October
      15, 2007
              3,750,000
              75,000October
      31, 2007
              2,500,000
              100,000November
      1, 2007
              151,531
              3,031November
      13, 2007
              2,000,000
              10,000November
      27, 2007
              4,285,482
              141,733





As
described in the chart below, eTelcharge issued to eleven consultants shares of
Common Stock in consideration of a combination of services provided and, with
respect to one consultant, cash and services.  These shares were
issued without registration in reliance upon the exemption afforded by the
provisions of Section 4(2) of the Securities Act, based on the fact that the
issued shares were not sold or offered pursuant to general solicitation, and
that the consultants had sufficient sophistication and access to information
about eTelcharge.  In addition, such shares bear a legend indicating
such restrictions on transferability.




Date
              Number
      of Shares Issued
              Value
      of Consideration ($)March
      20, 2007
              12,110,000
              193,760August
      9, 2007
              12,000,000
              240,000August
      31, 2007
              2,000,000
              10,000September
      12, 2007
              985,555
              19,711October
      22, 2007
              2,448,122
              144,209November
      1, 2007
              6,700,000
              556,100January
      8, 2008
              3,315,468
              200,000March
      11, 2008
              1,323,554
              77,990





-10-





On March
20, 2007, eTelcharge issued 50,000,000 shares of Common Stock to American Home
Market (“AHM”), in a negotiated retirement of principal and accrued interest on
an unsecured promissory note (the “AHM Note”) issued to AHM on March 31, 2006 in
the amount of $250,000.  During the year ended December 31, 2006, AHM
had advanced $150,313 under the AHM Note.  The AHM Note provided for
an interest rate of 8% per annum, with interest-only payments commencing on
February 1, 2007.  The outstanding balance payable at the time of
settlement of the AHM Note was $157,246, which included $6,933 of accrued
interest.  The principal balance was due on December 1, 2007, but AHM
demanded earlier payment.





These
shares were issued to AHM without registration in reliance upon the exemption
afforded by the provisions of Section 4(2) of the Securities Act, and Rule 506
promulgated thereunder, based on the fact that the issued shares were not sold
or offered pursuant to general solicitation, and in reliance upon the
representation of AHM as to AHM’s status as an accredited
investor.  In addition, the Company advised AHM that resale of such
stock would be restricted, and such shares bear a legend indicating such
restrictions on transferability.





On
December 28, 2007, eTelcharge entered into a securities purchase agreement (the
“Purchase Agreement”), with Golden Gate Investors, Inc.  Under the
purchase agreement, eTelcharge issued to GGI a debenture, convertible into
eTelcharge’s common stock, in the amount of $1.5 million (the
“Debenture”).  GGI paid for the debenture by delivering a cash payment
of $200,000 and a note for $1.3 million from GGI to eTelcharge.  At
any time, GGI may convert a portion of the Debenture equal to the amount of cash
paid to eTelcharge on the initial issuance of the Debenture and pursuant to
payments made under the note from GGI, into common stock at a conversion price
equal the lesser of $0.50 per share or the three lowest Volume Weighted Average
Prices (“VWAP”) of eTelcharge’s common stock during the 20 trading days
preceding the election to convert.  The Debenture further provides for
eTelcharge to have the right, but not the obligation, to choose to prepay any
portion of the Debenture that the holder has elected to convert, for an amount
equal to 120% of such amount, when the VWAP is below $0.05 per
share.  The Debenture also provides that the holder may not exercise
the conversion privilege to the extent that it would acquire “beneficial
ownership” of eTelcharge’s common stock of more than 4.99%, which may be
increased to 9.99% on not less than 61 days prior notice, or such limitation may
be removed entirely on 61 days prior notice by the holder.





Under the
Purchase Agreement, GGI is required to purchase up to three additional
debentures, each in the amount of $1.5 million, on terms analogous to the
Debenture, upon satisfaction of the requirement that the Debenture, and each
succeeding debenture which has been issued subsequent to the Debenture, has no
more than $250,000 outstanding, i.e., the requirement arises when the prior
debenture has been converted or otherwise redeemed so that no more than $250,000
is outstanding.  GGI has the right to eliminate its obligations to
purchase each of the three additional debentures by a payment of
$100,000.





The
promissory note delivered by GGI to pay for the Debenture bears interest at the
rate of 8% per annum and is payable at maturity, January 31, 2012, with interest
payable monthly.  Interest on the Principal Amount of the Debenture is
also payable monthly, at the rate of 7 3⁄4% per annum in cash, or at the option of
the holder, in shares of eTelcharge’s common stock valued at the then applicable
conversion price.  The maturity date of the Debenture is December 26,
2011.





The
Debenture provides for various events of default, such as failure to pay
principal or interest when due, if it is determined that any representations
warranties or covenants made in the Purchase Agreement or other related
documents were false or misleading, certain insolvency conditions, if
eTelcharge’s common stock is no longer traded, if eTelcharge fails to file
required reports under the securities laws, if eTelcharge defaults on any
indebtedness exceeding $100,000, or if the VWAP of the common shares is $0.01
per share or less during the term of the Debenture.  In such event,
the Debenture holder would have the right to accelerate amounts due under the
Debenture and require immediate redemption of the Principal Amount of the
Debenture, at 120% of such amount, or 110% in the case of the default relating
solely to the VWAP of the common shares being $0.01 or less.





The
Debenture is secured by a pledge of 3,000,000 shares of common stock provided by
Rodney Wagner, a stockholder of eTelcharge.  The promissory note
issued by GGI is secured by all of the assets of GGI. -11-





The
Debenture (including the right to convert into common shares), were issued
without registration in reliance upon the exemption afforded by the provisions
of Section 4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and
Rule 506 promulgated thereunder, based on the fact that the Debenture and the
shares issuable upon conversion thereof were not sold or offered pursuant to
general solicitation, and in reliance upon the representation of GGI as to its
status as an accredited investor, that it was purchasing such securities for its
own account and not with a view to resale or distribution or any part thereof in
violation of the 1933 Act and an acknowledgement by GGI that resale of such
securities may not be made unless registered under the 1933 Act or another
exemption is available.  In addition, such securities bear a legend
indicating such restrictions on transferability.





Item
6. Management's Discussion and Analysis or Plan of Operation.





Our
financial statements and related notes, which are included in this filing,
provide additional information relating to the following discussion of our
financial condition, changes in financial condition and results of operations
over the last two fiscal years.  See Item 7 of this Form
10-KSB.





Management’s
discussion and Analysis contains various “forward looking statements” within the
meaning of Section 21E of the Exchange Act, regarding future events or the
future financial performance of eTelcharge that involve risk and uncertainties.
Certain statements included in this Form 10-KSB, including, without limitation,
statements related to anticipated cash flow sources and uses, and words such as
“ anticipates”, “believes”, “plans”, “expects”, “continue”, “will”, and similar
expressions are intended to identify forward- looking statements regarding
events, conditions, and financial trends that may affect our future plans of
operations, business strategy, operation results and financial position. We
caution readers that a variety of factors could cause our actual results to
differ materially from the anticipated results or other matters expressed in
forward-looking statements.





Overview





eTelcharge
was incorporated in Nevada in June 1999 to provide customers of online merchants
the ability to charge their online purchases to their local telephone bill. In
May of 2003, eTelcharge expanded its service by offering credit card processing
for merchants and becoming a merchant service company.  eTelcharge has
worked closely with the changes in service offerings of the telco operators in
the US throughout its history.  As those offerings have changed,
eTelcharge has sought to adapt its offerings to match the requirements of the
telcos.  eTelcharge has endeavored to operate by selling its services
to consumers and merchants making a profit on the transaction processing fees
generated at the point of sale.  eTelcharge entered into an agreement
with AT&T in February of 2006 for provision of billing and collection
services which was amended in April 2006, and which allows it to process,
subject to AT&T’s prior approval, non-credit card transactions for AT&T
customers and have those transactions applied to their AT&T land-line
telephone bills.  Under the April 2006 amendment, eTelcharge and
AT&T entered into a trial of billing information
and  entertainment type charges on the AT&T Telco End User monthly
bill.  eTelcharge launched its new Version 2.0 software and procedures
to the public in September 2007, and it continues to refine and extend its
services under that Version.  eTelcharge will continue to promote
consumer awareness of its brand and offers through the issuance of press
releases to related trade publications, general interest media publications,
print media and Internet media.  Through the social networking
functionality of its memberships, eTelcharge has entered the Internet
advertising space and expects to begin receiving revenues through its entry into
this sector in 2008.  eTelcharge enters 2008 with stable technology
and a focused approach to its markets.





Results
of Operations





Revenues





We are a
development stage company and, as such, have generated nominal
revenues.  Revenues were $44,170 for the year ended December 31, 2007,
as compared to $34,633 for the year ended December 31, 2006, a 27%
increase.  This increase is due to more residual income caused by an
increase in the transactions processed by our credit card
merchants.  We have generated
$98,112 in revenue since our inception. -12-





Operating
Expenses





Operating
expenses for the year ended December 31, 2007 were $2,634,343, an increase of
$2,194,252, or 499%, as compared to $440,091 for fiscal 2006.  The
increase primarily relates to the non-cash charges associated with the issuance
of common stock and stock options for services.





Net
Loss





eTelcharge
had a net loss of $2,924,604 for the year ended December 31, 2007, an increase
of $2,484,434, or 564%, as compared to a net loss of $440,170 for
2006.  The increased loss primarily resulted from an increase in the
operating expenses as discussed above.  Since inception, we have
incurred a cumulative net loss of $15,670,364.  Our ability to operate
profitably depends on generating sales and achieving sufficient gross profit
margins.  We cannot assure you that we will achieve or maintain
profitable operations in the future.





Financial
Condition





The
following table sets forth certain relevant measures of our liquidity and
capital resources:




Year
      ended December 31, 2007
                (in
      $000, except ratios)Cash
      and cash equivalents
              230Current
      Assets
              256Current
      liabilities
              455Ratio
      of current assets to current liabilities
              .56Stockholders’
      deficit per common share
              .00





At
December 31, 2007, our cash and cash equivalents totaled $230,227, an increase
of $228,555, or 1,410%, as compared to $1,672 at December 31,
2006.  This increase resulted from increased financing activity during
fiscal 2007, including the issuance of the Debenture to GGI on December 28,
2007, as described above in Item 5, and sales of eTelcharge’s common
stock.  Total cash proceeds, net of offering costs, for financing
activities was $714,380 for the year ended December 31, 2007, an increase of
$478,921, or 203%, as compared to $235,459 for 2006.  The funds
generated from financing activities during fiscal 2007 were used mainly to fund
operating expenses.Total cash proceeds, net
of offering costs, for financing activities is $2,399,537 for the period from
inception through December 31, 2007.





Our
current liabilities decreased from $866,501 to $454,800 from December 31, 2006
to December 31, 2007, a decrease of 48%, primarily due to the settlement of the
note payable to stockholders, settlement of short term debt ($152,763 at
12/31/06) and payment of eTelcharge’s payroll tax obligations (without interest
and penalties). -13-





Historically,
we have been dependent on financings to fund our development and working capital
needs.  We do not expect to generate significant revenues from
customers in the immediate future.  We believe that our existing
capital resources will be sufficient to provide needed capital for approximately
three months.  Accordingly, if we do not raise additional funds from
other sources, we would have to continue to severely diminish our operations or
halt them entirely.  Additional financing may not be available to us
on acceptable terms, or at all.





Due to
our lack of capital and our need for working capital to continue our business
plan, our independent registered public accountants issued a going concern
qualification as part of their audit opinion of our financial statements for the
year ended December 31, 2007.





OFF-BALANCE
SHEET ARRANGEMENTS





None.




-14-




Item 7. Financial Statements.


INDEX TO
FINANCIAL STATEMENTS





PAGEREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTNG FIRM
            F-2FINANCIAL
      STATEMENTSBalance Sheet
            F-3Statements of Operations
            F-4Statement of Changes in Stockholders' Deficit
            F-5Statements of Cash Flows
            F-6Notes to Financial Statements
            F-7





F-1


REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To The
Board of Directors


eTelcharge.com,
Inc.


(A
Development Stage Company)


Desoto,
Texas





We have
audited the accompanying balance sheet of eTelcharge.com, Inc. (A Development
Stage Company) as of December 31, 2007 and the related statements of operations,
stockholders’ deficit, and cash flows for the two years then ended and for the
period from June 7, 1999 (Inception) through December 31, 2007. The financial
statements for the period June 7, 1999 (inception) through December 31, 2002,
were audited by other auditors whose reports expressed unqualified opinions on
those statements. Our opinion on the statements of operations, stockholders'
deficit, and cash flows for the period June 7, 1999 (inception) through December
31, 2007, insofar as it relates to amounts for prior periods through December
31, 2002, is based solely on the reports of other auditors. These financial
statements are the responsibility of eTelcharge.com, Inc.’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.





We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. eTelcharge is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits include consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of eTelcharge’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 eTelcharge.com, Inc., as of
December 31, 2007 and the results of its operations and its cash flows for the
periods described, in conformity with accounting principles generally accepted
in the United States of America.





The
accompanying financial statements have been prepared assuming that
eTelcharge.com, Inc. will continue as a going concern. As discussed in Note 2 to
the financial statements, eTelcharge.com, Inc. suffered recurring losses and has
a working capital deficit which raises substantial doubt about its ability to
continue as a going concern. Management’s plans regarding those matters also are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.











/s/ Malone & Bailey,
PC


www.malone-bailey.com


Houston,
Texas





March 28,
2008


F-2




eTELCHARGE.COM,
      INC.(A
      Development Stage Company)BALANCE
      SHEETFor
      the year ended December 31, 2007December
      31,2007ASSETSCurrent
      assets:Cash
            
            $
            230,227Interest
      receivable
            
            
            1,425Prepaid
      expenses and other current assets
            
            
            24,444Total
      current assets
            
            $
            256,096Fixed
      assets, net of accumulated depreciation of $4,551
            
            
            25,970Deferred
      financing costs
            
            
            28,469Deposits
            
            
            1,980Total
      assets
            
            $
            312,515LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accrued
      expenses
            
            $
            139,732Payroll
      tax obligation
            
            
            112,610Accounts
      payable
            
            
            53,598Derivative
      liability
            
            
            144,643Current
      portion of notes payable
            
            
            4,217Total
      current liabilities
            
            $
            454,800Long-term
      liabilities:7.75%
      Convertible debenture, net of discount of $144,642
            
            
            55,358Notes
      payable
            
            
            6,042Total
      liabilities
            
            $
            516,200Commitments
      and contingencies
            
            
            -Stockholders'
      deficit:Common
      stock, $.003 par value, 400,000,000 shares authorized,282,087,602
      issued and outstanding
            
            $
            846,262Additional
      paid in capital
            
            
            14,620,417Deficit
      accumulated during the development stage
            
            
            (15,670,364
            )Total
      stockholders' deficit
            
            
            (203,685
            )Total
      liabilities and stockholders' deficit
            
            $
            312,515


See
accompanying summary of accounting policies


and notes
to financial statements


F-3




eTELCHARGE.COM,
      INC.(A
      Development Stage Company)STATEMENTS
      OF OPERATIONSJune
      7, 1999Years
      ended
            
            
            (Inception)
      toDecember
      31,
            
            
            December
      31,2007
            
            
            2006
            
            
            2007Revenues
            
            $
            44,170
            
            
            $
            34,633
            
            
            $
            98,112Operating
      expenses
            
            
            2,634,343
            
            
            
            440,091
            
            
            
            15,405,455Net
      loss from operations
            
            
            (2,590,173
            )
            
            
            (405,458
            )
            
            
            (15,307,343
            )Other
      income
            
            
            1,627
            
            
            
            2,762
            
            
            
            61,827Loss
      on extinguishment of debt
            
            
            (293,620
            )
            
            
            
            
            
            
            (293,620
            )Interest
      and penalty expense
            
            
            (42,438
            )
            
            
            (37,474
            )
            
            
            (131,228
            )Net
      loss
            
            $
            (2,924,604
            )
            
            $
            (440,170
            )
            
            $
            (15,670,364
            )Basic
      and diluted net loss per share
            
            $
            (0.01
            )
            
            $
            (0.00
            )Basic
      and diluted weighted average shares outstanding
            
            
            218,487,368
            
            
            
            130,409,037


F-4


eTELCHARGE.COM,
      INC.(A
      Development Stage Company)STATEMENTS
      OF CHANGES IN STOCKHOLDERS' DEFICITPeriod
      from June 7, 1999 (Inception) through December 31,
  2007




Price
      per share
            
            
            Number
      of Common Shares Issued
            
            
            Amount
            
            
            Additional
      Paid-in Capital
            
            
            Accumulated
      Deficit
            
            
            TotalIssuance
      of founder shares
            
            $
            0.00
            
            
            
            30,851,880
            
            
            $
            92,556
            
            
            $
            (69,417
            )
            
            $
            -
            
            
            $
            23,139Deemed
      distribution related to purchaseof
      asset from affiliate in 1999
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (53,500
            )
            
            
            -
            
            
            
            (53,500
            )Issuance
      of common stock for propertyand
      equipment in 2001
            
            
            0.38
            
            
            
            12,800
            
            
            
            38
            
            
            
            4,762
            
            
            
            -
            
            
            
            4,800Issuance
      of common stock for cash:1999
            
            
            .01-.06
            
            
            
            4,160,000
            
            
            
            12,480
            
            
            
            37,520
            
            
            
            -
            
            
            
            50,0002000
            
            
            .01-.38
            
            
            
            3,798,668
            
            
            
            11,396
            
            
            
            495,074
            
            
            
            -
            
            
            
            506,4702001
            
            
            .13-.5
            
            
            
            826,476
            
            
            
            2,479
            
            
            
            259,798
            
            
            
            -
            
            
            
            262,2772002
            
            
            .13-.88
            
            
            
            630,420
            
            
            
            1,890
            
            
            
            189,835
            
            
            
            -
            
            
            
            191,725Issuance
      of common stock for services:2000
            
            
            0.38
            
            
            
            1,484,200
            
            
            
            4,453
            
            
            
            552,122
            
            
            
            -
            
            
            
            556,5752001
            
            
            .13-.38
            
            
            
            13,001,520
            
            
            
            39,005
            
            
            
            4,343,021
            
            
            
            -
            
            
            
            4,382,0262002
            
            
            .38
            
            
            
            2,124,800
            
            
            
            6,374
            
            
            
            797,926
            
            
            
            -
            
            
            
            804,300Share
      adjustment in 2002
            
            
            -
            
            
            
            275,060
            
            
            
            825
            
            
            
            (634
            )
            
            
            -
            
            
            
            191Cancellation
      of common stock in 2002
            
            
            -
            
            
            
            (120,000
            )
            
            
            (360
            )
            
            
            360
            
            
            
            -
            
            
            
            -Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (7,153,550
            )
            
            
            (7,153,550
            )Balances,
      December 31, 2002
            
            
            
            
            
            
            57,045,824
            
            
            
            171,136
            
            
            
            6,556,867
            
            
            
            (7,153,550
            )
            
            
            (425,547
            )Issuance
      of common stock for services
            
            
            0.03
            
            
            
            9,200,800
            
            
            
            27,602
            
            
            
            202,498
            
            
            
            -
            
            
            
            230,100Issuance
      of common stock for cash
            
            
            0.38
            
            
            
            273,064
            
            
            
            819
            
            
            
            101,956
            
            
            
            
            
            
            
            102,775Net
      loss
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (2,271,341
            )
            
            
            (2,271,341
            )Balances,
      December 31, 2003
            
            
            
            
            
            
            66,519,688
            
            
            
            199,557
            
            
            
            6,861,321
            
            
            
            (9,424,891
            )
            
            
            (2,364,013
            )Net
      loss
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (772,712
            )
            
            
            (772,712
            )Balances,
      December 31, 2004
            
            
            
            
            
            
            66,519,688
            
            
            $
            199,557
            
            
            $
            6,861,321
            
            
            $
            (10,197,603
            )
            
            $
            (3,136,725
            )Issuances
      of common stock for cash:
            
            
            .08-.013
            
            
            
            532,000
            
            
            
            1,596
            
            
            
            4,554
            
            
            
            -
            
            
            
            6,150Issuance
      of common stock for stock payable from prior year
            
            
            .0083-.38
            
            
            
            3,718,424
            
            
            
            11,158
            
            
            
            136,849
            
            
            
            -
            
            
            
            148,007Issuance
      of common stock for services
            
            
            .0125-.3325
            
            
            
            58,151,594
            
            
            
            174,454
            
            
            
            4,325,887
            
            
            
            
            
            
            
            4,500,341Imputed
      interest on stockholder loan
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            12,014
            
            
            
            -
            
            
            
            12,014Net
      loss
            
            
            
            
            
            
            
            
            
            
            -
            
            
            
            -
            
            
            
            (2,107,987
            )
            
            
            (2,107,987
            )Balances,
      December 31, 2005
            
            
            
            
            
            
            128,921,706
            
            
            
            386,765
            
            
            
            11,340,625
            
            
            
            (12,305,590
            )
            
            
            (578,200
            )


F-5





Price
      per share
            
            
            Number
      of Common Shares Issued
            
            
            Amount
            
            
            Additional
      Paid-in Capital
            
            
            Accumulated
      Deficit
            
            
            TotalIssuance
      of common stockfor
      stock payable from prior year
            
            
            .065
            
            
            
            417,040
            
            
            
            1,251
            
            
            
            3,962
            
            
            
            
            
            $
            5,213Issuances
      of common stock for cash
            
            
            0.005
            
            
            
            8,000,000
            
            
            
            24,000
            
            
            
            16,000
            
            
            
            
            
            
            40,000Issuances
      of common stock services
            
            
            0.085
            
            
            
            1,091,313
            
            
            
            3,274
            
            
            
            84,325
            
            
            
            
            
            
            87,599Imputed
      interest on stockholder loan
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            26,327
            
            
            
            
            
            
            26,327Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (440,170
            )
            
            
            (440,170
            )Balances,
      December 31, 2006
            
            
            
            
            
            
            138,430,059
            
            
            
            415,290
            
            
            
            11,471,239
            
            
            
            (12,745,760
            )
            
            
            (859,231
            )




Issuance
      of common stock for cash
            
            
            .005-.04
            
            
            
            48,553,732
            
            
            
            134,706
            
            
            
            448,860
            
            
            
            
            
            
            583,566Issuance
      of common stock for services
            
            
            .016-.083
            
            
            
            34,243,677
            
            
            
            102,731
            
            
            
            1,052,684
            
            
            
            
            
            
            1,155,415Issuance
      of common stock for items
              paid
      on eTelcharge’s behalf
            
            
            .005-.02
            
            
            
            10,860,134
            
            
            
            43,535
            
            
            
            246,689
            
            
            
            
            
            
            290,224Issuance
      of common stock for settlement of debt
            
            
            .016
            
            
            
            50,000,000
            
            
            
            150,000
            
            
            
            650,000
            
            
            
            
            
            
            800,000Imputed
      interest on stockholder loan
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            24,695
            
            
            
            
            
            
            24,695Amortization
      of Stock Options issued to officers for services
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            726,250
            
            
            
            
            
            
            726,250Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,924,604
            )
            
            
            (2,924,604
            )Balances,
      December 31, 2007
            
            
            
            
            
            
            282,087,602
            
            
            $
            $$846,262
            
            
            $
            14,620,417
            
            
            $
            $(15,670,364
            )
            
            $
            (203,685
            )








F-6


eTELCHARGE.COM,
INC.


(A
Development Stage Company)


STATEMENTS
OF CASH FLOWS


June
      7, 1999Year
      ended
            
            
            (Inception)
      toDecember
      31,
            
            
            December
      31,2007
            
            
            2006
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
            
            $
            (2,924,606
            )
            
            $
            (440,170
            )
            
            $
            (15,670,364
            )Adjustments
      to reconcile net loss to netcash
      used in operating activities:Amortization
      and depreciation
            
            
            4,024
            
            
            
            2,573
            
            
            
            117,845Issuance
      of common stock for services
            
            
            1,445,639
            
            
            
            69,786
            
            
            
            9,370,769Issuance
      of stock options for services
            
            
            726,250
            
            
            
            
            
            
            
            726,250Imputed
      interest
            
            
            24,695
            
            
            
            26,327
            
            
            
            63,036Loss
      on extinguishment of debt
            
            
            293,620
            
            
            
            
            
            
            
            293,620Changes
      in:Other
      assets
            
            
            (24,444
            )
            
            
            -
            
            
            
            (26,424
            )Interest
      receivable
            
            
            (1,425
            )
            
            
            -
            
            
            
            (1,425
            )Accounts
      payable
            
            
            (16,864
            )
            
            
            (22,991
            )
            
            
            106,069Accrued
      expenses
            
            
            64,656
            
            
            
            43,538
            
            
            
            2,805,806Payroll
      tax obligation
            
            
            (59,907
            )
            
            
            28,547
            
            
            
            112,611Net
      cash used in operating activities
            
            
            (468,360
            )
            
            
            (246,408
            )
            
            
            (2,102,207
            )CASH
      FLOWS FROM INVESTING ACTIVITIESCapital
      Lease Obligation
            
            
            8,911
            
            
            
            
            
            
            
            8,911Disposal
      of property and equipment (net of depreciation)
            
            
            867
            
            
            
            
            
            
            
            867Purchase
      of property and equipment
            
            
            (27,243
            )
            
            
            (1,050
            )
            
            
            (76,882
            )Net
      cash used in investing activities
            
            
            (17,465
            )
            
            
            (1,050
            )
            
            
            (67,104
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from sales of common stock
            
            
            583,566
            
            
            
            40,000
            
            
            
            1,896,183Proceeds
      from convertible note payable, (net of offering costs)
            
            
            171,531
            
            
            
            
            
            
            
            171,531Net
      loan proceeds from stockholder
            
            
            1,473
            
            
            
            45,616
            
            
            
            337,752Proceeds
      from notes payable-other
            
            
            -
            
            
            
            150,313
            
            
            
            153,233Payments
      on notes payable-other
            
            
            (42,190
            )
            
            
            (470
            )
            
            
            (42,661
            )Payment
      on payable to related party for asset purchase
            
            
            
            
            
            
            -
            
            
            
            (116,500
            )Net
      cash provided by financing activities
            
            
            714,380
            
            
            
            235,459
            
            
            
            2,399,538NET
      CHANGE IN CASH AND CASH EQUIVALENTS
            
            
            228,555
            
            
            
            (11,999
            )
            
            
            230,227CASH
      AND CASH EQUIVALENTS, beginning of period
            
            
            1,672
            
            
            
            13,672
            
            
            
            -CASH
      AND CASH EQUIVALENTS, end of period
            
            $
            230,227
            
            
            $
            1,673
            
            
            $
            230,227




Supplemental
      schedule of non-cash financing activities:Issuance
      of common stock in exchange forreceivable
      from stockholder
            
            $
            -
            
            
            $
            -
            
            
            $
            1,000Derivative
      Liability
            
            
            144,643
            
            
            
            
            
            
            
            144,643Issuance
      of payable to related party in exchangefor
      proprietary rights
            
            
            -
            
            
            
            -
            
            
            
            116,500Property
      and equipment acquired throughissuance
      of common stock
            
            
            16,795
            
            
            
            -
            
            
            
            21,595Issuance
      of common stock for stock payablefrom
      prior year
            
            
            
            
            
            
            5,213
            
            
            
            153,220Issuance
      of common stock for compensation
            
            
            1,155,427
            
            
            
            52,533
            
            
            
            3,867,101Supplemental
      cash flow disclosures:Cash
      paid for income taxes
            
            
            
            
            
            
            -
            
            
            
            -Cash
      paid for interest
            
            
            43,805
            
            
            
            4,947
            
            
            
            54,477


See
accompanying summary of accounting policies and notes to financial
statements.


F-7





eTELCHARGE.COM,
INC.


(A
Development Stage Company)


NOTES
TO FINANCIAL STATEMENTS






NOTE
1 - HISTORY AND ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES




eTelcharge.com,
Inc. (“eTelcharge”) was incorporated in Nevada on June 7, 1999. eTelcharge was
formed for the purpose of providing an Internet credit option for online
shoppers to charge items sold over the Internet to their telephone bill. As of
December 31, 2007, eTelcharge has not commenced significant operations.
eTelcharge is in the process of raising equity financing to fund future
operations and marketing of its product to target customers. As such, eTelcharge
is considered to be in the development stage.





Use
of Estimates and Assumptions





Management
uses estimates and assumptions in preparing financial statements in accordance
with generally accepted accounting principles. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported amounts of revenues and
expenses. Actual results could vary from the estimates that were
used.




Cash
and Cash Equivalents




eTelcharge
considers cash in banks, certificates of deposit and other highly liquid
investments with maturities of three months or less when purchased to be cash
and cash equivalents.




Property
and Equipment





Property
and equipment are recorded at cost. Depreciation is computed using the
straight-line method over estimated lives of three to five years. 
Expenditures that increase values or extend useful lives are capitalized.
Routine maintenance and repairs are charged to expense when
incurred.





Impairment
of Long-Lived Assets





eTelcharge
reviews the carrying value of its long-lived assets annually or whenever events
or changes in circumstances indicate that the historical cost-carrying value of
an asset may no longer be appropriate.  eTelcharge assesses recoverability
of the carrying value of the asset by estimating the future net cash flows
expected to result from the asset, including eventual disposition.  If the
future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset's carrying
value and fair value.  There was no impairment of long-lived assets for the
year ending December 31, 2007.





F-8
 Derivative
Instruments




Financial
Accounting Standard No. 133, “Accounting for Derivative Instruments and Hedging
Activities” (“SFAS 133”) established financial accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities.  These
derivatives, including embedded derivatives in our structured borrowings, are
separately valued and accounted for on our balance sheet. Fair values for
exchange-traded securities and derivatives are based on quoted market prices.
Where market prices are not readily available, fair values are determined using
market based pricing models incorporating readily observable market data and
requiring judgment and estimates.  The pricing model we use for
determining fair values of our derivatives is the Lattice Model. Valuations
derived from this model are subject to ongoing internal and external
verification and review. The model uses market-sourced inputs such as interest
rates, exchange rates and option volatilities. Selection of these inputs
involves management’s judgment and may impact net income.




In
September 2000, the Emerging Issues Task Force issued EITF 00-19, "Accounting
for Derivative Financial Instruments Indexed to and Potentially Settled in, a
Company's Own Stock" ("EITF 00-19"), which requires freestanding contracts that
are settled in a company's own stock, including warrants to purchase common
stock, to be designated as an equity instrument, asset or a liability. Under the
provisions of EITF 00-19, a contract designated as an asset or a liability must
be carried at fair value on a company’s balance sheet, with any changes in fair
value recorded in eTelcharge’s results of operations. A contract designated as
an equity instrument must be included within equity, and no fair value
adjustments are required.





Convertible
Notes - Derivative Financial Instruments




eTelcharge’s
7.75% convertible debenture (the “Debenture”) issued to Golden Gate Investors
(“GGI”) on December 28, 2007 is subject to derivative accounting under SFAS 133
and EITF No. 00-19.  eTelcharge has identified that the Golden Gate
debenture contains more than one embedded derivative feature which SFAS 133
requires be accounted for as derivatives.  The derivative features
that have been bundled together in the compound embedded derivative include: (1)
the conversion feature of the debenture; (2) the put options to redeem the
debenture after an event of default or failure to deliver stock; and (3) the
call option to prepay the debenture subsequent to a conversion request and the
VWAP is below $0.05. These embedded derivatives have been bifurcated from the
host debt contract and accounted for as derivative liabilities in accordance
with EITF 00-19.  When multiple derivatives exist within the
Convertible Notes, they have been bundled together as a single hybrid compound
instrument in accordance with SFAS No. 133 Derivatives Implementation Group
Implementation Issue No. B-15, "Embedded Derivatives: Separate Accounting for
Multiple Derivative Features Embedded in a Single Hybrid
Instrument."





A model
was developed that values the compound embedded derivatives within the
Debenture.  The embedded derivatives are valued using a lattice model
which incorporates a probability weighted discounted cash flow
methodology.  This model is based on future projections of the various
potential outcomes.  The model analyzed the underlying economic
factors that influenced which likely events would occur, when they were likely
to occur, and the specific terms that would be in effect at the time (i.e.
interest rates, stock price, conversion price, etc.).  The primary
factors driving the economic value of the embedded derivatives are stock price,
stock volatility, whether eTelcharge has obtained a timely registration, an
event of default, and the likelihood of obtaining alternative
financing.




The
derivative liabilities result in a reduction of the initial carrying amount (as
unamortized discount) of the Debenture.  The embedded derivatives
within the Debenture have been recorded at fair value at the date of issuance;
and are marked-to-market each reporting period with changes in fair value
recorded to eTelcharge's income statement as "Net change in fair value of
derivative liabilities."  Unamortized discount is amortized to
interest expense using the effective interest method over the life of the
Debenture.  If the Debenture is converted, the derivative liability is
released and recorded as additional paid in capital. eTelcharge has utilized a
third party valuation firm to fair value the embedded derivatives using a
lattice model with layered discounted probability-weighted cash flow
methods.  The fair value of the derivative liabilities are subject to
the changes in the trading value of eTelcharge's common stock, as well as other
factors.  As a result, eTelcharge's financial statements may fluctuate
from quarter-to-quarter based on factors, such as the price of eTelcharge's
stock at the balance sheet date and the amount of shares converted by note
holders. Consequently, our financial position and results of operations may vary
from quarter-to-quarter based on conditions other than our operating revenues
and expenses.  F-9


Income
Taxes





eTelcharge
accounts for income taxes in accordance with the asset and liability method.
Deferred income tax assets and liabilities are computed periodically for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and 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. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.





Revenue
Recognition





eTelcharge
recognizes revenue in accordance with Staff Accounting Bulletin (SAB) No. 101,
“Revenue Recognition in Financial Statements.” Non-refundable, one-time
processing fee revenue from online merchants will be recognized using the
straight-line method over the term of the online merchant agreement. Billing fee
and service charge revenue from online merchants is recognized as online
purchases from customers are processed and typically ranges from 3% to 4% of the
purchase price, plus $0.15 to $0.25 per transaction and will be non-refundable.
Customer fee revenue is recognized upon shipment by the online merchant to the
customer, typically between 5% to 10% of the purchase price, and is refundable
should the merchant approve a customer dispute. All funds will be remitted
directly to eTelcharge. eTelcharge expects to enter into 2 to 3 year agreements
with merchants. The direct costs of providing these services includes a
transaction charge by the carrier.





Stock-Based
Compensation





eTelcharge
issues restricted common stock as compensation to employees and outside
consultants for services rendered. These shares are recorded at the fair value
of the freely trading unrestricted common stock as measured on the date or dates
the services were rendered.





eTelcharge
adopted the disclosure requirements of Financial Accounting Standard No. 123,
“Accounting for Stock-Based Compensation” (FAS No. 123) and FAS No. 148 with
respect to pro forma disclosure of compensation expense for options issued. For
purposes of the pro forma disclosures, the fair value of each option grant is
estimated on the grant date using the Black-Scholes option-pricing
model.





Effective
January 1, 2006, eTelcharge adopted SFAS No. 123R, “Share-Based Payment.” SFAS
No. 123R generally requires entities to recognize the cost of employee services
received in exchange for awards of stock options, or other equity instruments,
based on the grant-date fair value of those awards. This cost is recognized over
the period which an employee is required to provide services in exchange for the
award, generally the vesting period. Prior to January 2006, eTelcharge accounted
for employee stock option grants in accordance with APB No. 25, and had adopted
only the disclosure provisions of SFAS No. 123, “Accounting for Stock-Based
Compensation.” eTelcharge issued options to purchase 25,800,000 shares during
the year ended December 31, 2007, of which options to purchase 20,500,000 shares
are vested.  There were no options or warrants granted or outstanding
during the year ended December 31, 2006.  F-10


Net
Loss Per Share





Basic
loss per share is computed by dividing net loss by the weighted average number
of common shares outstanding during each period.  Diluted loss per
share includes the dilutive effects of common stock equivalents on an “as if
converted” basis.  For the year ended December 31, 2007, potential
dilutive securities had an anti-dilutive effect and were not included in the
calculation of diluted net loss per common share.  There were no
dilutive securities for the year ended December 31, 2006.





Recent Accounting
Pronouncements





eTelcharge
does not expect the adoption of recently issued accounting pronouncements to
have a significant impact on eTelcharge’s results of operations, financial
position or cash flow.





NOTE 2 - GOING
CONCERN





As shown
in the accompanying financial statements, eTelcharge incurred net losses of
$2,924,604 and $440,170 in fiscal 2007 and 2006, respectively, has an
accumulated deficit of $15,670,364 and a working capital deficit of
$198,704.  These conditions raise substantial doubt as to eTelcharge's
ability to continue as a going concern.  Management is trying to raise
additional capital through sales of common stock.  The financial statements
do not include any adjustments that might be necessary if eTelcharge is unable
to continue as a going concern.





NOTE
3 - PROPERTY AND EQUIPMENT





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





Description
            Life
            
            
            2007Computer equipment
            3
      years
            
            $
            28,293Office furniture and equipment
            5
      years
            
            
            2,22830,521Less: accumulated depreciation
            
            
            
            (4,551
            )$
            25,970




Depreciation
expense is recorded using the straight line method and totaled $4,024 and $2,573
in fiscal 2007 and 2006, respectively.




NOTE
4 - ACCRUED COMPENSATION





During
the year ended December 31, 2007, eTelcharge issued 34,243,677 shares of common
stock valued at $1,155,415 to employees and consultants for services
rendered.  For the year ended December 31, 2006, eTelcharge issued
1,091,313 shares valued at $87,599 to employees for services
rendered.





As of
December 31, 2007, eTelcharge accrued $36,606 payable in cash and $94,583
payable in 1,372,257 shares of common stock for compensation for services
rendered to eTelcharge.  As of December 31, 2006, eTelcharge accrued
$36,606 payable in cash and $34,720 payable in 501,869 shares of common stock
for compensation for services rendered to eTelcharge.  F-11





NOTE
5 - PAYROLL TAX OBLIGATION





During
2007, eTelcharge remitted previously unpaid Federal and State employer and
employee payroll taxes for the years 2001 through mid-2007. eTelcharge has
requested an abatement of penalties on this obligation and is awaiting a
determination of this request from the IRS.  Until such time as a
final determination of interest and penalties has be received, eTelcharge has
recorded estimated penalties at 25% of the tax paid, and accrued interest from
the date the taxes were due, through the date the taxes were paid. The total
amount recorded for this obligation at December 31, 2007 and 2006 was $108,026
and $172,517 respectively.





NOTE
6 - NOTE PAYABLE




In March
2007, after receiving a demand notice for the payment of its promissory note
payable to American Home Market, eTelcharge negotiated the retirement of the
note payable, including accrued interest, in exchange for 50,000,000 shares of
eTelcharge common stock, which was issued on March 20, 2007. The outstanding
balance of the note payable at the time of settlement was $157,246, which
included $6,933 of accrued interest. The agreement, entered into on March 14,
2007, represents a final settlement of the note payable. In the first quarter of
2007, eTelcharge recognized a loss on extinguishment of debt in the amount of
$642,754.





NOTE
7 – LOSS/GAIN ON EXTINGUISHMENT OF DEBT





At
December 31, 2006, eTelcharge had an unsecured demand note payable to a
stockholder in the amount of $336,279, with interest imputed at 8.00% with no
specified maturity date.  The stockholder made advances to eTelcharge on an
as needed basis and was periodically repaid portions of the outstanding balance.
In December 2007, this note was retired in full in exchange for $25,000.
eTelcharge recorded a gain of $296,663as a result of the
settlement.  During the year 2007, eTelcharge also settled a liability
with one of its creditors resulting in a gain of $52,471.  These
resulting gains were presented net of the loss in relation to the settlement of
eTelcharge’s note payable (Note 6) and presented as a net “Loss on
extinguishment of debt” in the statement of operations during the year ended
December 31, 2007.




NOTE
8 - DERIVATIVES




On
December 28, 2007, eTelcharge entered into a securities purchase agreement with
Golden Gate Investors.  Under the purchase agreement, eTelcharge
issued to GGI a debenture, convertible into eTelcharge’s common stock, in the
amount of $1.5 million.  GGI paid for the debenture by delivering a
cash payment of $200,000 and a note for $1.3 million from GGI to
eTelcharge.  At any time, GGI may convert a portion of the Debenture
equal to the amount of cash paid to eTelcharge on the initial issuance of the
Debenture and pursuant to payments made under the note from GGI, into common
stock at a conversion price equal the lesser of $0.50 per share or the three
lowest Volume Weighted Average Prices (“VWAP”) of eTelcharge’s common stock
during the 20 trading days preceding the election to convert.  As of
December 31, 2007, $200,000 of the Debenture was convertible.




The
Debenture further provides for eTelcharge to have the right, but not the
obligation, to choose to prepay any portion of the Debenture that the holder has
elected to convert, for an amount equal to 120% of such amount, when the VWAP is
below $0.05 per share.  The Debenture also provides that the holder
may not exercise the conversion privilege to the extent that it would acquire
“beneficial ownership” of eTelcharge’s common stock of more than 4.99%, which
may be increased to 9.99% on not less than 61 days prior notice, or such
limitation may be removed entirely on 61 days prior notice by the
holder.




Under the
Purchase Agreement, GGI is required to purchase up to three additional
debentures, each in the amount of $1.5 million, on terms analogous to the
Debenture, upon satisfaction of the requirement that the Debenture, and each
succeeding debenture which has been issued subsequent to the Debenture, has no
more than $250,000 outstanding, i.e., the requirement arises when the prior
debenture has been converted or otherwise redeemed so that no more than $250,000
is outstanding.  GGI has the right to eliminate its obligations to
purchase each of the three additional debentures by a payment of $100,000.  F-12




The
promissory note delivered by GGI to pay for the Debenture bears interest at the
rate of 8% per annum and is payable at maturity, January 31, 2012, with interest
payable to eTelcharge monthly.  Interest on the Principal Amount of
the Debenture is also payable monthly to GGI, at the rate of 7.75% per annum in
cash, or at the option of the holder, in shares of eTelcharge’s common stock
valued at the then applicable conversion price.  The maturity date of
the Debenture is December 26, 2011.




The
Debenture provides for various events of default, such as failure to pay
principal or interest when due, if it is determined that any representations
warranties or covenants made in the Purchase Agreement or other related
documents were false or misleading, certain insolvency conditions, if
eTelcharge’s common stock is no longer traded, if eTelcharge fails to file
required reports under the securities laws, if eTelcharge defaults on any
indebtedness exceeding $100,000, or if the VWAP of the common shares is $0.01
per share or less during the term of the Debenture.  In such event,
the Debenture holder would have the right to accelerate amounts due under the
Debenture and require immediate redemption of the Principal Amount of the
Debenture, at 120% of such amount, or 110% in the case of the default relating
solely to the VWAP of the common shares being $0.01 or less.




The
Debenture is secured by a pledge of 3,000,000 shares of common stock provided by
a stockholder of eTelcharge.  The promissory note issued by GGI is
secured by all of the assets of GGI.




eTelcharge
has identified that the Golden Gate debenture contains more than one embedded
derivative feature which SFAS 133 requires be accounted for as
derivatives.  The derivative features that have been bundled together
in the compound embedded derivative include: (1) the conversion feature of the
debenture; (2) the put options to redeem the debenture after an event of default
or failure to deliver stock; and (3) the call option to prepay the debenture
subsequent to a conversion request and the VWAP is below $0.05. These embedded
derivatives have been bifurcated from the host debt contract and accounted for
as derivative liabilities in accordance with EITF 00-19.  When
multiple derivatives exist within the Debenture, they have been bundled together
as a single hybrid compound instrument in accordance with SFAS No. 133
Derivatives Implementation Group Implementation Issue No. B-15.  The
value of the compound embedded derivative liability was bifurcated from the
debenture and recorded as a derivative liability, which results in a reduction
of the initial carrying amount (as unamortized discount) of the related
debenture at inception.




The
impact of the application of SFAS 133 and EITF 00-19 on the balance sheet as of
December 28, 2007, the date of the agreement, was as follows (in
thousands):





Net
      balance
            
            $
            200,000Less
      unamortized discount
            
            $
            (144,845)Convertible
      debt
            
            $
            55,155




The
unamortized discount is being amortized to interest expense using the effective
interest method over the life of the debenture.




Lattice
Valuation Model




eTelcharge
valued the compound embedded derivative features in the 2007 Debenture using a
Lattice Model with the assistance of a valuation consultant. The lattice model
values the compound embedded derivatives based on a probability weighted
discounted cash flow model. This model is based on future projections of the
five primary alternatives possible for settlement of the features included
within the compound embedded derivative, including: (1) payments are made in
cash, (2) payments are made in stock, (3) the holder exercises its right to
convert the debenture, (4) eTelcharge exercises its right to convert the
debenture and (5) eTelcharge defaults on the debenture. eTelcharge uses the
model to analyze (a) the underlying economic factors that influence which of
these events will occur, (b) when they are likely to occur, and (c) the common
stock price and specific terms of the debenture such as interest rate and
conversion price that will be in effect when they occur.  F-13




Based on
the analysis of these factors, eTelcharge uses the model to develop a set of
potential scenarios. Probabilities of each scenario occurring during the
remaining term of the debenture are determined based on management’s
projections. These probabilities are used to create a cash flow projection over
the term of the debenture and determine the probability that the projected cash
flow would be achieved. A discounted weighted average cash flow for each
scenario is then calculated and compared to the discounted cash flow of the
debenture without the compound embedded derivative in order to determine a value
for the compound embedded derivative.




The
primary determinants of the economic value of a compound embedded derivative
under the lattice model are (1) the price of eTelcharge's common stock, (2) the
volatility of eTelcharge's common stock price, (3) the likelihood that
eTelcharge will be required to pay registration delay expenses, (4) the
likelihood that an event of default or a change in control will occur, (5) the
likelihood that the conversion price will be adjusted, (6) the likelihood that
eTelcharge's common stock will be listed on an exchange, (7) the likelihood that
eTelcharge will be able to obtain alternative financing and (8) the likelihood
that eTelcharge would be able to force conversion of the debenture.




The fair
value of the compound derivative embedded in the 2007 Debenture as of December
31, 2007 determined using the lattice valuation model was based on the following
management assumptions:


2007
      DebentureDecember
      28, 2007
            December 31, 2007Assumptions:The
      price of eTelcharge's common stock would increase at a rate commensurate
      with the cost of equity, with a volatility of:
            
            
            142
            %
            
            
            142
            %Percent
      likelihood that an event of default or a fundamental change would occur,
      increasing over time:
            
            
            5
            %
            
            
            5
            %eTelcharge
      would redeem the 2007 Debenture if eTelcharge's common stock price is
      below:
            
            $
            0.05
            
            
            $
            0.05




Based on
these management assumptions, the fair value of these embedded derivatives as of
December 28, 2007 and December 31, 2007 were calculated by management to be
$144,845 and $144,643, respectively.




All of
the above assumptions are reviewed quarterly and are subject to change based
primarily on management’s assessment of the probability of the events described
occurring. Accordingly, changes to these assessments could materially affect the
valuation.





NOTE
9 - INCOME TAXES





eTelcharge
uses the liability method, where deferred tax assets and liabilities are
determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. eTelcharge has incurred significant net
losses in past years and, therefore, has no tax liability. The net deferred tax
asset generated by the loss carry-forward has been fully reserved. The
difference between the statutory tax rate and the effective tax rate relates to
the valuation allowance applied against the deferred tax assets generated from
net operating losses. The cumulative net operating loss carry-forward is
approximately $10,233,034 at December 31, 2007, and will expire in the years
2020 through 2027.  F-14





At
December 31, 2007, deferred tax assets consisted of the following:





Deferred tax assetsNet operating losses
            
            $
            1,499,274Less: valuation allowance
            
            
            (1,499,274
            )Net deferred tax asset
            
            $
            -





NOTE
10 - COMMITMENTS AND CONTINGENCIES





eTelcharge
has a business relationship (affinity program) with a charitable organization
that requires eTelcharge to contribute $.05 per revenue generating transaction
to the charity up to $250,000 per year.





eTelcharge
has several agreements with employees and consultants that require eTelcharge to
issue shares of common stock if the agreements are fulfilled by the employees
and consultants.  At December 31, 2007, eTelcharge will be required to
issue up to 2,090,926 shares of common stock in 2008 under existing
agreements.





eTelcharge
is obligated to issue 10,000 shares of common stock to each director each year
for director services provided to eTelcharge.  eTelcharge typically has
four directors.





In
February 2007, eTelcharge entered into a modified lease agreement extending the
lease scheduled to expire in January 2010. The new base rent is $4,098 per
month.





Under the
new lease, future minimum lease commitments are as follows:





2008
            $49,1762009
            $49,1762010
            $4,098





Rent
expense totaled approximately $50,416 and $47,775 each for the years ended
December 31, 2007 and 2006.





NOTE
11- COMMON STOCK




Since
inception and through December 31, 2007, the following share activity
occurred:




Shares
            
            
            AmountShares
      for cash
            
            
            70,909,824
            
            
            $
            1,940,506Shares
      for services
            
            
            150,424,844
            
            
            
            11,716,559Shares
      for items paid on eTelcharge’s behalf
            
            
            10,860,134
            
            
            
            215,528Settlement
      of debt
            
            
            500,000
            
            
            
            800,000Shares
      for assets
            
            
            12,800
            
            
            
            4,800Amortization
      of stock options
            
            
            
            
            
            
            726,250Share
      cancellation
            
            
            (120,000
            )
            
            
            -Imputed
      Interest
            
            
            -
            
            
            
            63,036Totals
            
            
            232,087,602
            
            
            
            15,466,679


F-15





During
2007, eTelcharge issued 34,243,677 shares valued at $1,155,415 for services,
48,553,732 shares for $583,566 cash, 50,000,000 shares valued at $800,000 to
settle a debt and 10,860,134 shares valued at $290,224 by reimbursement for
items purchased for eTelcharge.





NOTE
12 - PAYABLE TO RELATED PARTY AND PROPRIETARY RIGHTS





During
1999, eTelcharge purchased proprietary rights from a related company, Consumer
Data Solutions Corp. ("CDS"), which, at the time, had the same majority
stockholder as eTelcharge. This agreement requires eTelcharge to pay CDS for a
period of 99 years, 3% of any and all income, less customary and normal business
expenses associated with the usage of proprietary rights (which equates to 3% of
net income of eTelcharge) beginning January 1, 2001.  The proprietary
rights purchased are not in use in any of the technology of
eTelcharge.





As these
rights were purchased from a related entity, the asset was recorded by
eTelcharge at the book value of CDS. Accordingly, the asset was recorded at
$63,000 with the difference between the recorded cost and the payable to related
party being reflected as a debit to additional paid-in capital. Amounts payable
to CDS totaled $0 at December 31, 2007.





NOTE 13 - SUBSEQUENT
EVENTS





Common
Stock and Pending Stock Subscriptions





Subsequent
to December 31, 2007, eTelcharge issued 4,639,022 shares of common stock in
connection with various consulting agreements.  F-16





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





None.




Item 8A(T). Controls and
Procedures.





Disclosure
Controls and Procedures





As
required by Rule 13a-15 under the Exchange Act, we carried out an evaluation of
the effectiveness of the design and operation of our disclosure controls and
procedures as of December 31, 2007.  This evaluation was carried out
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer.  Based on their evaluation of our
disclosure controls and procedures as of December 31, 2007, we concluded that
such disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms.




Management’s
Report on Internal Control Over Financial Reporting





The
management of eTelcharge is responsible for establishing and maintaining
adequate internal control over financial reporting.  The internal
control process has been designed under our supervision to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of eTelcharge’s financial statements for external reporting purposes in
accordance with accounting principles generally accepted in the United States of
America.





Management
conducted an assessment of the effectiveness of eTelcharge’s internal control
over financial reporting as of December 31, 2007, utilizing the framework
established in Internal Control – Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).  The
COSO framework summarizes each of the components of a company’s internal control
system, including (i) the control environment, (ii) risk assessment, (iii)
control activities, (iv) information and communication, and (v)
monitoring.  Based on this assessment, management has determined that
eTelcharge’s internal control over financial reporting as of December 31, 2007
was not effective.





Our
internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that accurately and fairly reflect, in
reasonable detail, transactions and dispositions of assets; and provide
reasonable assurances that: (1) transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States; (2) receipts and expenditures are being
made only in accordance with authorizations of management and the directors of
eTelcharge; and (3) unauthorized acquisitions, use, or disposition of
eTelcharge’s assets that could have a material affect on eTelcharge’s financial
statements are prevented or timely detected.





All
internal control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparations and presentations.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





Identified
Material Weaknesses and Management’s Remediation Initiatives




A
material weakness is a significant deficiency in one or more of the internal
control components that alone or in the aggregate precludes our internal
controls from reducing to an appropriately low level of risk the risk that
material misstatements in our financial statements will not be prevented or
detected on a timely basis.  -15-





Management
identified the following internal control deficiencies during its assessment of
our internal control over financial reporting as of December 31, 2007, that they
considered to be, in the aggregate, a material weakness:





Lack of segregation of
duties.  Due to our small employee base, it is difficult to
effectively segregate accounting duties.  There are 4 employees, including
our CEO and CFO, who are involved in the processing of transactions.  While
we strive to segregate duties as much as practicable, budgetary considerations
have not allowed the addition of more full time staff.  We will attempt to
add staff to allow for fuller segregation of duties, although there is no
certainty additional staff can be successfully hired.  As a result, this
significant internal control deficiency has not been remediated as of the end of
the period covered by this annual report, nor do we know if we will be able to
remediate this weakness during the upcoming quarter or year.




If we are
unable to remediate the identified material weaknesses, there is a reasonable
possibility that a material misstatement to our SEC reports will not be
prevented or detected, in which case investors could lose confidence in the
accuracy and completeness of our financial reports, which could have an adverse
effect on our ability to raise additional capital and could also have an adverse
effect on our stock price.





Notwithstanding
the material weaknesses identified by management, we believe that the financial
statements, and other financial information included in this report, fairly
present in all material respects, the financial condition, results of operation
and cash flows of eTelcharge as of, and for, the periods represented in this
report.





Changes
in Internal Control Over Financial Reporting





During
our most recent fiscal quarter, there has not occurred any change in our
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.





Auditor
Attestation





This
annual report does not include an attestation report of eTelcharge's registered
public accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by
eTelcharge's registered public accounting firm pursuant to temporary rules of
the SEC that permit eTelcharge to provide only management's report in this
annual report.





Item
8B.   Other Information.





As
disclosed above in Item 5,Recent Sales of
Unregistered Securities, eTelcharge issued securities in reliance on
private placement exemptions during the three months ended December 31,
2007.





Robyn
Priest was appointed Sr. VP Finance and CFO on October 15, 2007 and James T.
Wilson was appointed Sr. VP and Chief Technology Officer on July 23,
2007.  Information regarding their biographies and compensation is
described below in Items 9 and 10.





Roger
Wagner was appointed as a member of the Board of Directors on October 1,
2007.  Information regarding Mr. Wagner’s biography, compensation and
related party transactions is described below in Items 9, 10 and
12.





eTelcharge
amended its Articles of Incorporation in order to increase the number of
authorized shares of capital stock from 250,000,000 to 400,000,000, effective
July 26, 2007.  -16-





PART III.




Item
9. Directors, Executive Officers, Promoters, Control Persons and Corporate
Governance; Compliance with Section 16(a) of the Exchange Act.





Executive
Officers, Directors and Significant Employees





The
following table sets forth information regarding our executive officers,
directors and significant employees as of March 21, 2008:





Name
            Age
            OfficeRobert
      M. Howe III
            61
            Chairman
      of the Board, President & CEORoger
      Wagner
            43
            DirectorThomas
      Jackson
            36
            DirectorRobyn
      Priest
            57
            Sr.
      VP Finance and CFOJames
      T. Wilson
            38
            Sr.
      VP and Chief Technology Officer





Directors
hold office for a period of one year from their election at the annual meeting
of stockholders and until their successors are duly elected and
qualified.  Officers are elected by, and serve at the discretion of,
the Board of Directors.  None of the above individuals has any family
relationship with any other.





The
following is a summary of the business experience of each of our executive
officers and directors for at least the last five years:





ROBERT M.
HOWE III has served as Chairman of the Board, President and Chief Executive
Officer of eTelcharge since June 2007.  From May 2006 to February
2007, Mr. Howe served as President and Chief Operations Officer of DualCor
Technologies, Inc, a technology firm that developed a mobile handheld
computer.  From September 2000 to May 2006, Mr. Howe served as a
consultant to technology firms, both independently and in collaboration with the
Sightline Group, in connection with go- to – market readiness.  From
October 1997 to September 2000, Mr. Howe served as President of CompUSA
PC.  Mr. Howe graduated with a BA in English from Birmingham-Southern
College.




ROGER
WAGNER was appointed to our Board in 2007 and has a very diverse background in
business transactions from oil & gas, rock sand and gravel quarries to large
real-estate projects.  Mr. Wagner has been President & CEO of
Rogaro Co. Inc from 1989 to present, which owns and operates franchise yogurt
stores. Mr. Wagner has provided consulting services for new entrepreneurs,
professional entertainers, professional athletes, private and public companies
on business development, the evaluation structure of financing; corporate
reorganization and expansion; possible acquisition and merger opportunities;
capital structure borrowing and numerous of other business related
issues.  Mr. Wagner served for six years on the Board of Directors for
Bryan’s House, which is an organization that provides medically managed care for
children with AIDS.





THOMAS
JACKSON was appointed to the Board in September 2003.  Mr. Jackson has
been a Family Psychologist and has been working in behavioral health for twelve
years.  Prior to that, he has twelve years of experience in the
technology industry. Mr. Jackson also served as a Technology Professor for DeVry
Institute from 1994 to 1999. Mr. Jackson graduated with a BS Degree from DeVry
University in 1994, MA Degree from Keller Graduate School of Management in 2003
and a PhD in Theology/Family Psychology from Capella University in 2003.  -17-





ROBYN
PRIEST has served as Senior Vice President-Finance and Chief Financial Officer
of eTelcharge since August 2007.  Prior to that, since 1998, Ms.
Priest served as an independent financial consultant primarily to retail
companies.  From 1992 to 1998, Ms. Priest served as Vice President,
Controller and Chief Accounting Officer of CompUSA.  Ms. Priest
graduated with a BA in Accounting from the University of South
Florida.  She is a Certified Public Accountant in Florida and
Texas.





JAMES T.
WILSON has served as Senior VP and Chief Technology Officer since July
2007.  From December 2006 to December 2007, Mr. Wilson served as
Director of Manufacturing at DualCor Technologies, where he ran the
manufacturing division.  From April 2004 to December 2006, he served
as Chief Technology Officer of Leading Technology Micro, a computer
manufacturer.  From December 2001 to April 2004, Mr. Wilson served as
Senior Director of Engineering at Systemax, a computer
manufacturer.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Exchange Act, requires our directors and executive officers, as
well as persons who own more than 10% of a registered class of our equity
securities (each, a "Reporting Person"), to file with the SEC initial reports of
ownership and reports of changes in beneficial ownership.  Reporting
Persons are required by SEC regulation to furnish us with copies of all Section
16(a) forms they file.  No individual or entity who was a Reporting
Person at any time during the fiscal year ended December 31, 2007 filed any such
reports.  The chart below provides detail as to the delinquent
reports.




Reporting
      Person
              Delinquent
      Section 16 FilingsRobert
      M. Howe III
              Form
      3 was not filed in connection with Mr. Howe’s appointment on June 4, 2007
      as President, CEO and a member of the Board of Directors.  In
      addition, a Form 4 was not filed in connection with the grant of
      20,000,000 options on June 4, 2007.Roger
      Wagner
              Form
      3 was not filed in connection with Mr. Wagner’s appointment on October 1,
      2007 as a member of the Board of Directors.  In addition, a Form
      4 was not filed in connection with his receipt of 3,333 shares of Common
      Stock for service as a director in 2007.Thomas
      Jackson
              Form
      3 was not filed in connection with Mr. Jackson’s appointment as a member
      of the Board of Directors in September 2003.  An indeterminate
      number of Form 4s were not filed in connection with various acquisitions
      and dispositions of Common Stock.Robyn
      Priest
              Form
      3 was not filed in connection with Ms. Priest’s appointment on October 15,
      2007 as Sr. VP Finance and CFO.  In addition, Form 4s were not
      filed in connection with the grant of 100,000 options on each of October
      15, 2007, November 15, 2007 and December 15, 2007.James
      T. Wilson
              Form
      3 was not filed in connection with Mr. Wilson’s appointment on July 1,
      2007 as Sr. VP and Chief Technology Officer.  In addition, a
      Form 4 was not filed in connection with the grant of 1,200,000 options on
      July 23, 2007.Carl
      O. Sherman
              Form
      3 was not filed in connection with Mr. Sherman’s appointment as an officer
      and director of eTelcharge and his status as a 10% stockholder prior to
      fiscal 2007.  An indeterminate number of Form 4s were not filed
      in connection with various acquisitions and dispositions of Common
      Stock.Michelle
      R. Sherman
              Form
      3 was not filed in connection with Ms. Sherman’s becoming a 10%
      stockholder prior to fiscal 2007.  An indeterminate number of
      Form 4s were not filed in connection with various acquisitions and
      dispositions of Common Stock.American
      Home Market
              Form
      3 was not filed in connection with American Home Market’s acquisition of
      50,000,000 shares of Common Stock on March 20,
  2007.







eTelcharge
is working closely with is new legal advisors, who were engaged in Fall 2007, to
ensure that delinquent filings are made as soon as practicable, and that future
Section 16(a) filings, as well as other required SEC reports, are made in a
timely manner.  -18-





Code
of Ethics





Our Chief
Executive Officer and Chief Financial Officer (who is also our principal
accounting officer) (“Officers”), are required to abide by our Code of Ethics
for the CEO and Senior Officers (“Code of Ethics”) to ensure that our business
is conducted in a consistently legal and ethical manner.





Our Code
of Ethics is filed as Exhibit 14 hereto.





Audit
Committee





The
entire Board of Directors acts as our audit committee and oversees our
accounting and financial reporting processes and audits of our financial
statements; we do not have a separately-designated standing audit
committee.Our
Board of Directors has determined that it does not have an "audit committee
financial expert," as that term is defined in Item 407(d)(5) of
Regulation  S-B.  Since we are in the development stage and
do not have substantial operations, it is difficult to attract Board members who
have the relevant experience.





Stockholder
Recommendations of Board Nominees





We have
not adopted any procedures by which our stockholders may recommend nominees to
our Board of Directors.  -19-
 Item
10. Executive Compensation.





Compensation
of Named Executive Officers





The
following table sets forth the compensation paid during our fiscal years ended
December 31, 2007 and 2006 to our Chief Executive Officer, our two most highly
compensated executive officers other than our CEO, and our former Chief
Executive Officer who served during this time period (the “Named Executive
Officers”).





SUMMARY
COMPENSATION TABLE





Name,
              Principal
      Position
            Year
            Salary
              ($)
            Bonus
              ($)
            Stock
      Awards
              ($)(1)
            Option
              Awards
      ($)
            All
      other Compensation
            Total
              ($)Robert
      M. Howe,
              Chairman
      of the BOD,
              President
      & CEO
            2007
            28,045(2)
            10,000
            407
            422,098(3)
            
            460,5502006
            N/A
            N/A
            N/A
            N/A
            N/A
            N/ARobyn
      Priest,
              Sr.
      V.P. & CFO
            2007
            11,750(4)
            1,000
            
            165,644(5)
            17,000(6)
            178,3942006
            N/A
            N/A
            N/A
            N/A
            N/A
            N/AJames
      Wilson,
              Sr.
      V.P. and CTO
            2007
            33,125(7)
            5,000
            
            28,338(8)
            
            66,4632006
            N/A
            N/A
            N/A
            N/A
            N/A
            N/ACarl
      O. Sherman,
              President
      & CEO
            2007
            40,000(9)
            
            
            
            25,000(10)
            40,0002006
            60,000
            
            
            
            
            60,000





(1)  These
amounts represent the dollar amount recognized for financial statement reporting
purposes with respect to the relevant fiscal year in accordance with FAS
123R.


(2)  Represents
actual salary payments from June 1, 2007 through December 31, 2007, based on an
annual salary of $50,000.


(3)  Represents
10,000,000 fully vested incentive stock options granted on 05/15//07, and
10,000,000 incentive stock options granted on 06/04/07, vesting in equal monthly
installments over a ten month period.  After 36 months, any
unexercised stock options, will expire at the same rate at which they were
earned.


(4)  Represents
actual salary payments from October 16, 2007 through December 31, 2007, based on
an annual salary of $60,000.


(5)  Represents
1,200,000 fully vested ten year incentive stock options granted on 08/15, and
four grants of 100,000 fully vested ten year incentive stock options granted on
each of 09/15, 10/15, 11/15, 12/15.


(6)  Represents
consulting fees paid for 8/16 through 10/15.


(7)  Represents
actual salary payments from July 23, 2007 through December 31, 2007, based on an
annual salary of $75,000.


(8)  Represents
1,200,000 ten year incentive stock options granted on 7/23/07, and vesting
100,000 shares on 7/23/07 and 100,000 shares monthly thereafter.


(9)  Represents
actual salary payments from January 1, 2007 through July 31, 2007, based on an
annual salary of $60,000.


(10) This
amount reflects aggregate severance paid to Mr. Sherman and his wife, Michelle
Sherman, in connection with their resignations from eTelcharge.  -20-





Employment,
Consulting, Severance and Change-in-Control Agreements





eTelcharge
has entered into an employment letter agreement with Mr. Howe, which became
effective on May 11, 2007.  Under this agreement, Mr. Howe earns an
annual salary of $50,000, and is eligible for salary increases at the Board’s
discretion.  Mr. Howe was granted a sign-on grant of 10,000,000 fully
vested options to purchase Common Stock, at an exercise price of $0.011, in
connection with his execution of his employment letter.  In addition,
Mr. Howe received 10,000,000 options to purchase Common Stock, at an exercise
price of $0.011, vesting in equal monthly installments over a ten month period
beginning on June 4, 2007.  After 36 months, any unexercised stock
options will expire at the same rate at which they were earned.  The
Board has not implemented an executive bonus plan as of March 21, 2008, but it
intends to do so, and Mr. Howe will be eligible for equitable participation at
such time.  If there is a change in control of eTelcharge as a result
of a merger or acquisition, or a sale of all or substantially all of
eTelcharge’s assets that occurs within the first year of Mr. Howe’s employment,
all of Mr. Howe’s options granted as the date hereof will vest
immediately.  If such a transaction occurs after the first year of Mr.
Howe’s employment, any options granted after the date of the agreement will vest
immediately.  Mr. Howe’s employment is not for any specified period of
time and he serves at the discretion of the Board.  However, if he is
terminated without cause, all of his unvested options will vest immediately, and
he will receive a lump sum severance payment equal to one half of his current
annual salary and six months of COBRA payments grossed up for tax
purposes.  Mr. Howe is also eligible to receive reimbursement for
business related travel and other expenses.  Mr. Howe also receives
10,000 shares of restricted common stock annually as compensation for his
membership as Director of eTelcharge.




eTelcharge
entered into a consulting letter agreement, dated August 10, 2007, with Ms.
Priest.  Under this agreement, eTelcharge paid Ms. Priest an up-front
lump sum payment of $10,000, and granted her 1,200,000 options to purchase
Common Stock, at an exercise price of $0.11.  Ms. Priest also received
a monthly consulting fee of $3,500 in cash and monthly grants of 100,000 fully
vested options to purchase Common Stock.  The cash payments were
payable monthly and the option grants were permitted to be implemented
semi-annually.  On October 15, 2007, Ms. Priest became a part-time
employee of eTelcharge with a monthly salary of $5,000, for an annual salary of
$60,000.  The stock option grant terms under her consulting
agreement continue in effect.  If Ms. Priest terminates her employment
within the first eight months of service commencing in August, she will pay back
to eTelcharge a portion of her consulting fees pursuant to a specified schedule,
up to a maximum of $8,000.





eTelcharge
entered into an employment letter agreement with Mr. Wilson, which became
effective on July 23, 2007.  Under this agreement, Mr. Wilson earns an
annual salary of $75,000, and is eligible for salary increases at the CEO’s
discretion.  Mr. Wilson was granted a sign-on grant of 1,200,000
options to purchase Common Stock, at an exercise price of $0.037, in connection
with his execution of his employment letter agreement, vesting in equal monthly
installments over a twelve month period beginning on July 23,
2007.  After 36 months, any unexercised stock options will expire at
the same rate at which they were earned.  The Board has not
implemented an executive bonus plan as of March 21, 2008, but it intends to do
so, and Mr. Wilson will be eligible for equitable participation at such
time.  If there is a change in control of eTelcharge as a result of a
merger or acquisition, or a sale of all or substantially all of eTelcharge’s
assets that occurs within the first year of Mr. Wilson’s employment, all of Mr.
Wilson’s options granted as of the date of the agreement, will vest
immediately.  If such a transaction occurs after the first year of Mr.
Wilson’s employment, any options granted after the date of the agreement will
vest immediately.  Mr. Wilson’s employment is not for any specified
period of time and he can be terminated at any time, with or without cause,
without payment of severance.  Mr. Howe is also eligible to receive
reimbursement for business related travel and other expenses.





eTelcharge
entered into a Separation and Release Agreement with Carl and Michelle Sherman,
which became effective on December 24, 2007.  Carl Sherman was the
Chairman and Chief Executive Officer of eTelcharge until July 31, 2007, and
Michelle Sherman was the Secretary and a director of eTelcharge until September
21, 2007.  eTelcharge paid $25,000 to the Shermans in connection with
this agreement.  The Shermans agreed to release eTelcharge from any
obligation to them, including the forgiveness of outstanding indebtedness in the
amount of approximately $336,279.  Pursuant to this agreement, the
Shermans also agreed to a five-year non-competition agreement and to indemnify
eTelcharge for any undisclosed liabilities that they may have incurred on behalf
of eTelcharge.  -21-





The
following table provides the information indicated as of December 31, 2007 with
respect to unexercised options held by each Named Executive
Officer.




OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-END
              OPTION
      AWARDSName
              (a)
            Number
      of Securities Underlying Unexercised Options (#)
              Exercisable
      (b)
            Number
      of Securities Underlying Unexercised Options (#)
              Unexercisable
      (c)
            Equity
      Incentive Plan Awards:
              Number
      of Securities Underlying Unexercised Unearned Options
              (#)
              (d)
            Option
      Exercise Price
              ($)
              (e)
            Option
      Expiration Date
              (f)Robert
      M. Howe
            10,000,000
            -0-
            -0-
            .011
            05/15/10Robert
      M. Howe
            1,000,000
            -0-
            -0-
            .011
            07/04/10Robert
      M. Howe
            1,000,000
            -0-
            -0-
            .011
            08/04/10Robert
      M. Howe
            1,000,000
            -0-
            -0-
            .011
            09/04/10Robert
      M. Howe
            1,000,000
            -0-
            -0-
            .011
            10/04/10Robert
      M. Howe
            1,000,000
            -0-
            -0-
            .011
            11/04/10Robert
      M. Howe
            1,000,000
            -0-
            -0-
            .011
            12/04/10Robert
      M. Howe
            -0-
            1,000,000(1)
            -0-
            .011
            01/04/11Robert
      M. Howe
            -0-
            1,000,000
      (1)
            -0-
            .011
            02/04/11Robert
      M. Howe
            -0-
            1,000,000
      (1)
            -0-
            .011
            03/04/11Robert
      M. Howe
            -0-
            1,000,000
      (1)
            -0-
            .011
            04/04/11Robyn
      Priest
            1,200,000
            -0-
            -0-
            .09
            08/15/17Robyn
      Priest
            100,000
            -0-
            -0-
            .09
            09/15/17Robyn
      Priest
            100,000
            -0-
            -0-
            .09
            10/15/17Robyn
      Priest
            100,000
            -0-
            -0-
            .09
            11/15/17Robyn
      Priest
            100,000
            -0-
            -0-
            .09
            12/15/17James
      T. Wilson
            100,000
            -0-
            -0-
            .05
            07/23/10James
      T. Wilson
            100,000
            -0-
            -0-
            .05
            08/23/10James
      T. Wilson
            100,000
            -0-
            -0-
            .05
            09/23/10James
      T. Wilson
            100,000
            -0-
            -0-
            .05
            10/23/10James
      T. Wilson
            100,000
            -0-
            -0-
            .05
            11/23/10James
      T. Wilson
            100,000
            -0-
            -0-
            .05
            12/23/10James
      T. Wilson
            -0-
            100,000
      (2)
            -0-
            .05
            01/23/11James
      T. Wilson
            -0-
            100,000
      (2)
            -0-
            .05
            02/23/11James
      T. Wilson
            -0-
            100,000
      (2)
            -0-
            .05
            03/23/11James
      T. Wilson
            -0-
            100,000
      (2)
            -0-
            .05
            04/23/11James
      T. Wilson
            -0-
            100,000
      (2)
            -0-
            .05
            05/23/11James
      T. Wilson
            -0-
            100,000
      (2)
            -0-
            .05
            06/23/11





Other
than individual compensation arrangements, there are no equity incentive
plans.





(1)
            Vesting
      in four equal monthly installments from January to April 2008, with a
      three year term, and expiring at the same rate that they
    vest.


(2)
            Vesting
      in six equal monthly installments from January to June 2008, with a three
      year term, and expiring at the same rate that they
  vest.


.


-22-


Compensation of
Directors





The
following table sets forth the compensation paid to each director who is not a
Named Executive Officer for services rendered during our fiscal year ended
December 31, 2007.





DIRECTOR
COMPENSATION


Name
            Fee
      Earned
              or
      Paid
              in
      Cash
            Stock
              Awards
      ($)(1)
            Option
              Awards
      ($)
            All
      Other
              Compensation
            Total
      ($)Michelle
      R. Sherman
            
            316(2)
            
            $25,000
      (5)
            25,316Thomas
      Jackson
            -
            498(3)
            
            
            498Roger
      Wagner
            
            263(4)
            
            
            263







(1)
Represents the dollar amount recognized for financial statement reporting
purposes for 10,000 shares of Common Stock granted to each director with respect
to service during fiscal 2007 in accordance with FAS 123R. Pro-rated for the
period of time each served as a director.


(2) At
December 31, 2007, Ms. Sherman beneficially owned an aggregate of 13,061,199
shares of Common Stock (162,743 held individually, 4,865,841 held jointly with
her husband, and 8,032,615 held by her husband), including 10,000 shares issued
in 2007 for service as a director.


(3) At
December 31, 2007, Mr. Jackson held an aggregate of 136,212 shares of common
stock jointly with his wife, including 10,000 shares issued in 2007 for service
as a director.


(4) At
December 31, 2007, Mr. Wagner held an aggregate of 13,703,660 shares of Common
Stock (7,823,123 shares held individually and 5,880,532 shares held by his
wife), including 3,333 shares issued in 2007 for service as a
director.


(5) This
amount reflects aggregate severance paid to Mrs. Sherman and her husband, Carl
Sherman, in connection with their resignations from eTelcharge.





Members
of the Board of Directors receive 10,000 shares of Common Stock for each year of
service as a director.  They do not receive any cash compensation
either as a retainer or for attendance at Board meetings.  They are,
however, reimbursed for out-of-pocket expenses incurred in connection with
service as a director and attendance at Board meetings.





Michelle
Sherman served as Secretary of eTelcharge until September 2007, and earned the
salary and bonus described above in such capacity.  In addition, Ms.
Sherman received the severance described above in connection with her
resignation from eTelcharge.





Item
11. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.





Security
Ownership of Certain Beneficial Owners and Management





The
following table sets forth the number of shares Common Stock beneficially owned
as of March 28, 2008 by (i) each person or “group” known by eTelcharge to be the
beneficial owner of more than five percent of any class of our voting
securities, (ii) each director of eTelcharge, (iii) each of eTelcharge’s
executive officer named in the Summary Compensation Table above, and (iv) by all
executive officers and directors of eTelcharge as a group.  Except as
noted below, to our knowledge, each stockholder listed below has sole voting and
investment power with respect to all shares of stock shown beneficially owned by
the stockholder.  -23-





Title
      of Class
            Name
      and Address of Beneficial Owner (1)
            
            Amount
      and Nature of Beneficial Ownership
            
            
            Percentage
      of ClassCommon
      Stock
            American
      Home Market 3811 Turtle Creek Blvd., Ste. 600, Dallas,
      TX  75252
            
            
            50,000,000
            
            
            
            17.4
            %Common
      Stock
            Roger
      Wagner (2)
            
            
            13,703,660
            
            
            
            4.9Common
      Stock
            Thomas
      Jackson
            
            
            136,212
            
            
            
            *Common
      Stock
            Rob
      Howe
            
            
            20,080,000
            (3)
            
            
            6.5Common
      Stock
            Robyn
      Priest
            
            
            1,900,000
            
            
            
            *Common
      Stock
            James
      T. Wilson
            
            
            1,100,000
            
            
            
            *Common
      Stock
            Carl
      O. Sherman
            
            
            13,061,199
            (4)
            
            
            4.6Common
      Stock
            All
      officers and directors as a group (consisting of 7
persons)
            
            
            38,519,872
            
            
            
            16.6





* Less
than 1%


(1)
Unless otherwise indicated, the address is c/o eTelcharge, 1636 N. Hampton Road,
Suite 270, DeSoto, TX  75115.


(2)
Includes 7,823,128 shares held individually and 5,880,532 shares held by his
wife.


(3)
Includes 20,000,000 options exercisable within 60 days.


(4) Includes 162,743 held by his wife,
Michelle Sherman, 4,865,841 held jointly with his wife, and 8,032,615 held
individually.


The
following table provides the information indicated as of December 31, 2007 with
respect to compensation plans (including individual compensation arrangements)
under which equity securities of the registrant are authorized for issuance,
aggregated (i) for all compensation plans previously approved by security
holders, and (ii) all compensation plans not previously approved by security
holders.





Equity
Compensation Plan Information





Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
              (a)
            Weighted-average
      exercise price of outstanding options, warrants and rights
              (b)
            Number
      of securities remaining available for future issuance under equity
      compensation plans (excluding securities reflected in column
      (a))
              (c)Equity
      compensation plans approved by security holders
            -0-
            N/A
            -0-Equity
      compensation plans not approved by security holders
            25,000,000(1)
            $.026
            (2)Total
            25,000,000
            $.026
            (2)







(1)
Shares issuable upon the exercise of outstanding employee stock
options.




(2) Under
the terms of her compensation arrangement, Ms. Priest receives monthly grants of
100,000 fully vested options to purchase Common Stock.  -24-





Item
12. Certain Relationships and Related Transactions and Director
Independence.





As
described above in Item 10, eTelcharge entered into a Separation and Release
Agreement with Carl Sherman, eTelcharge’s former Chairman and Chief Executive
Officer, and Michelle Sherman, eTelcharge’s former Secretary and a former
director, which became effective on December 24, 2007.  The Shermans
are husband and wife.  eTelcharge paid $25,000 to the Shermans in
connection with this agreement.  The Shermans agreed to release
eTelcharge from any obligation to them, including the forgiveness of outstanding
indebtedness in the amount of approximately $336,279.  Pursuant to
this agreement, the Shermans also agreed to a five-year non-competition
agreement and to indemnify eTelcharge for any undisclosed liabilities that they
may have incurred on behalf of eTelcharge.  During fiscal 2007,
eTelcharge paid to Ms. Sherman an aggregate of $5,500 as compensation for
services as Secretary and a director of eTelcharge through her
resignation.





One of
our directors, Roger Wagner, is the brother of Rodney Wagner, to whom eTelcharge
issued an aggregate of 34,628,384 shares of Common Stock for $510,548 in cash
pursuant to subscription agreements during fiscal 2007.





Rodney
Wagner is also a party to three consulting agreements with eTelcharge, as
follows:





Under the
terms of the twelve month Marketing Consulting Contract dated May 16, 2007, Mr.
Wagner provides information and media via a web-based forum communicating
eTelcharge’s messages through audio and video news content to the business,
financial and investing community in exchange for an aggregate of 3,942,220
shares of restricted Common Stock payable in four equal quarterly
installments.





Under the
terms of a two month consulting agreement, dated October 17, 2007, Mr. Wagner
provided advisory services aimed at engaging other financial public relation
firms to publicize eTelcharge in exchange for an aggregate of 6,700,000 shares
of restricted Common Stock.





On
January 2, 2008, eTelcharge entered into a marketing consulting contract with
Mr. Wagner for a 30 day term, under which Mr. Wagner provided advisory services
with respect to business development and various business transactions in
exchange for an aggregate of 3,000,000 shares of restricted Common
Stock.





In
addition, Rodney Wagner is the sole owner of The G.I.D. Group Inc., which is a
party to a consulting agreement with eTelcharge.  This thirteen month
agreement, dated March 20, 2007, is for assistance with business development in
exchange for an aggregate of 12,000,000 shares of restricted Common
Stock.





As
described above in Item 5 “Recent Sales of Unregistered
Securities”, the Debenture issued to GGI on December 28, 2007 is secured
by a pledge of 3,000,000 shares of common stock provided by Rodney
Wagner.





As
described above in Item 5, on March 20, 2007, eTelcharge issued 50,000,000
shares of Common Stock to American Home Market, in a negotiated retirement of
principal and accrued interest on an unsecured promissory note issued to AHM on
March 31, 2006 in the amount of $250,000.  During the year ended
December 31, 2006, AHM had advanced $150,313 under the AHM Note.  The
AHM Note provided for an interest rate of 8% per annum, with interest-only
payments commencing on February 1, 2007.  The outstanding balance
payable at the time of settlement of the AHM Note was $157,246, which included
$6,933 of accrued interest.  The principal balance was due on December
1, 2007, but AHM demanded earlier payment.





During
1999, eTelcharge purchased proprietary rights from Consumer Data Solutions Corp.
("CDS"), which, at the time, had the same majority stockholder as eTelcharge,
Carl Sherman.  This agreement requires eTelcharge to pay CDS for a
period of 99 years, 3% of any and all income, less customary and normal business
expenses associated with the usage of the purchased proprietary rights (which
equates to 3% of net income of eTelcharge) beginning January 1,
2001.  These proprietary rights are not currently in use in any of the
technology of eTelcharge, and no royalties were paid in fiscal 2007 or are
anticipated to be paid in the future.  -25-







Director
Independence





Our Board
of Directors does not have separate standing compensation, nominating or audit
committees.





The
following members of the Board of Directors of eTelcharge are independent as
defined in Rule 4200(a) of the National Association of Securities Dealers
listing standards: Thomas Jackson.





The
following members of the Board of Directors of eTelcharge are not independent as
defined in Rule 4200(a) of the National Association of Securities Dealers
listing standards: Robert M. Howe III and Roger Wagner.





Item
13. Exhibits.





Exhibit
      No.
              Description3.1
              Articles of Incorporation, as
      amended3.2
              Bylaws4.1
              7 3⁄4% Convertible Debenture
      (1)10.1
              Assignment from Consumer Data
      Solutions Corp. (2)10.2
              Office Lease10.3*
              Employment Agreement with Robert
      M. Howe III (3)10.4*
              Employment Agreement with Robyn
      Priest10.5*
              Employment Agreement with James
      T. Wilson10.6
              Subscription Agreement, between
      eTelcharge and Golden Gate Investors (1)10.7
              Stock Pledge Agreement between
      Rodney Wagner and Golden Gate Investors (1)10.8
              Promissory Note issued by Golden
      Gate Investors to eTelcharge (1)10.9
              Letter Agreement with Golden Gate
      Investors10.10
              Separation and Release Agreement
      between eTelcharge and Carl Sherman and Michelle Sherman
    (1)10.11
              Form
      of Cash Subscription Agreement10.12
              Promissory
      Note issued to American Home Market10.13
              Settlement
      and Release Agreement with American Home Market14
              Code
      of Ethics31.1
              Rule 13a-14(a)/15d-14(a)
      Certification of Robert M. Howe III31.2
              Rule
      13a-14(a)/15d-14(a) Certification of Robyn Priest32.1
              Section
      1350 Certification of Robert M. Howe III32.2
              Section
      1350 Certification of Robyn
Priest


*
Management contract or compensatory plan, contract or arrangement.


(1)  Incorporated
      by reference in this document to the Current Report on Form 8-K filed with
      the Securities and Exchange Commission on January 3,
  2008.


(2)  Incorporated
      by reference in this document to the Registration Statement on Form SB-2
      filed with the Securities and Exchange Commission on September 5,
      2001.


(3)  Incorporated
      by reference in this document to the Current Report on Form 8-K filed with
      the Securities and Exchange Commission on June 20,
  2007.


-26-


Item
14. Principal Accountant Fees and Services.





The
following table presents fees for professional services rendered by Malone &
Bailey PC (“Malone”)for the audit of eTelcharge’s annual financial statements
for the years ended December 31, 2007, and December 31, 2006, and fees billed
for other services rendered by Malone during those periods.





Fee
      Category
            
            Year
      ended
              December
      31, 2007
            
            
            Year
      ended
              December
      31, 2006Audit
      fees
            
            $
            22,327
            
            
            $
            6,750Audit-related
      fees
            
            
            -0-
            
            
            
            -0-Tax
      fees
            
            $
            2,500
            
            
            $
            2,500All
      other fees
            
            
            -0-
            
            
            
            -0-




(1)  Audit
fees were principally for audit work performed on our annual financial
statements and review of our interim financial statements.


(2)  Malone
did not provide any “audit-related fees” during the period.


(3)  Tax
fees were for services related to preparation of federal income tax returns and
state franchise tax returns.


(4)  Malone
did not provide any “other services” during the period.





Policy
Related to Board of Directors Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Registered Accounting Firm.





As we do
no currently have an audit committee, and although we lack a formal policy
relating to approval of audit and permitted non-audit services provided by the
independent auditors, our Board of Directors has pre-approved all such services
described above.These services may
include the following:





·
            Audit
      services, which are generally services for the audit of our annual
      financial statements and review of our financial statements that are
      included in our Form 10-QSB, or services that are normally provided in
      connection with statutory and regulatory filings or
      engagements.





·
            Audit-related
      services, which are generally assurance and related services that are
      reasonably related to the performance of Audit Services, but do not
      otherwise fall under the category of Audit services.  We
      generally do not request any Audit-related services from
      Malone.





·
            Tax
      services, which are generally tax compliance, tax advice, and tax planning
      services, including preparation of tax
returns.





·
            All
      other services, which are generally all products and services which do not
      otherwise fall into the three categories described above.  We
      generally do not request any other services from
  Malone.








-27-


SIGNATURES




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





Etelcharge.com








/s/ Robert M. Howe
III


By: Robert M. Howe III


Title: President and Chief Executive
Officer


Date: March 31, 2008







In
accordance with the Exchange Act, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.




Signature
            Title
            Date/s/
      Robert M. Howe III
            Chairman
      of the Board,President,
      andRobert
      M. Howe III
            Chief
      Executive Officer
            March
      31, 2008/s/
      Robyn Priest
            Senior
      Vice President – FinanceRobyn
      Priest
            And
      Chief Financial Officer
            March
      31, 2008/s/
      Thomas JacksonThomas
      Jackson
            Director
            March
      31, 2008/s/
      Roger WagnerRoger
      Wagner
            Director
            March
      31, 2008







-28-