<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[x] Annual report under section 13 or 15(d) of the Securities Exchange Act of
    1934 for the fiscal year ended December 31,2002

    Commission file number    000-30479

                              eTELCHARGE.COM, INC.
                 (Name of Small Business Issuer in its Charter)

            NEVADA                                       75-2847694
(State or other jurisdiction of               (I.R.S. Employer incorporation or
      Identification No.)                               organization)

                               eTELCHARGE.COM, INC
             1636 N. HAMPTON ROAD, SUITE 270, DESOTO, TEXAS 75115.
                                 (972) 298-3800
     (Address and telephone number of issuer's principal executive offices)

                   Securities under Section 12(b) of the Act:

                                      None

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

                         Common Stock, $0.003 Par Value

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definite proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

             State issuer's revenues for its most recent fiscal year
                                      None

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60days. (See definition of affiliate in Rule
12b-2 of the Exchange Act) $6,379,663

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 11,961,456 shares outstanding as of
March 01, 2003.

Documents incorporated by reference. None

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

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

HISTORY

    eTELCHARGE.com, Inc. (the "Company"), 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. The Company has an Internet web site,
www.etelcharge.com..

THE BUSINESS

CURRENT OPERATIONS

    We were organized in June 1999 to provide customers of online merchants with
the ability to charge their Internet purchases to their local telephone bill,
rather than to a credit card. Generally, our users do not have a credit card or
are reluctant to use a credit card online due to security and privacy concerns.
We enable these charge transactions through a 900 number billing arrangement
with AT&T. Our billing arrangement with AT&T is available to customers
throughout the United States, except those western states for which Qwest
provides the local service because Qwest does not provide local billing services
for any 900 number.

    Internet merchants that offer our telephone billing option include our brand
icon with the icons of credit card companies on the check out or pay page of
their Web site. Customers who wish to charge their purchase to their telephone
bill simply click on our icon and the billing information is communicated
through AT&T to the local telephone service provider, using AT&T's 900 billing
system. The charge then appears on the customer's next monthly telephone bill on
a separate page of the bill, with AT&T's logo on the page.

    Although three other companies use similar 900 billing arrangements to allow
customers to charge purchases to their telephone bills, these charges are
limited to the purchase of services and some online software products. To our
knowledge, no other company offers customers the opportunity to charge other
goods and merchandise to their telephone bills.

    We are in the development stage and have not generated any material revenue.
We began our service online in August 2000 and currently have agreements with 19
Internet merchants to offer our local telephone billing service to their
customers. We entered into these agreements commencing in the second quarter of
2001. No single merchant agreement is material to our ongoing business
operations. We charge these merchants a fee for each transaction ranging from 5%
to 8% of the customer purchase which is approximately the same fee AT&T charges
us for providing to us its 900 billing arrangement. In addition, we charge the
customer a fee of 10% of the product or service purchase price. We did not earn
any revenue from our merchants until October 2001 because it took us until that
time to complete the integration of our system with that of our online
merchants.

    Commencing in January 2003, AT&T no longer communicates the 900 charge to
the local phone companies nor will the local monthly bill include AT&T's logo on
the 900 billing page. Consequently, we have selected Billing Concepts, Inc., one
of many third-party billing services, to handle the billing transaction. AT&T
will continue to provide all other support services for the 900 billing and the
change in third-party billing services will not in any way affect transaction
procedures of the customer and merchant. Billing Concepts, Inc. charges similar
fees as AT&T.

    Our rights to offer AT&T's 900 billing service online were assigned to us by
Consumer Data Solutions Corp., which originally entered into a 900 number
billing agreement with AT&T in March 1994. CDS has assigned to us its rights
under the AT&T agreement until November 2098. We pay a license fee to CDS equal
to 3% of the gross fees we receive from online telephone billing charge
transactions. CDS is majority owned and controlled by Carl O. Sherman, our Chief
Executive Officer and a director. Mr. Sherman founded CDS in 1993 to provide a
900 billing service for pizza and other food delivery businesses. The service
allows customers to bill their food deliveries directly to their telephone bill.
Mr. Sherman continues to act as the Chief Executive Officer of CDS, although he
spends less than 10% of his time on its operations. CDS does not compete with us
as we have the exclusive right to use the 900 billing service for online sales
transactions, including online food delivery services. We do not believe any
conflicts of interest could develop between CDS and us for these reasons.


                                       2
<PAGE>

    According to a March 30, 2001 Wall Street Journal article, over 70 million
adult Americans do not have credit cards. Moreover, a majority of credit card
holders who decline to charge online do so out of security or privacy concerns.
Initially, we have targeted Internet merchants who offer CDs, video cassette
tapes, computer software, books, flowers and food items to offer our telephone
billing option. Following an online purchase by a customer, the charge is
included on behalf of the merchant in the customer's next telephone bill.
Approximately 30 days after an online charge, we receive an advance against the
purchase price prior to the customer paying the telephone bill. After deducting
our fees, we forward payment directly to our online merchant. If the charge is
not paid by the customer for any reason, including a default or refusal to pay
due to a dispute, the telephone company will charge back its advance to us. In
this event, our merchant and we will not receive the purchase price for the
goods or services. We intend to establish a reserve of 3% of fees due to us from
merchants to cover defaults, refusals to pay, disputes and other charge backs
due to customer nonpayment. This reserve is larger than that of our competitors,
which averages approximately 2% of such fees according to these competitors. We
intend to evaluate this reserve on an ongoing basis to reflect our experience.

    The privacy and security of our billing service could be breached by third
parties seeking confidential account information such as passwords and financial
account information. Such a breach could subject us to liability from customers
and merchants and could harm our reputation, thereby inhibiting the use of our
billing service. However, since the customer only provides a telephone number,
and not charge card information, and since the maximum amount we allow any
customer to charge in any month is only $150, we do not believe it likely that
third parties will seek to access this information. In order to make any breach
of our system more difficult, our system only approves charges that originate
from the customer's home computer and verifies the charge through a telephone
call that must be generated from the customer's telephone number.

STRATEGY

    Our objective is to significantly grow the number and dollar amount of
online transactions charged by customers to their telephone bills. We believe we
can attract online merchants by offering their customers a new billing option
which is safe, secure and confidential and which has been previously unavailable
to customers who do not have credit cards. In order to achieve our objective we
intend to:

    o    Continue to stress the security and privacy advantages of our telephone
         billing service;

    o    Maintain a customer-friendly system for initiating online charges to
         telephone bills;

    o    Stress our strategic relationship with AT&T which allows for online
         charges to telephone bills through AT&T's 900 billing system; and

    o    Provide responsive customer service to our online merchants through use
         of an employee assigned to each merchant.

    Although AT&T terminated its billing services for all 900 number merchants
in January 2003, requiring us to select another billing service provider, the
charge transactions continue to be supported by AT&T.

MARKETING

    Using our marketing staff, including our President, we market to online
merchants through direct presentations by our staff. We attract online merchants
through direct sales calls, referrals from Web design firms, advertisements in
trade journals, media reports about our company and word of mouth.

    In the future, we intend to use mass e-mail communications to inform
Internet users of our charge payment option, in order to encourage customers to
request that our payment option be included on the merchant Web sites on which
the customer shops. We also intend to use banner and other online advertisements
to market to online virtual shopping mall providers in order to reach online
merchants. We will also increase our advertising in print and Internet-based
trade publications subscribed to by online merchants and may also use television
commercials to inform merchants and customers that purchases can be charged to
the customers' telephone bill.



                                       3
<PAGE>

    Our marketing efforts stress the simplicity and privacy of using a telephone
number and password for online charges rather than using a credit card. We also
stress to our online merchants the substantial number of individuals who do not
have credit cards. Finally, we include in our sales presentations our commitment
to donate $.05 per billing transaction up to a maximum of $250,000 per year to
KIDCARE, a Houston-based charity benefitting underprivileged children. Our
commitment to KIDCARE may be cancelled by us on six months notice.

    We have filed a service mark application with the U.S. Patent Office for our
online icon, "eTELCHARGE." The application is currently pending and we cannot
assure that it will be granted.

COMPETITION

    We compete with the U.S.-based multinational credit card companies as a
charge option to customers electing to charge on the merchant's Web site. In
soliciting merchants, we are disadvantaged by the fact that we charge the
merchant more than a credit card company would for the same transactions and we
also charge the merchants' customers a separate charge fee. Additionally,
customer charges are limited to no more than $150 per month. However, we offer a
new charge option to customers of our merchants who do not have credit cards or
are reluctant to use credit cards online.

    We also compete with three other 900 billing services, eCharge, iBill and
Secure Bill, all of which are larger than we and offer customers similar
opportunities to charge to their telephone bills online, through arrangements
with AT&T's 900 billing service. However, 900 billing charges through these
companies are generally limited to services, rather than products, and to some
digital goods offered for sale online. We believe we have a competitive
advantage in that we have developed a 900 number application that allows for the
purchase of all goods offered by our online merchants. Moreover, we believe that
our software is more customer friendly than our competitors because our customer
simply clicks on the eTELCHARGE icon and provides a password and e-mail address.
iBill and Secure Bill require the customer to call a 900 number while online to
obtain a special pin number to complete the transaction.

    There can be no assurance that competitors will not develop software in the
future that will allow them to include all merchant offered products and
services for online charging. Moreover, many of our competitors are larger,
better financed, have been in business longer and have significantly more
working capital and more experienced personnel than we.

GOVERNMENT REGULATION

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

EMPLOYEES

    As of April 30, 2003, we had two full-time employees, including our
executive officers.

ITEM 2. DESCRIPTION OF PROPERTY

    We currently lease 1,369 square feet of office space on a three-year lease
expiring July 31, 2003 at 1636 N. Hampton Road, Suite 270, DeSoto, Texas 75115.
We share our space with Consumer Data Solutions Corp., an affiliated company,
with each company paying 50% of the $1,000 per month rent.

    CDS offers 900 number billing services for restaurant food delivery. Mr.
Sherman, our Chief Executive Officer, founded and acts as Chief Executive
Officer of CDS. We have no direct business relationships with CDS, except the
license agreement granted by it to us which allows us to offer 900 billing
services online.


                                       4
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

    As of the date of this report there are no legal proceedings pending against
the Company.

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

    The Company did not submit any matters to a vote of its stockholders during
the 2002 fiscal year.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTES

    The Company does not currently have its shares listed on any exchange but
has received approval from the NASD, through a market maker, to have its shares
listed on the NASD Over The Counter Bulletin Board.

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

    The Company generated a net loss of $1,116,689 for the year ended December
31, 2002 compared to a net loss of $1,441,823 for the year ended December 31,
2001. The decreased loss primarily resulted from a decrease in payroll expenses
of $128,000, a decrease in professional fees of $15,000 and a decrease in the
non-cash charges associated with the issuance of common stock for services
deceased to $128,000, and a decrease in advertising costs of $28,000. The
Company, as a development company, has generated no material operating revenues
as of December 31, 2002.

                                PLAN OF OPERATION

    We were organized in June 1999 and are in the development stage. Investors
should note that our auditor's report for the year ended December 31, 2002
included a paragraph which expressed substantial doubt as to our ability to
continue as a going concern. We expect that our revenue will be generated from
online merchants and customers. We charge merchants a one-time processing fee of
$199 to $2,499 depending upon the anticipated number of the merchant's online
transactions, a billing fee of 5% to 8% of the purchase price of the goods or
services charged, not including taxes, and an approximately $.15 per transaction
service charge. We charge customers who purchase goods or services online a fee
equal to 10% of the goods or services purchased and we limit their purchases to
no more than $150 per month. Our costs for online transactions are comprised of
AT&T's billing and collection charge of 8% of the amount of the transaction and
a fixed fee of $.45 per transaction. AT&T earns this fee for providing the bills
which the local telephone companies include in their monthly billing statements
to their customers. Commencing in January 2003, AT&T terminated providing this
billing service, and we have contracted with a private third-party billing
service, Billing Concepts, Inc., in place of AT&T. All other aspects of AT&T's
900 services will remain the same, as will customer and merchant transaction
procedures.

    We intend to establish a reserve of 3% of fees due to us from merchants to
cover defaults, refusals to pay, disputes and other charge backs due to customer
nonpayment. This reserve is larger than that of our competitors, which averages
approximately 2% of such fees according to these competitors. We have not made
any independent assessment of the sufficiency of the reserve amount, because we
have not yet generated on line billing transactions that create receivables due
from merchants. Accordingly, although we believe our reserve will be adequate to
cover defaults and other charge backs, we cannot give any such assurance. We
intend to evaluate this reserve on an ongoing basis to reflect our experience.

    Although we have generated only negligible revenue, we currently have
billing agreements with 19 Web merchants, all of which have been integrated into
our billing system. Previously, it took a number of months to integrate our
merchants, as they were required to write some of the computer code necessary to
join our system. Recently, however, we began to provide the code ourselves which
we believe will significantly shorten the time necessary for merchants to join
our billing system. We expect, but cannot assure, that we will add new Web
merchants in 2003, most of whom will be signed up through the efforts of our
resellers. We currently have 11 such resellers who are existing Web merchants,
Web designers and shopping cart software companies who are paid a commission of
approximately 20% of the revenue generated from new Web merchants referred by
them. Our resellers take a three day training course from us, either online or
at our corporate offices, before commencing to market our 900 billing services
to Web merchants. Our agreements with resellers provide for the 20% commission,
a


                                       5
<PAGE>

nominal residual fee so long as we retain Web merchants referred by the reseller
and are cancelable by either party on 30 days notice to the other.

    Commencing in the second quarter of 2003, and assuming financing is
available, we intend to initiate an online advertising campaign, using mass
e-mails to advise online users of our billing service. We also intend to
commence at that time an effort to attract resellers through attendance at
industry and trade shows and through advertising in trade journals. We are
uncertain as to how many resellers we will be able to attract through these
efforts.

    We also seek to enter into agreements with other online entities and Web
sites to generate market awareness and usage of our eTELCHARGE icon. We will
also continue to promote our brand through the issuance of press releases to
related trade publications, general interest media publications, print media and
Internet media.

    Over the next two years, we intend to make adjustments and improvements in
our product software and marketing efforts. In order to identify the areas that
need improvement, we anticipate meeting with online retailers and AT&T and to
conduct online consumer interviews. In the near term, we will expand our efforts
to reach online retailers, focusing upon the larger national retailers.
Commencing in the second quarter of 2003, assuming funds are available, we will
also demonstrate our billing system at industry affiliated trade shows.

    The initiation of our plan of operation is dependent upon our raising
sufficient working capital to allow us to institute the plan. However, there can
be no assurance that we will be successful in doing so. Due to our lack of
capital and our need for working capital to continue our business plan, our
auditors issued a going concern qualification as part of their audit opinion of
our financial statements for the year ended December 31, 2002. We have not
generated any revenue since our inception and since inception through the year
ended December 31, 2002 we incurred a cumulative net loss of $3,589,620 to date
including a net loss of $1,116,689 for the year ended December 31, 2002. Our
operations have been funded solely through the issuance of our common shares.
Total cash proceeds for the issuance of common shares totaled $1,009,472 from
inception through December 31, 2002 including $191,725 for the year ended
December 31, 2002. In order to institute our business plans we must continue to
raise capital, as revenue from operations will be insufficient in the short run
to meet our working capital needs. However, we cannot assure that any such
capital will be available to us. Based upon our current cash resources, we
cannot meet our cash requirements or institute our business plan for more than
six months unless we raise additional funds from the sale of our securities, as
we have done in the past, or unless our revenue grows significantly.



ITEM 7. FINANCIAL STATEMENTS

    Reference is made to the Index of Financial Statements which appears on page
F-1 of this report. The Report of Independent Accountants, Financial Statements,
Notes to Financial Statements and Financial Statement Schedule which are listed
in the Index of the Financial Statements and which appear beginning on page F-2
of this report are incorporated into this Item 7.

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

    None.

                                    PART III

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

    The following are the Company's current Directors and Officers:



                                       6
<PAGE>

    The following table sets forth information regarding our executive officers
and directors, all of whom joined us at our inception in June 1999:

<TABLE>
<CAPTION>
                        NAME            AGE         OFFICE
              ------------------------ ----- -----------------------
<S>                                    <C>   <C>
              Carl O. Sherman........    36  Chief Executive Officer and Director
              Michelle R. Sherman....    32  Secretary and Director
              William L. Widman......    62  Chief Financial Officer
              Marvin Parish..........    50  Director
              Robert Penn............    36  Chief Technology Officer
</TABLE>

    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 except Carl O. Sherman is married to Michelle R. Sherman. Directors do not
receive payment for attending Board meetings, but are reimbursed for
out-of-pocket expenses.

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

    CARL O. SHERMAN cofounded our company and has served as Chief Executive
Officer and a director since our inception in June 1999. Mr. Sherman has also
been the Chief Executive Officer of Consumer Data Solutions Corp., a Dallas,
Texas-based company engaged in consumer services, since 1993. He devotes 90% of
his time to our affairs and 10% of his time to the affairs of CDS. Mr. Sherman
was a Senior National Account Executive for Sprint Corporation from 1988 to
1993. He is married to Michelle R. Sherman.

    MICHELLE R. SHERMAN cofounded our company and has served as Secretary and a
director since our inception in June 1999. Ms. Sherman has also been employed by
Consumer Data Solutions Corp. as Operations Director and an account executive
since July 1996. From 1993 to 1996 she was a project supervisor and customer
service representative for ATC, Inc./AT&T Universal Card Project. Ms. Sherman is
married to Carl O. Sherman.

    WILLIAM L. WIDMAN has been self-employed as a management consultant for
small- and mid-size companies since 1990. From 1984 to 1990 Mr. Widman was
President and Chief Executive Officer of City National Bank, a full service
commercial bank based in Houston, Texas. From 1980 to 1984 Mr. Widman was the
Executive Vice President and Senior Lending Officer for InterFirst Bank, with
direct responsibility for lending and credit administration. Mr. Widman
graduated from the State University of New York with a Bachelor of Arts degree
in History and a minor in Business Administration. He devotes approximately ten
hours per month to our affairs.

    MARVIN PARISH has been a Senior Vice President for Wells Fargo Bank since
January 2000. From April 1997 to November 1999 he was a Senior Vice President
for Chase Manhattan Bank in Dallas, Texas. From July 1978 to March 1997 he was
employed in a number of capacities by NationsBank, leaving the bank as its
Senior Vice President. Mr. Parish graduated with a Bachelor of Arts degree from
Prairie View A&M University in 1975, with a concentration in management and
economics.

    ROBERT PENN, is the Company's Vice President of Systems Administration and
Chief Technology Officer, and has been employed in these capacities since
December 1999. Prior to his employment with the Company, Mr. Penn held the
position of Head Systems Administrator for Parks Associates from 1997 to 1999.
From 1996 to 1997, Mr. Penn was employed as the General Manager of Mr. Jim's
Restaurant. From May 1995 to November 1995, Mr. Penn worked as an Inventory
Representative for an individual Wal-Mart Store location. Prior to this
position, Mr. Penn occupied temporary positions through Kelly Services, Inc.
from October of 1994 to May of 1995. From August 1992 to January 1993, Mr. Penn
found temporary employment through Kelly Services, Inc. Prior to this period,
Mr. Penn was employed as a Lab Technician for Dixico Inc. from 1988 to 1992. In
1995, Mr. Penn filed personal bankruptcy in the U.S. Bankruptcy Court for the
Northern District of Texas and was discharged thereafter.


                                       7
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

    None of our executive officers have received or currently receive
compensation in excess of $100,000 per year. Mr. Sherman, our Chief Executive
Officer, entered into a five-year employment agreement with us in December 1999
under which he receives an annual salary of $42,000 plus the issuance of 200,000
shares of our common stock over the term of the employment agreement cancelable
by us at any time on two weeks notice. Mr. Sherman's compensation for the years
ended December 31, 1999, 2000 and 2001 is set forth below.


                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                 LONG TERM COMPENSATION
                                                                       -------------------------------------------
                                     ANNUAL COMPENSATION                          AWARDS                 PAYOUTS
                        ---------------------------------------------- ------------------------------  -----------
            (a)           (b)      (c)        (d)          (e)               (f)             (g)          (h)            (i)
           NAME                                                                           SECURITIES
            AND                                           OTHER           RESTRICTED      UNDERLYING                     ALL
         PRINCIPAL                                        ANNUAL            STOCK          OPTIONS/       LTIP          OTHER
         POSITION        YEAR   SALARY($)  BONUS($)   COMPENSATION($)      AWARD(S)         SARS(#)     PAYOUTS($)  COMPENSATION($)
      --------------    ------ ---------- ---------- ----------------- ------------------ -----------  ----------- ----------------
<S>                     <C>    <C>        <C>        <C>    <C>        <C>                <C>          <C>         <C>
      Carl O. Sherman
      Chief Executive    2000    42,000      -0-           -0-         40,000 shares (1)      -0-          -0-         -0-
      Officer            2001    57,000      -0-           -0-         -0-                    -0-          -0-         -0-
                         2002    36,426      -0-           -0-         40,000 shares (2)      -0-          -0-         -0-
</TABLE>

(1)  Valued at $39,634.
(2)  Valued at $60,000

    None of our executive officers or directors has been granted stock options,
warrants or similar securities.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth information with respect to the ownership of
our common stock as of December 31, 2001 by:

    o    The holders of more than 5% of our common stock;

    o    Each of our directors; and

    o    All of our directors and executive officers as a group.

    Each stockholder's address is in care of our company at 1636 N. Hampton
Road, Suite 270, DeSoto, Texas 75115.

<TABLE>
<CAPTION>
                                             NUMBER OF SHARES          PERCENT OF COMMON STOCK
        NAME OF BENEFICIAL OWNER           OF COMMON STOCK OWNED       OWNED PRIOR TO OFFERING
   ---------------------------------- ------------------------------ ----------------------------
<S>                                   <C>                            <C>
   Carl O. Sherman(1)...............              5,567,913                         51.1%
   Michelle R. Sherman(1)...........              5,567,913                         51.1%
   Marvin Parish....................                 13,880                            *
   James E. May.....................              1,016,120                          9.1%
   All officers and directors
     as a group (five persons)......              5,581,793                         50.2%
</TABLE>


----------
* Less than 1%

(1)  Carl O. Sherman and Michelle R. Sherman are husband and wife and each share
     in the beneficial ownership of all 5,567,913 shares.

(2)  Comprised of 180,000 shares of common stock and options to purchase
     1,150,000 shares of common stock of which 750,000 shares are exercisable at
     $2.00 per share and 400,000 shares are exercisable at $2.50 per share.


                                       8
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    During November 2001, Carl O. Sherman, our Chief Executive Officer, advanced
the Company $38,000 in exchange for a note payable. The note payable is
uncollateralized, requires monthly interest payments at 12.25% and does not have
a specific maturity date. At December 31, 2002, $30,110 is outstanding on this
note payable.

    In November 1999, we entered into a license agreement with Consumer Data
Solutions Corp. under which CDS granted us an exclusive license to use its 900
number telephone billing software and assigned us its 900 telephone billing
agreement with AT&T, in exchange for a cash payment of $116,500 and a royalty
equal to 3% of our net income during the license period which we are obligated
to pay to CDS. The license expires November 2098. Carl O. Sherman, our Chief
Executive Officer and a director, is the controlling stockholder, Chief
Executive Officer and a director of CDS. We believe that the terms of the
license agreement with CDS are fair, reasonable and consistent with terms we
could negotiate with unaffiliated third parties. In the future, any transactions
with affiliated companies will be approved by a majority of the independent
members of our board of directors.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits:

    (a)(1) Index to Financial Statements

        Please see the accompanying Index to Financial Statements which appears
    on page F-1 of this report. The Report of Independent Certified Public
    Accountants, Financial Statements and Notes to the Financial Statements
    which are listed in the Index to Financial Statements and which appear
    beginning on page F-2 of this report are incorporated by reference into Item
    7. above.

     (a)(2) 99.1 Certification of Principal Executive Officer Re: Sarbanes-Oxley
                 Act of 2002
     (a)(2) 99.2 Certification of Principal Financial Officer Re: Sarbanes-Oxley
                 Act of 2002

  (b) Reports on Form 8-K

        None

ITEM 14. CONTROLS AND PROCEDURES

         Based on their evaluation, as of a date within 90 days of the filing
date of this Form 10-KSB, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the Company's disclosure controls and
procedures (as defined in Rule 13a-14 (c) and 15d-14 (c) under the Securities
Exchange Act of 1934, as amended) are effective. There have been no significant
changes in internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

                                   SIGNATURES

    In accordance with Section 12 of the Securities and Exchange Act of 1934,
the registrant caused this Form 10-KSB to be signed on its behalf by the
undersigned, thereunto duly authorized.

    eTELCHARGE.com, Inc.

Date: May 21, 2003                   By     /s/ Carl O. Sherman
                                            -------------------
                                            Carl O. Sherman, Sr., President



                                       9
<PAGE>

    Pursuant to the requirements of the Securities Act, as amended, this
Registration Statement has been signed below by the following persons on the
dates indicated.

   /s/ CARL O. SHERMAN           Chief Executive Officer and       May 21, 2003
   -------------------           Director
   Carl O. Sherman
   /s/ MICHELLE R. SHERMAN       Secretary and Director            May 21, 2003
   -----------------------
   Michelle R. Sherman
   /s/ WILLIAM L. WIDMAN         Chief Financial Officer           May 21, 2003
   ---------------------         (Principal Accounting Officer
   William L. Widman
   /s/ MARVIN PARISH             Director                          May 21, 2003
   -----------------
   Marvin Parish


                                 CERTIFICATIONS

         I, Carl O. Sherman, Chief Executive Officer, certify that:
         1. I have reviewed this annual report on Form 10-KSB of eTelcharge.com,
         Inc., a Texas corporation;
         2. Based on my knowledge, this annual report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this annual report;
         3. Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;
         4. The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have: a) designed such disclosure controls and procedures to ensure
         that material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared; b) evaluated the effectiveness of the registrant's
         disclosure controls and procedures as of a date within 90 days prior to
         the filing date of this annual report (the "Evaluation Date"); and c)
         presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;
         5. The registrant's other certifying officers and I have disclosed,
         based on our most recent evaluation, to the registrant's auditors and
         the audit committee of registrant's board of directors (or persons
         performing the equivalent functions): a) all significant deficiencies
         in the design or operation of internal controls which could adversely
         affect the registrant's ability to record, process, summarize and
         report financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and b) any fraud, whether
         or not material, that involves management or other employees who have a
         significant role in the registrant's internal controls; and
         6. The registrant's other certifying officers and I have indicated in
         this annual report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

         Date: May 21, 2003
         /s/ Carl O. Sherman, Chief Executive Officer
          ---------------------------------------------
         Principal Executive Officer

         I, William L. Widman, Chief Financial Officer, certify that:
         1. I have reviewed this annual report on Form 10-KSB of eTelcharge.com,
         Inc., a Texas corporation;
         2. Based on my knowledge, this annual report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this annual report;
         3. Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this annual report;
         4. The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have: a)



                                       10
<PAGE>


         designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared; b) evaluated the effectiveness of the registrant's
         disclosure controls and procedures as of a date within 90 days prior to
         the filing date of this annual report (the "Evaluation Date"); and c)
         presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;
          5. The registrant's other certifying officers and I have disclosed,
         based on our most recent evaluation, to the registrant's auditors and
         the audit committee of registrant's board of directors (or persons
         performing the equivalent functions): a) all significant deficiencies
         in the design or operation of internal controls which could adversely
         affect the registrant's ability to record, process, summarize and
         report financial data and have identified for the registrant's auditors
         any material weaknesses in internal controls; and b) any fraud, whether
         or not material, that involves management or other employees who have a
         significant role in the registrant's internal controls; and
         6. The registrant's other certifying officers and I have indicated in
         this annual report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

         Date: May 21, 2003
         /s/ William L. Widman, Chief Financial Officer
         -------------------------------------------
         Principal Financial Officer









                                       11
<PAGE>




                          INDEX TO FINANCIAL STATEMENTS




                                                                       PAGE
                                                                       ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS......................F-2

FINANCIAL STATEMENTS
    Balance Sheets......................................................F-3
    Statements of Operations............................................F-4
    Statement of Changes in Shareholders' Equity (Deficit)..............F-5
    Statements of Cash Flows............................................F-8
    Notes to Financial Statements.......................................F-9










                                      F-1

<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Shareholders of
ETELCHARGE.COM, INC.

We have audited the accompanying balance sheets of ETELCHARGE.COM, INC., (a
development stage company) as of December 31, 2002 and 2001, and the related
statements of operations, changes in shareholders' equity (deficit) and cash
flows for the years then ended and the period from June 7, 1999 (inception) to
December 31, 2002. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the 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. 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, 2002 and 2001, and the results of its operations and its cash flows
for the years then ended and the period from June 7, 1999 (inception) to
December 31, 2002, in conformity with accounting principles generally accepted
in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company is in the development stage and has not
generated revenue since its inception. In addition, at December 31, 2002, the
Company's liabilities exceeded its assets by $311,617, certain obligations are
past due and the Company currently has no funds available to execute its
business plan. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to those
matters are also described in Note C. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.




KBA GROUP LLP
Dallas, Texas
May 16, 2003






                                      F-2
<PAGE>


                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS


<TABLE>
<CAPTION>

                                      ASSETS                                DECEMBER 31,    DECEMBER 31,
                                                                                2002            2001
                                                                           --------------  -------------
<S>                                                                        <C>             <C>
CURRENT ASSETS
   Cash                                                                    $         200   $         200
   Employee advances                                                                 472           1,190
                                                                           -------------   -------------
       Total current assets                                                          672           1,390
PROPERTY AND EQUIPMENT, net                                                       16,206          28,014
OTHER ASSETS
   Proprietary rights, net of accumulated amortization of $63,000
   and $43,750 at December 31, 2002 and 2001, respectively                            --          19,250
   Deposits                                                                        1,000           1,000
                                                                           -------------   -------------
       Total other assets                                                          1,000          20,250
                                                                           -------------   -------------

TOTAL ASSETS                                                               $      17,878   $      49,654
                                                                           =============   =============

                 LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
   Bank overdraft                                                          $       2,389   $       5,955
   Accrued compensation                                                           83,166          86,666
   Payroll tax obligation                                                         96,044          59,526
   Accounts payable                                                              107,065          51,460
   Pending stock subscriptions                                                    10,721              --
                                                                           -------------   -------------

       Total current liabilities                                                 299,385         203,607
NOTE PAYABLE TO SHAREHOLDER                                                       30,110          37,000
COMMITMENTS AND CONTINGENCIES (Notes C, D, and H)
SHAREHOLDERS' DEFICIT
   Common stock; $.003 par value; 50,000,000 shares
     authorized; 11,961,456 and 11,267,561 shares
     issued and outstanding at December 31, 2002
     and 2001, respectively                                                       35,885          33,803
   Additional paid-in capital                                                  3,242,118       2,248,175
   Deficit accumulated during development stage                               (3,589,620)     (2,472,931)
                                                                           -------------   -------------

       Total shareholders' deficit                                              (311,617)       (190,953)
                                                                           -------------   -------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                                $      17,878   $      49,654
                                                                           =============   =============
</TABLE>



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



                                      F-3
<PAGE>



                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                                   PERIOD FROM
                                                                                                  JUNE 7, 1999
                                                                   YEAR ENDED      YEAR ENDED    (INCEPTION) TO
                                                                  DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                                      2002            2001            2002
                                                                 --------------  --------------   -------------
<S>                                                              <C>             <C>              <C>
REVENUES                                                         $           --  $           --   $         --
GENERAL AND ADMINISTRATIVE EXPENSES                                   1,121,463       1,446,471      3,600,522
                                                                 --------------  --------------   ------------
       Net loss from operations                                       1,121,463       1,446,471      3,600,522
OTHER INCOME                                                              4,774           4,648         10,902
                                                                 --------------  --------------   ------------
       Net loss before provision for income taxes                     1,116,689       1,441,823      3,589,620
PROVISION FOR INCOME TAXES                                                   --              --             --
                                                                 --------------  --------------   ------------
       Net loss                                                  $    1,116,689  $    1,441,823   $  3,589,620
                                                                 ==============  ==============   ============
NET LOSS PER SHARE, basic and diluted                            $          .09  $         0.13
                                                                 ==============  ==============
WEIGHTED AVERAGE SHARES OUTSTANDING,
       basic and diluted                                             11,768,460      10,809,992
                                                                 ==============  ==============
</TABLE>












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



                                      F-4
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

             STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)


<TABLE>
<CAPTION>
                                                  COMMON STOCK
                                            ---------------------  ADDITIONAL
                                             NUMBER OF               PAID-IN    ACCUMULATED
                                              SHARES      AMOUNT     CAPITAL      DEFICIT        TOTAL
                                            ----------   --------  ---------    ----------    ---------
<S>                                         <C>         <C>       <C>          <C>           <C>
Initial issuance of common stock for
  services (June 7, 1999) (Note E)           7,712,970   $ 23,139  $      --    $       --    $  23,139
Deemed distribution related to purchase
  of asset from affiliate (Note D)                  --         --    (53,500)           --      (53,500)
Issuance of common stock for cash
  (November 27, 1999)                          400,000      1,200      8,800            --       10,000
Issuance of common stock for cash
  (December 10, 1999)                           40,000        120      9,880            --       10,000
Issuance of common stock for cash
  and receivable (December 17, 1999)           600,000      1,800     28,200            --       30,000
Net loss for period                                 --         --         --       (26,401)     (26,401)
                                            ----------   --------  ---------    -----------  ----------
Balance at December 31, 1999                 8,752,970     26,259     (6,620)      (26,401)      (6,762)
Issuance of common stock for cash               36,667        110      5,390            --        5,500
  (January 14, 2000)
Issuance of common stock for cash               20,000         60      9,910            --        9,970
  (January 28, 2000)
Issuance of common stock for cash              240,000        720     11,280            --       12,000
  (February 7, 2000)
Issuance of common stock for cash               10,000         30      2,470            --        2,500
  (March 14, 2000)
Issuance of common stock for cash              368,000      1,104     62,896            --       64,000
  (April 13, 2000)
Issuance of common stock for cash              195,000        585    291,915            --      292,500
  (June 30, 2000)
Issuance of common stock for cash
  (numerous transactions during                 75,000        225    112,275            --      112,500
  quarter ended September 30, 2000)
Issuance of commons stock for services
  at fair value (December 10, 2000)             21,050         63  $  31,512           --     $  31,575
Issuance of common stock in connection
  with capital raising (December 10, 2000)     350,000      1,050    523,950           --       525,000
Issuance of common stock for
  cash (December 31, 2000)                       5,000         15      7,485           --         7,500
Adjustment to original share issuance           63,675        191         --           --           191
Net loss for year                                   --         --         --    (1,004,707)  (1,004,707)
                                            ----------   --------  ---------    -----------  ----------
Balances at December 31, 2000               10,137,362     30,412  1,052,463    (1,031,108)      51,767
Issuance of common stock for cash
  (February 1, 2001)                            48,000        144     23,856           --        24,000
Issuance of common stock for services
  at fair value (February 14, 2001)            305,380        916    151,797           --       152,713
Issuance of common stock for services
  at fair value (February 22, 2001)            150,000        450     74,550           --        75,000
Issuance of common stock for cash
  (March 14, 2001)                              15,000         45     22,455           --        22,500
Issuance of common stock for cash
  (April 1, 2001)                                9,834         30     14,722           --        14,752
Issuance of common stock for cash
  (April 24, 2001)                              10,000         30     14,970           --        15,000
Issuance of common stock for cash
  (May 20, 2001)                                10,667         32     15,968           --        16,000
</TABLE>





    The accompanying notes are an integral part of this financial statement.




                                      F-5
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

       STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - CONTINUED

<TABLE>
<CAPTION>

                                                 COMMON STOCK
                                             --------------------
                                                                        ADDITIONAL
                                             NUMBER OF                   PAID-IN      ACCUMULATED
                                              SHARES      AMOUNT         CAPITAL        DEFICIT         TOTAL
                                             ---------   ---------     -----------   -------------   -----------
<S>                                          <C>         <C>          <C>           <C>             <C>
Issuance of common stock for cash
  (May 25, 2001)                                10,000          30          14,970              --        15,000
Issuance of common stock for services
  at fair value (June 6, 2001)                  25,000          75          37,425              --        37,500
Issuance of common stock for cash
  (June 11, 2001)                               30,000          90          44,910              --        45,000
Issuance of common stock for services
  at fair value (June 12, 2001)                  5,000          15           7,485              --         7,500
Issuance of common stock for cash
  (June 18, 2001)                               20,000          60          29,940              --        30,000
Cancellation of common stock
  previously issued in initial issuance        (30,000)        (90)             90              --            --
Issuance of common stock for services
  at fair value (August 31, 2001)              350,000       1,050         523,950              --       525,000
Issuance of common stock for cash
  (August 31, 2001)                             10,000          30          14,970              --        15,000
Issuance of common stock for services
  at fair value (September 10, 2001)            75,000         225          74,088              --        74,313
Issuance of common stock for services
  at fair value (September 11, 2001)            40,000         120          59,880              --        60,000
Issuance of common stock for cash
  (September 20, 2001)                          20,000          60          29,940              --        30,000
Issuance of common stock for cash
  (September 21, 2001)                           5,000          15           9,985              --        10,000
Issuance of common stock for cash
  (November 21, 2001)                           14,785          44          19,981              --        20,025
Issuance of common stock for property
  and equipment at fair value
  (November 21, 2001)                            3,200          10           4,790              --         4,800
Issuance of common stock for cash
  (December 3, 2001)                             3,333          10           4,990              --         5,000
Net loss for year                                   --          --              --      (1,441,823)   (1,441,823)
                                             ----------   --------     -----------   -------------   -----------
Balances at December 31, 2001                11,267,561     33,803       2,248,175      (2,472,931)     (190,953)
</TABLE>



                                      F-6
<PAGE>





                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

       STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - CONTINUED


<TABLE>
<CAPTION>
                                                  COMMON STOCK
                                               --------------------
                                                                          ADDITIONAL
                                               NUMBER OF                   PAID-IN     ACCUMULATED
                                                SHARES       AMOUNT        CAPITAL       DEFICIT          TOTAL
                                               ---------   ---------     -----------   -------------   -----------
<S>                                            <C>         <C>          <C>           <C>             <C>
Issuance of common stock for
   services at fair value (January 7,2002)       393,350       1,195         596,330               -       597,525
Issuance of common stock for
   services at fair value (January 30, 2002)       5,000          15           7,485               -         7,500
Issuance of common stock for cash
   (January 30, 2002)                              4,000          12           5,988               -         6,000
Issuance of common stock for cash
   (February 1, 2002)                             16,666          50          19,951               -        20,001
Issuance of common stock for cash
   (February 26, 2002)                             2,199           7           2,698               -         2,705
Issuance of common stock for
   services at fair value (April 1, 2002)          8,250          25          12,350               -        12,375
Issuance of common stock for cash
   (April 1, 2002)                                20,000          60           9,940               -        10,000
Issuance of common stock for cash
   (April 9, 2002)                                 5,548          17           8,305               -         8,322
Issuance of common stock for
   services at fair value (May 29, 2002)          30,000          90          44,910               -        45,000
Issuance of common stock for cash
   (July  1, 2002)                                29,800          89          24,611               -        24,700
Issuance of common stock for cash
   (July 10, 2002)                                26,933          81          40,317               -        40,398
Issuance of common stock for cash
   (August 16, 2002)                                 941           3             797               -           800
Issuance of common stock for cash
   (September 5, 2002)                             1,000           3           3,497               -         3,500
Issuance of common stock for cash
   (September 10, 2002)                            3,333          10           4,990               -         5,000
Issuance of common stock for cash
   (September 20, 2002)                           13,334          40          19,960               -        20,000
Issuance of common stock for cash
   (September 30, 2002)                            5,333          16           7,984               -         8,000
Issuance of common stock for
   services at fair value (September 30,
   2002)                                          10,000          30          14,970               -        15,000
Issuance of common stock for cash
   (December 20, 2002)                            28,608          86          42,213               -        42,299
Issuance of common stock for
   services at fair value (December 31,
   2002)                                          84,600         253         126,647               -       126,900
Net loss for year                                     --          --              --      (1,116,689)   (1,116,689)
                                              ----------     -------      ----------     -----------     ---------
Balances at December 31, 2002                 11,961,456     $35,885      $3,242,118     $(3,589,620)    $(311,617)
                                              ==========     =======      ==========     ===========     =========
</TABLE>





    The accompanying notes are an integral part of this financial statement.





                                      F-7
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                   PERIOD FROM
                                                                                                  JUNE 7, 1999
                                                                  YEAR ENDED      YEAR ENDED     (INCEPTION) TO
                                                                 DECEMBER 31,    DECEMBER 31,     DECEMBER 31,
                                                                     2002            2001             2002
                                                                -------------   -------------    --------------
<S>                                                             <C>             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                     $  (1,116,689)  $  (1,441,823)   $  (3,589,620)
   Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation and amortization                                    31,686          33,305           92,547
      Issuance of common stock for services                           804,300         932,026        2,316,231
   Changes in:
    Employee advances                                                     718            (655)            (472)
    Prepaid expenses                                                        -           2,000                -
    Other assets                                                            -              --           (1,000)
    Accounts payable                                                   55,605          40,056          107,065
    Accrued compensation                                               (3,500)         12,353           83,166
    Payroll tax obligation                                             36,518          59,526           96,044
    Accrued liabilities                                                     -         (14,946)               -
                                                                -------------   -------------    -------------
   Net cash used in operating activities                             (191,362)       (378,158)        (896,039)
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                    (628)           (694)         (40,953)
CASH FLOWS FROM FINANCING ACTIVITIES
   Increase (decrease) in bank overdraft                               (3,566)          5,955            2,389
   Proceeds from issuance of common stock                             191,725         262,277        1,009,472
   Payments on payable to related party                                     -          (4,000)        (116,500)
   Payments on note payable to shareholder                             (8,890)         (1,000)          (9,890)
   Proceeds from note payable to shareholder                            2,000          38,000           40,000
   Cash received on pending stock subscriptions                        10,721               -           10,721
   Cash received on receivable from shareholder                             -              --            1,000
                                                                -------------   -------------    -------------
   Net cash provided by financing activities                          191,990         301,232          937,192
                                                                -------------   -------------    -------------
INCREASE (DECREASE) IN CASH                                                 -         (77,620)             200
Beginning cash                                                            200          77,820               --
                                                                -------------   -------------    -------------
Ending cash                                                     $         200   $         200    $         200
                                                                =============   =============    =============

SUPPLEMENTAL SCHEDULE OF NON-CASH
   FINANCING ACTIVITIES
    Issuance of common stock in exchange for
     receivable from shareholder                                $          --   $          --    $       1,000
                                                                =============   =============    =============
    Issuance of payable to related party in
     exchange for proprietary rights                            $          --   $          --    $     116,500
                                                                =============   =============    =============
    Property and equipment acquired through
     issuance of common stock                                   $          --   $          --    $       4,800
                                                                =============   =============    =============
SUPPLEMENTAL SCHEDULE OF CASH FLOWS
  Cash paid during the period for:
    Interest                                                    $       3,874   $          --    $       3,874
                                                                =============   =============    =============
    Income taxes                                                $          --   $          --    $          --
                                                                =============   =============    =============
</TABLE>


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





                                      F-8
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

NOTE A - HISTORY AND ORGANIZATION

ETELCHARGE.COM, INC. (the "Company") was incorporated in the State of Nevada on
June 7, 1999. The Company 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 the date of this report, the Company has not
commenced significant operations. The Company is in the process of raising
equity financing to fund its future operations and marketing its product to
target customers. As such, the Company is considered to be in the development
stage.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

The Company 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 three to five years, its estimated useful life.
Expenditures which increase values or extend useful lives are capitalized.
Routine maintenance and repairs are charged to expense when incurred.
Depreciation of property and equipment totaled $12,436 and $12,305 for the years
ended December 31, 2002 and 2001, respectively.

Proprietary Rights

Proprietary rights consist of certain exclusive rights that allow the Company's
customers to charge meals and other consumer oriented goods to proprietary "900"
telephone numbers obtained from AT&T. These rights expired in January 2003, and
are fully amortized at December 31, 2002. The proprietary rights were being
amortized using the straight-line method over their estimated useful life of
three years which was the contractual life of the underlying agreement with
AT&T. Amortization expense of proprietary rights totaled $19,250 and $21,000 for
the years ended December 31, 2002 and 2001, respectively. These rights were
reviewed for impairment whenever events or changes in circumstances indicated
that their carrying value may not be recoverable. These evaluations included
comparing the future undiscounted cash flows of such assets to the carrying
value. If the carrying value exceeded the future undiscounted cash flows, the
assets were written-down to their fair value. There was no impairment of the
value of such assets for the years ended December 31, 2002 and 2001.

Long-lived Assets

The Company accounts for the impairment and disposition of long-lived assets in
accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
"Accounting for the Impairment of Long-Lived Assets." In accordance with SFAS
No. 144, long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that their carrying value may not be
recoverable. These evaluations include comparing the future undiscounted cash
flows of such assets to the carrying value. If the carrying value exceeds the
future undiscounted cash flows, the assets are written-down to their fair value.
There was no impairment of the value of such assets for the years ended December
31, 2002 and 2001.



                                      F-9
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company 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.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense totaled
approximately $15,000 and $46,000 for the years ended December 31, 2002 and
2001, respectively.

Revenue Recognition

The Company recognizes revenue is 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 will be recognized as
online purchases from customers are processed and will typically range from 5%
to 8% of the purchase price, plus $0.15 per transaction and will be
non-refundable. Customer fee revenue will be recognized upon shipment by the
online merchant to the customer and will typically be 10% of the purchase price
and will be refundable should the merchant approve the customer dispute. All
funds will be remitted directly to the Company. The Company expects to enter
into 2 to 3 year agreements with merchants, such agreements do not contain
cancellation clauses. The direct costs of providing these services which
includes a transaction charge by the carrier of approximately 6% of the purchase
price and a usage charge per minute will be expensed as incurred.

Stock-Based Compensation

The Company accounts for common stock issued to employees in accordance with
Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock
Issued to Employees." Under APB 25, the Company recognizes compensation expense
as shares are earned under terms of various employment agreements based on the
fair value of the common stock. Fair value is calculated using the average cash
sales price of the Company's common stock during each month in which the shares
are earned.

The Company accounts for common stock issued to non-employees using Financial
Accounting Standard No. 123 ("FAS 123"), "Accounting for Stock-Based
Compensation," and the provisions of Emerging Issues Task Force No. 96-18 ("EITF
96-18"), "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring or in Conjunction with Selling Goods or Services." All
transactions in which goods or services are the consideration received for the
issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. The measurement date of the fair value of
the equity instrument issued is the earlier of the date on which the
counterparty's performance is complete or the date on which it is probable that
performance will occur.

The Company accounts for its stock-based employee compensation using the
intrinsic value-based method prescribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25) and related
interpretations. As such, compensation expense is based on the excess, if any,
on the date of grant between the fair values of the Company's stock over the
option exercise price. The Company recorded no compensation expense related to
the issuance of stock options in 2002 and 2001. If the Company determined
compensation based on the fair value at the grant date for the stock options
under SFAS No. 123, "Accounting for Stock Based Compensation" ("FAS No. 123") as
amended by SFAS No. 148 "Accounting for Stock-Based Compensation-Transition and
Disclosure-an amendment of FASB Statement No. 123" ("FAS No. 148"), the
Company's net loss would not have been materially different for the years ended
December 31, 2002 and 2001.



                                      F-10
<PAGE>


                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Net Loss Per Share

Basic and diluted loss per share is computed by dividing net loss by the
weighted average number of basic and diluted common shares outstanding.

Fair Value of Financial Instruments

The carrying amounts for cash, accounts payable and accrued liabilities
approximate fair value because of the short-term nature of these financial
instruments. The carrying amount of the note payable approximates fair value
based on the Company's ability to obtain similar advances.

Recent Accounting Pronouncements

Effective, January 1, 2002, the Company adopted SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Live Assets," which addresses financial
accounting and reporting for impairment or disposal of long-lived assets and
supersedes SFAS No. 121. The adoption of this standard had no impact on the
Company's financial condition, cash flows or results of operations.

In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure--an amendment of FASB Statement No.
123." This statement amends methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. This statement is effective for
fiscal years ending after December 15, 2002. The Company has adopted the
disclosure requirements of SFAS No. 148, and the adoption of this standard had
no material effect on its financial condition, cash flows or results of
operations.




                                      F-11
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE C - GOING CONCERN UNCERTAINTY

The Company is currently in the development stage and has generated no revenues.
The Company has incurred $3,589,620 in losses since its inception including
$23,129 of services provided by its founder paid for through the initial
issuance of common stock. In addition, at December 31, 2002, the Company's
liabilities exceeded its assets by $311,617, and certain obligations are past
due and the Company currently has no funds available to execute its business
plan. The ability of the Company to continue as a going concern is dependent on
its ability to raise the necessary capital to finance the implementation of its
business plan. Since inception, the Company has raised approximately $1,009,000
of capital primarily through contacts of the Company's CEO. The Company believes
but cannot assure that it has the ability to raise capital from many of these
same individuals who previously purchased stock. Additionally, the Company may
rely upon its CEO to advance funds to the Company in order to meet ongoing
obligations until sufficient capital is raised from other sources. However there
is no agreement in this regard and no assurance that any such funding will be
available in the future. The Company, also anticipates generating revenues
during the third quarter of 2003 which will assist in meeting its current
operating obligations. The Company may also receive funds generated from
exercise of the stock options discussed in Note K. The financial statements do
not include any adjustments to reflect the possible effects on the
recoverability and classification of assets or classification of liabilities
which may result from the possible inability of the Company to continue as a
going concern.


NOTE D - PAYABLE TO RELATED PARTY AND PROPRIETARY RIGHTS

During 1999, the Company purchased proprietary rights from a related company,
Consumer Data Solutions Corp. ("CDS"), which has the same majority shareholder
as ETELCHARGE.COM, INC., for $116,500 payable under a repayment agreement which
required monthly payments ranging from $7,500 to $8,500 through January 2001.
The repayment agreement is unsecured and does not bear interest. In addition,
the agreement requires the Company 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 the
Company) beginning January 1, 2001.

As these rights were purchased from a related entity, the asset was recorded by
the Company 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 contra to additional paid-in capital. Amounts payable
to CDS totaled $0 at December 31, 2002 and 2001.


NOTE E - STOCKHOLDERS' EQUITY (DEFICIT)

During 2002 and 2001, the Company raised $191,725 and $262,277, respectively, in
cash proceeds through private placement offerings. The Company also issued
536,200 and 603,626 shares of common stock at fair value for services rendered
in 2002 and 2001, respectively, as well as 350,000 shares of common stock under
an agreement for consulting related to the private placement offerings during
2001. Upon inception, the Company issued 7,776,645 shares of common stock
(7,712,970 original shares of common stock plus an adjustment of 63,675 shares
of common stock) to its President and Chief Executive Officer in exchange for
services.



                                      F-12
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE F - INCOME TAXES

Deferred tax assets and liabilities at December 31, 2002 and 2001, consist of
the following:

<TABLE>
<CAPTION>
                                                                                 2002          2001
                                                                             ------------- ------------
<S>                                                                          <C>           <C>
                    Current deferred tax asset                               $         --  $         --
                    Non-current deferred tax asset                                339,967       264,781
                    Valuation allowance                                          (339,967)     (264,781)
                                                                             ------------  ------------
                                                                             $         --  $         --
                                                                             ============  ============
</TABLE>

The non-current deferred tax asset results from capitalized proprietary rights,
which are amortized for income tax purposes using a different life than for
financial reporting purposes and the net operating loss carryforward of
approximately $960,000 at December 31, 2002, which begins to expire in 2015. A
valuation allowance has been recorded to offset all of the net deferred tax
assets due to the uncertainty of generating future taxable income.

The Company's income tax expense (benefit) for the years ended December 31, 2002
and 2001, differed from the statutory federal rate of 34 percent as follows:

<TABLE>
<CAPTION>
                                                                                 2002          2001
                                                                             ------------  ------------
<S>                                                                          <C>           <C>
                    Statutory rate applied to loss before income taxes       $   (379,674) $   (490,220)
                    Items not deductible for income tax purposes                  304,488       353,907
                    Increase in valuation allowance                                75,186       136,313
                                                                             ------------  ------------
                    Income tax expense (benefit)                             $         --  $         --
                                                                             ============  ============
</TABLE>


NOTE G - PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2002 and 2001, consists of the following:

<TABLE>
<CAPTION>
                                                                                 2002          2001
                                                                             -----------   -----------
<S>                                                                          <C>           <C>
                    Office equipment                                         $    30,836   $    30,208
                    Furniture and fixtures                                        14,917        14,917
                                                                             -----------   -----------
                                                                                  45,753        45,125
                    Less accumulated depreciation                                (29,547)      (17,111)
                                                                             -----------   -----------
                                                                             $    16,206   $    28,014
                                                                             ===========   ===========
</TABLE>


NOTE H - COMMITMENTS AND CONTINGENCIES

Effective December 28, 1999 the Company entered into a five-year employment
contract with its CEO, which requires the Company to issue 200,000 shares of
common stock as compensation over the term of the contract. In the event of
termination, the stock issuance will be prorated based on the portion of the
five-year term served. The Company has accrued $49,800 and $53,300 of
compensation at December 31, 2002 and 2001, respectively, which represents the
fair value of the portion of shares earned and not yet issued at December 31,
2002 and 2001, respectively. As of December 31, 2002, 80,000 shares of stock
have been issued under this agreement.

Effective December 28, 1999, the Company entered into a two-year employment
contract with an employee which requires the Company to issue 50,000 shares of
common stock as compensation over the term of the contract. The Company has
accrued $33,366 of compensation at December 31, 2002 and 2001, which represents
the fair value of the portion of shares earned and not yet issued at December
31, 2002 and 2001, respectively. As of December 31, 2002, 25,000 shares of stock
have been issued under this agreement.




                                      F-13
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE H - COMMITMENTS AND CONTINGENCIES (Continued)

Effective December 28, 1999 the Company entered into a one-year employment
contract with an employee, which requires the Company to issue 10,000 shares of
common stock as compensation over the term of the contract. The contract carries
an automatic one year renewal and requires the Company to issue an additional
10,000 shares each year. All shares due under this agreement as of December 31,
2002, have been issued.

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

At December 31, 2002, future minimum commitments under non-cancelable operating
leases are as follows:

<TABLE>
<CAPTION>
                                  YEARS ENDING
                                   DECEMBER 31,
                              --------------------
<S>                                                   <C>
                                      2003                7,000
                                                       --------
                                                       $  7,000
                                                       ========
</TABLE>

Rent expense totaled approximately $12,000 for the years ended December 31, 2002
and 2001.


NOTE I - PAYROLL TAX OBLIGATION

The Company has not remitted a portion of its Federal and State employer and
employee payroll taxes for the year ended December 31, 2002 and 2001. The
Company has determined this obligation to be the actual amounts of the tax
withheld from the employees and the employer portion of the Social Security
Federal Tax obligation in addition to a 25% penalty and interest accrual. The
total obligation associated with these delinquent amounts at December 31, 2002
and 2001 is 96,044 and $59,526 respectively, and has been reflected in the
accompanying financial statements as Payroll Tax Obligation.


NOTE J - NOTE PAYABLE TO SHAREHOLDER

At December 31, 2002 and 2001, the Company has an uncollateralized note payable
to a shareholder in the amount of $30,110 and $37,000, respectively, with
interest only payments due monthly at 12.25% with no specified maturity date.
This obligation is classified as a long-term liability based on the Company's
and the note holder's intent.


NOTE K - STOCK OPTIONS

Under the terms of a stock option agreement effective August 1, 2001, the
Company granted options to a consulting firm to purchase 2,300,000 shares of
common stock. 1,500,000 options have an exercise price of $2.00 per share and
800,000 options have an exercise price of $2.50 per share. The options vested
immediately upon approval by the Securities and Exchange Commission (SEC) of the
Company's Form SB-2, which occurred in April of 2002, and expire April 2003. The
Company estimated the fair value of this option grant using the Black-Scholes
option-pricing model with the following assumptions:

<TABLE>
<S>                                                                   <C>
                            Dividend yield.................................0%
                            Expected volatility............................0%
                            Risk-free interest rate........................5%
                            Expected life..............................1 year
</TABLE>



                                      F-14
<PAGE>




                              ETELCHARGE.COM, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001


NOTE K - STOCK OPTIONS (Continued)

On the grant date, the exercise price of these options exceeded the fair value
calculated under the Black-Scholes model and thus, no consulting expense was
recorded associated with this stock option grant.

A summary of these options as of December 31, 2002 and 2001 and changes during
the years ended December 31, 2002 and 2001 are as follows:

<TABLE>
<CAPTION>
                                                                               WEIGHTED
                                                                                AVERAGE
                                                                               EXERCISE       RANGE OF
                                                                    OPTIONS      PRICE     EXERCISE PRICE
                                                                    -------      -----     --------------
<S>                                                             <C>           <C>         <C>       <C>
                       Outstanding at January 1, 2001                     --       --      n/a          n/a
                       Granted                                     2,300,000     2.17     2.00         2.50
                                                                 -----------
                       Outstanding at December 31, 2001            2,300,000     2.17     2.00         2.50
                       Granted                                            --       --       --           --
                       Outstanding at December 31, 2002            2,300,000     2.17     2.00         2.50
                                                                 ===========
</TABLE>





                                      F-15
<PAGE>
                               Index to Exhibits

EX. NO          DESCRIPTION
------          -----------
99.1            Certification of Principal Executive Officer Re: Sarbanes-Oxley
                Act of 2002

99.2            Certification of Principal Executive Officer Re: Sarbanes-Oxley
                Act of 2002