UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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


[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the fiscal year ended December 31, 1999


[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number:

                                 TMEX USA, Inc.
             (Exact name of registrant as specified in its charter)

            Nevada                                       33-0248339
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

5031 Birch Street, Suite G, Newport Beach, California                   92660
(Address of principal executive offices)                              (Zip Code)

                                  949.863.9872
              (Registrant's Telephone Number, Including Area Code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period 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  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $413,999.00

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 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.) As of March 31, 2000, approximately $17,912,595.

As of March 31, 2000,  there were  14,679,437  shares of the issuer's  $.001 par
value common stock issued and outstanding.

Documents  incorporated  by reference.  There are no annual  reports to security
holders, proxy information statements,  or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.

Transitional Small Business Disclosure format (check one):

               [ ] Yes   [X] No

                                       1

<PAGE>


                                     PART I

Item 1. Description of Business.

Our Background and Development.  TMEX USA, Inc., a Nevada corporation,  formerly
Swiss Cellular Laboratories,  Inc. ("Company"), was incorporated pursuant to the
laws of the State of Nevada on July 29, 1987,  as a wholly owned  subsidiary  of
NuTek, Inc., a Nevada corporation,  formerly Swiss Technique, Inc. ("NuTek"). On
June 30, 1995, NuTek distributed  270,042 of the 300,000  outstanding  shares of
the  Company's  $.001 par value common stock which NuTek then held as a dividend
to the  shareholders of record of NuTek on a pro rata basis. The distribution of
those shares of the Company's  $.001 par value common stock to the  shareholders
of NuTek was effected for the purpose of facilitating  the Company's  ability to
expand and  diversify its business.  On June 30, 1995,  the Company  changed its
name to TMEX USA, Inc.

On April 30, 1996, the Company and TMEX USA, Inc. a Missouri  corporation ("TMEX
Missouri")  entered  into a Plan of  Reorganization  and  Agreement  whereby the
Company  issued  1,300,000  shares of common stock in exchange for the assets of
TMEX  Missouri,  valued at $488,220.  Subsequent  to that  reorganization,  TMEX
Missouri was wound up and dissolved.

Our   Business   and   Communications   Network.   We   are   an   international
telecommunications  provider of wholesale and retail voice, video, data, private
network,  and Internet services via our computer network and laser communication
connection  from  the  United  States  to  Mexico.  We  utilize   communications
technology, tested and approved by telecommunications carriers, to niche markets
and deliver a full range of services  through our network.  We are  committed to
evaluating  new  technologies  and  continuing to improve our network  services,
locations, and savings to our customers.

In  September  1998,  we installed  the first cross border laser  communications
system  designed  to  connect  Laredo,  Texas  to  Nuevo  Laredo,   Mexico.  The
combination  of wireless  and fiber  technology  which is utilized at the border
crossing was originally designed for expansion of our Asynchronous Transfer Mode
(ATM)  Network  and  allows us to cross the  terrain  barrier  of the Rio Grande
River. We began offering Mexican voice and data communications  services to U.S.
Telecom  Corporation through this laser connection by establishing a contractual
relationship  through  our  Mexican  subsidiary  with  Alestra  (AT&T),  a major
licensed Mexican phone carrier.

Products and Services.

Our   service    capabilities   include   voice,   debit   access,   video   and
e-commerce/internet,  although we concentrate our marketing efforts on voice and
debit calling card access.

Voice Services.  In the  telecommunications  market,  we provide  standard voice
telephone  services to support  international  telephone  traffic to Mexico.  We
anticipate that we will contract with various United States carriers for initial
system usage of  approximately  20.4 million minutes per month. We anticipate an
average  margin of 1.83 cents per  minute  for  telephone  calls  utilizing  our
network into Mexico.  By servicing  these  contracts,  we anticipate that we can
generate gross profits of approximately $360,000 per month.

Debit Card  Services.  We provide  telephone  services  to Mexico via debit card
access.  Calls originate within the United States,  are routed within the United
States (domestically) as well as to Mexico  (internationally).  We are currently
negotiating   with  United   States   carriers  and   distributors   to  provide
international  debit  calls from the  United  States to other  markets,  such as
Central  and South  America,  Europe and Asia.  We believe  that our  pricing is
competitive with the pricing of other wholesale  carriers for the  international
calls to Mexico.  Our current debit card program targets  Hispanic groups living
within the United States who make long distance international calls.

                                       2

<PAGE>

Network  Services.  Our high  speed  ATM  network  supports  all of a  business'
international  data, voice, or video requirements for service by one carrier. We
can provide secure private computer networks,  telecommunication switch networks
and private voice communication networks within a fully integrated ATM system.

Internet Services.  We provide standard Internet Service Provider (ISP) services
to the general public.  These services include internet access, web hosting, web
page design, name registration, mail services and off-site data storage.

Consulting  Services.  We can assist small to medium size businesses with all of
their communication requirements.  We provide full "turn key" services to update
existing network  infrastructure,  integrate Mexico calling services and provide
computer network consultations and recommendations.

Networking  Switches.  Our networking switches are supported by a fault tolerant
ATM system,  which insures services are delivered over our network. Our switches
utilize Cabletron Systems as the primary switching source.

Our Target  Markets  and  Channels of  Distribution.  Our  customers  consist of
wholesalers  who purchase  minutes of  international  telephone  time to Mexico.
Communication  quality,  bandwidth and cost are  priorities of these  customers.
Utilizing our  technologies,  these  customers  receive high quality service and
benefit from reduced costs.

The Company  expects that it can  substantially  increase its revenue with these
customers and other carriers to the Mexican market.  The Company also expects to
expand its network to other markets.

Our Major  Customer.  Our major  customer is Clifton  Digital,  Inc., one of the
largest  marketers  of debit  calling  cards in the United  States.  We recently
executed an addendum to our existing  agreement with Clifton Digital,  Inc., for
us to provide  international service on telephone calls placed using the Clifton
calling cards. These calling cards are targeted to specific retailers throughout
the United States,  such as 7-11 and Circle K stores,  for their customers.  The
contract  with Clifton  Digital,  Inc.  provides that we will sell $5 million of
debit  calling  card  minutes  each  month for a  twelve-month  period  after an
adequate  introductory period. We are currently negotiating with other companies
in order to reduce our reliance on the contract with Clifton Digital, Inc.

Our  Suppliers.  Our network has been developed  using products  supplied by the
following  three  primary  vendors:  (i)  Cabletron  Systems,  Inc.,  a Delaware
corporation   ("Cabletron");   (ii)   AstroTerra   Corporation,   a   California
corporation;  and (iii)  FORE  Systems,  Inc.,  a  Delaware  corporation  ("FORE
Systems").  Cabletron provides the ATM system and data access products,  as well
as the switch  routers  and  Internet  switches  and  routers  utilized  for our
telecommunications  network.  FORE Systems provides the ATM access network which
interconnects our clients with our network and destination services.  AstroTerra
provides a laser  communications  system which  transmits  communications  via a
wireless  optical  communications  system across the border of the United States
and Mexico which is separated by the Rio Grande River.

Our  Competition.  Our competitors  for our debit calling card business  include
companies which provide low cost  telecommunications  service to Mexico, such as
Blackstone,  Inc.; U.S. South Communications,  Inc.; and RSL Communications Ltd.
Our competitors for our wholesale  minutes  business  include  companies such as
Bordercom International,  RSL Communications Ltd., Qwest Communications,  Sprint
and AT&T. We believe our competitive  advantages  include low cost service,  the
ability to supply niche  markets with  increased  bandwidth,  and our history of
established business in Mexico.

However,   competition  in  the  telecommunications   industry,   generally,  is
significant.  We compete  directly with other companies and businesses that have
developed and are in the process of developing  technologies  and products which
will be competitive with the products  developed and offered by us. There can be
no  assurance  that  other  technologies  or  products  which  are  functionally
equivalent or similar to our  technologies  and products have not been developed
or are not in development.  We expect that there will be companies or businesses
which may have developed or are  developing  such  technologies  and products as
well as other  companies and  businesses  which have the  expertise  which would
encourage them to develop and market products  directly  competitive  with those
developed and marketed by us.

                                       3

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Many of these competitors have greater  financial and other resources,  and more
experience in research and development, than us.

Our  Intellectual  Property.  Our  success  depends in part upon our  ability to
preserve  our trade  secrets,  obtain and  maintain  patent  protection  for our
technologies,  products  and  processes,  and  operate  without  infringing  the
proprietary  rights of other parties.  However,  we rely on certain  proprietary
technologies,  trade secrets, and know-how that are not patentable.  Although we
may take action to protect our unpatented trade secrets,  our technology and our
proprietary information,  in part, by the use of confidentiality agreements with
our  employees,  consultants  and  certain of our  contractors,  there can be no
assurance  that (i) these  agreements  will not be breached,  (ii) we would have
adequate  remedies for any breach;  or (iii) our  proprietary  trade secrets and
know-how  will not  otherwise  become  known or be  independently  developed  or
discovered by  competitors.  There is also no assurance that our actions will be
sufficient  to prevent  imitation  or  duplication  of either our  products  and
services by others or prevent  others from  claiming  violations  of their trade
secrets and proprietary rights.

The utilization or other  exploitation of the products and services developed by
us may  require us to obtain  licenses or consents  from  government  regulatory
agencies or from the producers or other holders of patents,  copyrights or other
similar  rights  relating  to our  products  and  services.  In the event we are
unable, if so required,  to obtain any necessary license or consent on terms and
conditions  which we  consider  to be  reasonable,  we may be  required  to stop
developing,   utilizing,   or  exploiting  products  and  services  affected  by
government regulation or by patents,  copyrights or similar rights. In the event
we are  challenged  by a  government  regulatory  agency,  or by the  holders of
patents,  copyrights or other similar rights,  there can be no assurance that we
will have the financial or other resources to defend any resulting legal action,
which could be significant.

Our  Research  and  Development.  We  believe  that we will  expand the types of
products we offer by  introducing  new  products and  technologies.  New product
ideas are derived  from a number of sources,  including  in-house  research  and
development,  our executives,  staff,  and consultants and outside  parties.  In
advance of introducing  new products and  technologies,  local counsel and other
representatives retained by us investigate product design matters as they relate
to regulatory  compliance and other issues.  Our products are then redesigned to
accommodate  both the  regulatory and marketing  requirements  of the particular
market. There can be no assurance as to the final form of any new regulations or
that an  appropriate  regulatory  authority  will not seek to impose  additional
regulations, possibly prohibiting, or placing other restrictions on, the sale of
such products, or the impact, if any, of any such regulations.

Our Mexican  Subsidiaries.  In May 1995,  we  incorporated  TMEX S.A. de C.V., a
Mexico   corporation   ("TMEX   Mexico")  for  the  purpose  of  supporting  our
telecommunication  services  in  Mexico.  We own 9,999  shares of TMEX  Mexico's
common stock (approximately  99.99% of the issued and outstanding shares of TMEX
Mexico's common stock).  Our President,  Cooper Lee, as Director  General of the
subsidiary,  owns 1 share of TMEX Mexico's  common stock (the  remaining .01% of
the outstanding stock of TMEX Mexico), as required by Mexican law.

In  December,  1996,  we acquired  approximately  24,500  shares of common stock
(approximately 49%) of Network  Technologies S.A. de C.V., a Mexican corporation
("NetTech") valued at $15,000.  NetTech is headquartered in Loma de Chapultepec,
Mexico City and received a concession  for  Internet  services  from the Mexican
Federal Commission of  Telecommunications,  which will allow NetTech to transmit
Internet and data traffic from the United States throughout Mexico.

Government  Regulation.  Our  business is subject to  regulation  by the Federal
Communications  Commission  ("FCC")  and  other  federal  and  state  regulatory
agencies.  These regulatory  authorities impose regulations governing the rates,
terms and conditions for interstate and intrastate  telecommunications services.
Changes in existing laws and regulations,  including the  Telecommunications Act
of  1996,   which   provides  for  greater   competition   among   providers  of
telecommunications  services,  may have a material  impact on our activities and
operating  results.  We have a C-214 Facilities Bases Services permit by the FCC
to operate as a provisioned bearer circuit network.

We may also be subject to Federal Trade Commission  regulation and other federal
and state laws relating to the promotion, advertising, labeling and packaging of
our  products.  We believe that we are in  compliance  with all laws,

                                       4

<PAGE>


rules and  regulations  material to our operations and have obtained,  or are in
the process of obtaining, all licenses,  tariffs and approvals necessary for the
conduct of our  business.  There can be no assurance,  however,  that we will be
able to obtain  required  licenses or approvals in the future or that the FCC or
state  regulatory  authorities will not require us to comply with more stringent
regulatory  requirements.  Conformance of our  operations  with new statutes and
regulations could require us to alter methods of operation, at costs which could
be material, or otherwise limit the types of services offered by us.

Hazardous  Materials;  Environmental  Matters. We may be subject to various laws
and regulations governing the use, manufacture,  storage, handling, and disposal
of  hazardous  materials  and certain  waste  products.  The risk of  accidental
contamination   or  injury  from  hazardous   materials   cannot  be  completely
eliminated.  In the event of such an  accident,  we could be held liable for any
damages that result and any such liability could exceed our financial resources.
In  addition,  there can be no  assurance  that,  in the future,  we will not be
required  to incur  significant  costs to  comply  with  environmental  laws and
regulations relating to hazardous  materials.  We may be subject to various laws
and  regulations  governing  the use,  storage,  handling  and  disposal of such
materials  and  certain  waste  products.  Although  we believe  that our safety
procedures  for  handling  and  disposing  of such  materials  comply  with  the
standards  prescribed  by such  laws and  regulations,  the  risk of  accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an  accident,  we could be held  liable for any  damages  that
result,  and any such  liability  could  exceed our  resources.  There can be no
assurance that we will not be required to incur significant costs to comply with
current or future  environmental  laws and  regulations nor that our operations,
business or assets will not be  materially  or adversely  affected by current or
future environmental laws or regulations.

Employees.  As of  December  31,  1999,  we had 12  full  time  employees  and 6
part-time  employees.  The employees  provide services such as technical support
and marketing.  From time-to-time we use the services of independent contractors
and consultants to support product research and development, marketing and sales
and business development.

Item 2.  Description of Property.

Our Property.  The consolidated  financial  statements filed as exhibits to this
Form 10-KSB include our accounts and those of our subsidiary, TMEX S.A. de C.V.,
a Mexico  corporation.  All  significant  intercompany  transactions  have  been
eliminated.  As of the  dates  specified  in the  following  table,  we held the
following property:

================================================================================
     Property                  December 31, 1999           December 31, 1998
--------------------------------------------------------------------------------
Cash and equivalents                $375,387                    $248,515
--------------------------------------------------------------------------------
Property & Equipment less           $823,190                    $539,566
Depreciation
================================================================================

We define cash equivalents as all highly liquid investments with a maturity of 3
months or less when  purchased.  We do not  presently  own any interests in real
estate.

                                       5

<PAGE>


Our  Facilities.   The  following  table  specifies  the   descriptions  of  our
properties.

================================================================================
       Property                                       Description

Newport Beach, California              Our main corporate office and a
5031 Birch Street, Suite G             switching facility.
Newport Beach, CA 92660                Lease expires: September 8, 2000
                                       $2,400.00 / month
--------------------------------------------------------------------------------
Laredo, Texas                          Our United States communications laser
Howard Johnson's Hotel Rooftop         site and a switching facility.
1 South Main Avenue                    Lease expires: August, 2001
Laredo, TX 78040                       $1,750.00 / month
--------------------------------------------------------------------------------
Tijuana, Baja California               The corporate office of our subsidiary,
Av. Rio Suchiate No. 10065-3           TMEX S.A. de C.V.
Col. Revolucion                        Lease term: month to month
P.O. Box 432627                        $220.00 / month
Tijuana, B.C. 22400
--------------------------------------------------------------------------------
Nuevo Laredo, Mexico                   Our Mexican communications laser site.
Ave Josefa O. De Dominguez No 2853     Lease expires: August, 2000
Nuevo Laredo, Tamaulipas               $200.00 / month
================================================================================


Item 3.  Legal Proceedings.

Specified below is our pending litigation.

Fore  Systems.  On or about  September  7, 1999,  we filed a complaint in Orange
County  Superior  Court  against Fore  Systems,  a business  organization,  form
unknown,  and Doe  Defendants  1 through  100,  alleging  breach of  warranty of
fitness for intended  purposes and negligent  misrepresentation.  That complaint
relates to our purchase,  from Fore Systems,  of certain  equipment  designed to
transmit  electrical  signals  between  the United  States and  Mexico,  and the
malfunctioning  of that equipment,  resulting in monetary  damages to us in lost
transmission time and software solution costs.

On October  6, 1999,  Defendant  Fore  Systems  filed a Notice of Removal of the
complaint to federal  court;  specifically,  the United States  District  Court,
Central  District of  California,  Southern  Division.  On October 12, 1999, the
complaint  was ordered  removed to that federal  court.  On or about October 27,
1999,  we  filed a First  Amended  Complaint  for  breach  of  warranty,  strict
liability on defective product,  negligence, and fraud, and correctly identified
Defendant Fore Systems, as a Delaware corporation.

We are seeking monetary damages of approximately  $250,000.  On or about January
10, 2000, Fore Systems filed a Motion to Dismiss the complaint.  We opposed that
Motion to Dismiss  and,  on January 26,  2000,  the Court  denied Fore  System's
Motion to Dismiss but granted permission for Fore Systems to refile that motion.
On February 9, 2000,  Fore Systems  refiled that Motion.  We again  opposed that
Motion and that Motion is currently being considered by the judge.

We are  currently  engaged in settlement  discussions  with Fore Systems and may
entertain  a  settlement  offer  which  includes  discounts  on the  purchase of
additional components and other products from Fore Systems.

Phillips,  Nagel and Nagel. On or about March 8, 2000,  Silas  Phillips,  Conrad
Nagel and Kathrina B. Nagel  (collectively,  "Plaintiffs")  filed a complaint in
Orange County  Superior  Court against us for damages for  conversion and fraud.
The  Plaintiffs  alleged,  among other  things,  that we acquired a  controlling
interest in Cellular 2000, a Nevada  corporation,  in 1997.  Plaintiffs  further
alleged that we, as compensation for services and as a bonus, had

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issued  certain  shares  of our  common  stock to  Plaintiffs,  two of whom were
officers  of  Cellular  2000 and one of whom was the  spouse  of an  officer  of
Cellular 2000.  Plaintiffs further allege that, on or about October 28, 1998, we
improperly canceled that common stock.

We believe that Plaintiffs' allegations are without merit, in that, the issuance
and  delivery  of our  common  stock  to  Plaintiffs  was  conditioned  upon the
performance, by Plaintiffs, of certain promises, covenants and agreements, which
Plaintiffs failed to perform.  We intend to oppose this complaint  zealously and
intend to file a cross-complaint for breach of contract against Plaintiffs.

AstroTerra  Corporation.  We have been negotiating  with AstroTerra  Corporation
("AstroTerra"),  regarding  certain disputes which arose in or about June, 1999,
between  AstroTerra,  on the one hand,  and us, on the other hand.  We desire to
effect a settlement  and resolution of the issues in dispute in order to promote
a  long-term  business  relationship  with  AstroTerra.  The  disputes  are  not
presently being  litigated;  however,  we anticipate that these disputes will be
litigated if no settlement is reached.

We  encountered  a  problem  with our  daytime  communications  from  our  laser
transmission system located in Laredo, Texas. We considered the possibility that
the problem arose from either (1) a switching problem, or (2) a problem with the
AstroTerra  laser  equipment.   We  contacted   AstroTerra  and  requested  that
AstroTerra  provide a technical support crew to investigate and suggest possible
solutions to this problem.  AstroTerra  requested that we perform certain tests,
which we performed.  We then requested  AstroTerra's  presence on site and fiber
testing was performed.  An AstroTerra  engineer  returned again to the site and,
after we  performed  additional  tests on the fiber optic  cable,  we  requested
AstroTerra to return to the site a third time. We expended  significant time and
money removing and reconfiguring  switches,  testing fiber cables,  installing a
new power  conditioner,  isolating  and  labeling  fiber  interconnections,  and
testing the various  systems before the  transmission  problem was located.  The
ultimate  conclusion was that a defective  laser lens provided by AstroTerra was
the cause of the transmission problem.

Due to the failure of the laser  system,  we incurred  charges  from  AstroTerra
totaling  $52,000,  which included the purchase of ZT3000 lasers at an aggregate
price of $44,631.  We have refused to pay a significant portion of those charges
because of the failure of the laser system,  and  AstroTerra  has  threatened to
litigate  this  matter  if  a  settlement  is  not  reached.  We  are  presently
negotiating  with AstroTerra to purchase  certain  equipment,  and to license or
distribute  certain  equipment  and  technology,  as part of  global  settlement
negotiations. In the event we are unable to resolve this matter, we are prepared
to litigate this matter zealously.

Item 4.  Submission of Matters to Vote of Security Holders

Not applicable.

                                     PART II

Item 5.  Market Price for Common Equity and Related Stockholder Matters.

Reports to Securities Exchange Commission ("SEC"). From January 1997 until March
20, 2000,  our common stock traded on the OTC Bulletin  Board  (OTCBB) under the
symbol "TMXU". We have never been a "reporting company." On January 4, 1999, the
SEC required issuers of any class of securities  quoted on the OTCBB to register
and become reporting companies pursuant to Section 12(b) or Section 12(g) of the
Securities  Exchange Act of 1934 ("Exchange  Act"), by reason of its approval of
amendments to Rules of the National Association of Securities Dealers, Inc. that
limit  quotations on the OTCBB to the stock of companies that are registered and
who timely file the reports required by such sections of the Exchange Act. On or
about March 20,  2000,  an "E" was affixed to our OTCBB  trading  symbol and our
common stock began trading under the symbol TMXUE,  which indicates that we have
not  completed  the SEC  registration  process  and that our stock is subject to
removal from the OTCBB,  within 30 days of such date, if we do not complete that
process.  About the same time, we also became  required to register  pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly,  we are
concurrently filling a Registration  Statement with the SEC on Form 8-A together
with this Form 10-KSB.  By its terms,  such  Registration  Statement on Form 8-A
will become

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<PAGE>


effective  upon  the  date of its  filing  with  the SEC and  this  10-KSB  will
represent our first report as a Reporting Company.

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

Prices of Common Stock.  Prior to our  participation on the OTCBB,  there was no
public  market for our  common  stock.  Our common  stock has closed at a low of
$1.5625 and a high of $4.125 for the 52-week  period  ended April 5, 2000.  This
market is  extremely  limited  and the  prices for our  common  stock  quoted by
brokers  is not  necessarily  a reliable  indication  of the value of our common
stock.  On or about March 20, 2000, an "E" was affixed to our trading symbol and
our common stock began trading under the symbol TMXUE,  which  indicates that we
have failed to comply with  eligibility  requirements  specified in Rule 6530 of
the  National  Association  of  Securities  Dealers,  Inc.  ("Rule  6530")  and,
therefore, we will be delisted from the OTCBB if we do not comply with Rule 6530
on or before April 19, 2000.

The following  table specifies the reported high and low sales or closing prices
of the Company's common stock on the OTCBB for the periods indicated.

================================================================================
            Period                             High                Low
--------------------------------------------------------------------------------
October 1, 1999 - December 31, 1999           $2.375              $1.156
--------------------------------------------------------------------------------
July 1, 1999 - September 30, 1999             $3.125              $1.250
--------------------------------------------------------------------------------
April 1, 1999 - June 30, 1999                 $4.125              $2.000
--------------------------------------------------------------------------------
January 1, 1999 - March 31, 1999              $3.187              $0.937
================================================================================

We are authorized to issue 50,000,000  shares of common stock,  $.001 par value,
each share of common stock having equal rights and preferences, including voting
privileges.  We are not  authorized  to issue shares of preferred  stock.  As of
December  31, 1999,  12,688,320  shares of our $.001 par value common stock were
issued and outstanding.

Our shares of $.001 par value common stock constitute equity interests entitling
each shareholder to a pro rata share of cash distributions made to shareholders,
including dividend payments. The holders of our common stock are entitled to one
vote for each  share of record on all  matters  to be voted on by  shareholders.
There is no  cumulative  voting with respect to the election of our directors or
any other  matter,  with the  result  that the  holders  of more than 50% of the
shares voted for the election of those directors can elect all of the Directors.
The holders of our common stock are entitled to receive  dividends  when, as and
if declared by our Board of Directors  from funds  legally  available  therefor;
provided,  however,  that cash dividends are at the sole discretion of our Board
of Directors.  In the event of our  liquidation,  dissolution or winding up, the
holders of common  stock are entitled to share  ratably in all assets  remaining
available for  distribution  to them after payment of our  liabilities and after
provision has been made for each class of stock,  if any,  having  preference in
relation to our common stock.  Holders of the shares of our common stock have no
conversion, preemptive or other subscription rights, and there are no redemption
provisions applicable to our common stock.

Dividend  Policy.  We have never declared or paid a cash dividend on our capital
stock  and do not  expect  to pay  cash  dividends  on our  common  stock in the
foreseeable future. We currently intend to retain our earnings,  if any, for use
in our business.  Any dividends declared in the future will be at the discretion
of the Board of Directors and subject to any restrictions that may be imposed by
our lenders.

Warrants.  As of  December  31,  1999,  there were no  outstanding  warrants  to
purchase shares of our $.001 par value common stock.

                                       8

<PAGE>


Stock  Option  Plan.  On April 12,  2000,  our Board of  Directors  approved and
adopted a stock option plan, pursuant to which 5,000,000 shares of our $.001 par
value  common  stock will be reserved  for  issuance to satisfy the  exercise of
options.  The  stock  option  plan will be  designed  to  retain  qualified  and
competent  officers,  employees,  and  directors.  Our Board of Directors,  or a
committee  thereof,   shall  administer  the  stock  option  plan  and  will  be
authorized,  in its sole and absolute discretion, to grant options thereunder to
all of our eligible employees, including officers, and to our directors, whether
or not those directors are also our employees.  Options will be granted pursuant
to the  provisions  of the stock  option  plan on such  terms,  subject  to such
conditions  and at such  exercise  prices as shall be determined by our Board of
Directors.  Options  granted  pursuant  to the stock  option  plan  shall not be
exercisable after the expiration of ten years from the date of grant.

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

THIS  FOLLOWING  INFORMATION  SPECIFIES  CERTAIN  FORWARD-LOOKING  STATEMENTS OF
MANAGEMENT  OF THE  COMPANY.  FORWARD-LOOKING  STATEMENTS  ARE  STATEMENTS  THAT
ESTIMATE  THE  HAPPENING  OF FUTURE  EVENTS  ARE NOT BASED ON  HISTORICAL  FACT.
FORWARD-LOOKING  STATEMENTS  MAY BE  IDENTIFIED  BY THE  USE OF  FORWARD-LOOKING
TERMINOLOGY,  SUCH AS "MAY", "SHALL",  "WILL",  "COULD",  "EXPECT",  "ESTIMATE",
"ANTICIPATE",   "PREDICT",  "PROBABLE",  "POSSIBLE",  "SHOULD",  "CONTINUE",  OR
SIMILAR  TERMS,  VARIATIONS  OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS.  THE
FORWARD-LOOKING  STATEMENTS  SPECIFIED IN THE  FOLLOWING  INFORMATION  HAVE BEEN
COMPILED BY OUR  MANAGEMENT ON THE BASIS OF  ASSUMPTIONS  MADE BY MANAGEMENT AND
CONSIDERED  BY  MANAGEMENT  TO BE  REASONABLE.  OUR  FUTURE  OPERATING  RESULTS,
HOWEVER, ARE IMPOSSIBLE TO PREDICT AND NO REPRESENTATION,  GUARANTY, OR WARRANTY
IS TO BE INFERRED FROM THOSE FORWARD-LOOKING STATEMENTS.

THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS SPECIFIED IN
THE FOLLOWING  INFORMATION  REPRESENT ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT
TO UNCERTAINTY AS TO POSSIBLE CHANGES IN ECONOMIC,  LEGISLATIVE,  INDUSTRY,  AND
OTHER CIRCUMSTANCES.  AS A RESULT, THE IDENTIFICATION AND INTERPRETATION OF DATA
AND OTHER INFORMATION AND THEIR USE IN DEVELOPING AND SELECTING ASSUMPTIONS FROM
AND AMONG  REASONABLE  ALTERNATIVES  REQUIRE THE  EXERCISE OF  JUDGMENT.  TO THE
EXTENT THAT THE ASSUMED EVENTS DO NOT OCCUR, THE OUTCOME MAY VARY  SUBSTANTIALLY
FROM ANTICIPATED OR PROJECTED RESULTS, AND, ACCORDINGLY, NO OPINION IS EXPRESSED
ON THE ACHIEVABILITY OF THOSE  FORWARD-LOOKING  STATEMENTS.  NO ASSURANCE CAN BE
GIVEN THAT ANY OF THE  ASSUMPTIONS  RELATING TO THE  FORWARD-LOOKING  STATEMENTS
SPECIFIED IN THE FOLLOWING INFORMATION ARE ACCURATE, AND WE ASSUME NO OBLIGATION
TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS.

Summary Financial Information. The summary financial information set forth below
is derived from the more detailed  consolidated  financial  statements and notes
thereto  appearing   elsewhere  in  this  Form  10-KSB.  We  have  prepared  our
consolidated  financial  statements  contained in this Form 10-KSB in accordance
with generally accepted accounting  principles in the United States. See "Report
of  Independent   Auditors"  and  "Consolidated   Financial   Statements".   All
information should be considered in conjunction with our consolidated  financial
statements and the notes contained elsewhere in this Form 10-KSB.

                             Year Ended December 31

================================================================================
Income Statement                     1999              1998            1997
--------------------------------------------------------------------------------
Revenue                             413,999           80,145          146,266
--------------------------------------------------------------------------------
Gross Profit (Loss)                (128,567)          69,886          79,315
--------------------------------------------------------------------------------
Net Income (Loss)                 (2,714,443)      (1,107,963)       (569,416)
--------------------------------------------------------------------------------
Net Income (Loss) Per Share         (0.25)            (0.15)          (0.10)
================================================================================

                                       9

<PAGE>

================================================================================
Balance Sheet                   1999                1998               1997
--------------------------------------------------------------------------------
Total Assets                  1,543,635           854,898            560,331
--------------------------------------------------------------------------------
Long Term Debt                 170,066            300,000            200,000
--------------------------------------------------------------------------------
Total Liabilities              989,545            445,807            383,789
--------------------------------------------------------------------------------
Shareholders' Equity           554,090            409,091            176,542
================================================================================


Results of Operations  for the Year Ended December 31, 1999 Compared to the Year
Ended  December 31, 1998.  Revenues for the year ended December 31, 1998 totaled
$80,145 and  increased  for the year ended  December 31, 1999 to  $413,999.  The
increase  represents the beginning of two new revenue sources,  (i) in May 1999,
we  began   offering   Mexican   voice  and  data   services  to  United  States
telecommunications  companies  using a laser  connection  in Laredo  Texas which
resulted  in  $354,611  in 1999  only;  and (ii),  in  December  1999,  we began
generating  revenues  from our debit  calling card  business  which  resulted in
$14,057 in 1999 only.

We  incurred a net loss of  $2,714,443  for the year ended  December  31,  1999,
compared to $1,107,963, for the year ended December 31, 1998. The increased loss
for the year ended December 31, 1999,  resulted from 2 reasons,  (i) the margins
on the telecommunications services being provided are very small; and (ii) stock
issued  for  services  totaled  $1,663,166  of  compensation  expenses  in 1999,
compared to $328,640 in 1998.

In total,  compensation  increased from $183,953 for the year ended December 31,
1998,  to  $1,714,641  for the year ended  December 31, 1999,  due  primarily to
additional services and compensation paid in stock.

We have incurred losses since our inception.  As of December 31, 1999, we had an
accumulated  deficit of $2,714,443.  We expect to incur operating  losses during
2000.  Our  results of  operations  have been and may  continue to be subject to
significant fluctuations.  The results for a particular period may vary due to a
number of  factors,  many of which are beyond  our  control,  including  (i) the
impact of price competition on our prices for products and services; (ii) market
acceptance  of new product or service  introductions  by us or our  competitors;
(iii) the timing of  expenditures  in  anticipation  of future sales;  and, (iv)
economic conditions generally.

Results of Operations  for the Year Ended December 31, 1998 Compared to the Year
Ended  December 31, 1997.  Revenues for the year ended December 31, 1997 totaled
$146,266 and  decreased  for the year ended  December  31, 1998 to $80,145.  The
decrease in revenues was  primarily  attributed to the decrease in the amount of
computer network consulting services provided by us.

We  incurred a net loss of  $1,107,963  for the year ended  December  31,  1998,
compared to  approximately  $569,416,  for the year ended December 31, 1997. The
increased loss for the fiscal year ending December 31, 1998,  resulted primarily
from stock issued for services which totaled  $328,640 of compensation  expenses
in 1998.

Liquidity  and  Capital  Resources.  In 1998 and 1999 we funded  our  operations
primarily  from equity  investments  through  issuances  of our  securities  and
through the issuance of notes payable.

In March 1999,  we issued  315,789  shares of our $.001 par value  common  stock
pursuant  to  Section  4(2)  of the  Securities  Act of  1933  and  Rule  506 of
Regulation D promulgated  pursuant to that Act in connection with the conversion
of a $300,000  convertible  note payable,  or at a conversion  rate of $0.95 per
share. In connection with the conversion, the parties agreed to modify an option
to purchase shares of our $.001 par value common stock.  The original option was
granted in October  1998,  whereby  the note  holder had the option to  purchase
280,000  shares of shares of our $.001 par value  common stock for cash at $1.25
per share at the time of conversion of the note payable into shares of shares of
our $.001 par value common stock through  October 16, 1999. In March 1999,  such
option was terminated,  and an existing  stockholder  issued options to the note
holder.

                                       10

<PAGE>


Our available cash and equivalents increased from $248,515 at December 31, 1998,
to  $375,387 at December  31,  1999.  Our  current  liabilities  increased  from
$145,807 to $819,479.  Our net property and equipment increased from $539,566 to
$823,190 due  primarily to the purchase of  additional  telecom  equipment.  Our
property and equipment  consists  primarily of equipment with an expected useful
life of 5 years.  Depreciation expense for the years ended December 31, 1999 and
1998, were $184,748 and $86,655, respectively.

Our cash flows used in  operating  activities  were  $400,579 for the year ended
December 31,  1998,  and  $708,981  for the year ended  December  31, 1999.  The
increase  in  funds  expended  was  primarily  the  result  of  ongoing  capital
acquisitions  necessary  to  effectuate  our  business  plan.  Cash  provided by
financing  activities  increased  from $884,278 for the year ended  December 31,
1998,  to  $1,008,808  for the year ended  December  31,  1999,  due to $896,276
received from a private placement of our common stock.

Our available cash and  equivalents  increased from $73,880 at December 31, 1997
to $248,515 at December 31, 1998. Our net property and equipment  increased from
$317,157 to $539,566,  and our current  liabilities  decreased  from $183,789 to
$145,807.As of December 31, 1998 we had $146,573 of working capital, which is an
increase  from the working  capital  deficit of $25,817 we had at  December  31,
1997.

We believe  that  current  and future  available  capital  resources,  including
revenues  generated from operations and planned  issuances of our capital stock,
will be adequate to meet our anticipated working capital and capital expenditure
requirements  for at  least  the  next  12  months.  If,  however,  our  capital
requirements or cash flows vary  materially  from our current  projections or if
unforeseen  circumstances occur, we may require additional financing sooner than
we  anticipate.  Failure to raise  necessary  capital could restrict our growth,
limit our  development  of new products and  services,  or hinder our ability to
compete.  Such capital may be raised through public or private financing as well
as borrowing and other sources.

There can be no  assurance  that  funding for our  operations  will be available
under favorable terms, if at all. If adequate funds are not available, we may be
required to curtail operations significantly or to obtain funds by entering into
arrangements  with  collaborative  partners  or others  that may  require  us to
relinquish  rights to certain  products and services that we would not otherwise
relinquish.

Our Plan of  Operation  For Next 12 Months.  We have  entered  into  substantial
contracts in connection with the debit calling card business,  and we anticipate
that we will have significant revenue growth in 2000. In addition, we are in the
process of  increasing  our capacity  through the  acquisition  of new telephone
circuitry  which  will  allow us to  enter  into  new and  more  cost  efficient
contracts in the purchase of wholesale telephone and data minutes.

To fulfill current contracts,  we must expand our infrastructure and facilities.
The current capacity of our network is 4 million minutes per month. Our capacity
limitation is primarily  based on current access to the Alestra fiber network in
Mexico.  We have  entered  into  an  agreement  for  additional  connections  to
Alestra's fiber network,  and we anticipate  that the proposed  expansion of our
network will increase our capacity to more than 50 million  minutes a month with
100%  redundancy.  We  believe  that 12 weeks is  required  from the  receipt of
additional financing to complete the connection process.

We anticipate that we will seek additional  capital to expand our global Network
Point of Presence (POPs) in Atlanta and New York.  With this additional  capital
and  expansion  of our  network,  we can support  existing  wholesale  and debit
calling card  contracts,  hire  additional  personnel,  attract  more  strategic
partners, and implement our sales and marketing strategy.

We believe that the  expansion of our POPs in Atlanta and New York will allow us
greater access to competitive rates into telecommunications  markets on a global
basis,  therefore,  lowering the costs of goods sold.  The majority of telephone
minutes for our current  debit card  programs  are mainly  targeted  towards the
Mexican  and Latin  markets,  which  traditionally  operate  upon  lower  profit
margins.  We plan to expand our debit calling card programs globally,  including
Central and South  America,  Europe and Asia upon the  completion of our network
expansion.

                                       11

<PAGE>


We also  anticipate  that the expansion of our POPs in Atlanta and New York will
allow for  quicker  implementation  time for  connecting  to our  customers  and
vendors.  By having  switching  facilities in the major United States  telephony
cross-connection   facilities,  we  will  reduce  the  implementation  time  and
bandwidth  required to  facilitate  wholesale  contracts  for Mexican  telephone
traffic  and  vendors.  Delays  in  implementation  could  result in the loss of
wholesale contracts due to the changing market prices.

Business    Interruption;    Reliance   on   Computer   and   Telecommunications
Infrastructure.  Our  success is  dependent,  in large  part,  on our  continued
investment in  sophisticated  telecommunications,  computer systems and computer
software.  We anticipate  making  significant  expenditures for the acquisition,
development  and  maintenance  of  such  technologies  in an  effort  to  remain
competitive  and  anticipates  that such  expenditures  will be  necessary on an
ongoing  basis.  Moreover,  computer  and  telecommunication   technologies  are
evolving  rapidly and are  characterized  by short  product life  cycles,  which
requires us to anticipate technological developments.  There can be no assurance
that  we  will  be  successful  in  anticipating,   managing  or  adopting  such
technological  changes on a timely basis or that we will have the cash necessary
to acquire new technologies or improve existing  technologies.  In addition, our
business is highly  dependent on its computer and  telecommunications  equipment
and software  systems,  the  temporary or permanent  loss of which,  by physical
damage or operating  malfunction,  could have a material  adverse  effect on our
business.   Operating   malfunctions  in  the  software   systems  of  financial
institutions,  market makers and other  parties might have an adverse  affect on
our  operations.  Our business is  materially  dependent on service  provided by
various local and long distance telephone  companies.  A significant increase in
the cost of telephone  services that is not  recoverable  through an increase in
the  price  of  our  services,  or any  significant  interruption  in  telephone
services, could have a material adverse effect on us.

Our systems may fail due to natural disasters,  telecommunications  failures and
other events, any of which would limit user traffic. Fire, floods,  earthquakes,
power loss,  telecommunications  failures,  break-ins  and similar  events could
damage our  communications  hardware and computer hardware  operations and cause
interruptions  in  services.  Computer  viruses,  electronic  break-ins or other
similar disruptive problems could cause failures in our systems. If any of these
circumstances occurred, our business could be harmed. Our insurance policies, if
any, may not  adequately  compensate us for any losses that may occur due to any
failures of or interruptions  in our systems.  We do not presently have a formal
disaster recovery plan. Our telecommunications must accommodate a high volume of
traffic.  Our   telecommunications  may  experience  slower  response  times  or
decreased  traffic for a variety of  reasons.  In  addition,  we depend on third
party service providers.  Many of these providers and operators have experienced
significant outages in the past and could experience  outages,  delays and other
difficulties  due to system  failures  unrelated  to our  systems.  Any of these
system failures could harm our business.

Impact of the Year 2000.  The Year 2000  (commonly  referred to as "Y2K")  issue
results from the fact that many computer programs were written using two, rather
than  four,  digits to  identify  the  applicable  year.  As a result,  computer
programs with  time-sensitive  software may  recognize a two-digit  code for any
year in the next century as related to this century. For example,  "00", entered
in a  date-field  for the  year  2000,  may be  interpreted  as the  year  1900,
resulting in system failures or  miscalculations  and disruptions of operations,
including,  among other things, a temporary inability to process transactions or
engage in other normal business  activities.  Although companies and governments
in the United States spent an estimated  $150 billion to $225 billion  repairing
the problem,  countries such as Russia and China,  which spent  relatively minor
amounts,  seemed to clear the New Year's Day hurdle  with equal  success.  Major
news media in the United  States are  reporting  that,  after  years of work and
billions  of  dollars  spent  repairing  the  Year  2000  computer  glitch;  the
technological  tranquility  of New Year's Day has raised a new concern  that the
United  States  overreacted  to this  problem.  Although it is still too soon to
conclude  positively  that the Y2K  transition  has passed  without  mishap,  we
believe that Y2K issues will not have a material adverse affect on our business.

Changes in Number of  Employees.  During the next 12  months,  depending  on the
success of our market  expansion  plan,  we may be required  to hire  additional
employees;  however,  we are not able to provide a  reasonable  estimate  of the
number of such additional employees which may be required at this time.

                                       12

<PAGE>


Item 7.  Financial Statements

Copies of the financial  statements  specified in Regulation  228.310 (Item 310)
are filed with this Annual Report on Form 10-KSB.



                          TMEX USA, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                           DECEMBER 31, 1999 AND 1998

<PAGE>


                                                   TMEX USA, INC. AND SUBSIDIARY
                                                                        CONTENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


                                                                         Page

REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    F-1 - F-2

CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Balance Sheet                                           F-3

     Consolidated Statements of Operations                                F-4

     Consolidated Statements of Stockholders' Equity                   F-5 - F-6

     Consolidated Statements of Cash Flows                             F-7 - F-8

     Consolidated Notes to Financial Statements                       F-9 - F-24

<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Stockholders of
TMEX USA, Inc.
Newport Beach, California

We have audited the  accompanying  consolidated  balance sheet of TMEX USA, Inc.
and subsidiary as of December 31, 1999, and the related consolidated  statements
of  operations,  stockholders'  equity,  and cash flows for the year then ended.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of TMEX USA, Inc. and
subsidiary  as of December 31,  1999,  and the results of their  operations  and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.


SINGER LEWAK GREENBAUM & GOLDSTEIN LLP

Santa Ana, California
March 27, 2000, except
  for Notes 7 and 9, as
  to which the date is
  April 12, 2000


                                      F-1

<PAGE>


                                                   TMEX USA, INC. AND SUBSIDIARY
                                                      CONSOLIDATED BALANCE SHEET
                                                               December 31, 1999
--------------------------------------------------------------------------------

                                     ASSETS

Current assets
  Cash                                                              $   375,387
  Accounts receivable                                                   291,350
  Prepaid expenses and other current assets                              38,708
                                                                    -----------

      Total current assets                                              705,445

Property and equipment, net                                             823,190

Investment in affiliate, at cost                                         15,000
                                                                    -----------

      Total assets                                                  $ 1,543,635
                                                                    ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Current portion of note payable                                   $    78,160
  Accounts payable and accrued expenses                                 279,341
  Accrued compensation and related benefits                              11,437
  Deferred revenue                                                      264,943
  Due to related party                                                   59,798
  Income taxes payable                                                      800
  Convertible note payable to stockholder                               125,000
                                                                    -----------

      Total current liabilities                                         819,479

Note payable, net of current portion                                    170,066
                                                                    -----------

      Total liabilities                                                 989,545
                                                                    -----------

Commitments and contingencies

Stockholders' equity
  Common stock, $0.001 par value
    50,000,000 shares authorized
    12,688,320 shares issued and outstanding                             12,688
  Common stock committed                                                 50,000
  Additional paid-in capital                                          3,205,845
  Accumulated deficit after December 31, 1998                        (2,714,443)
                                                                    -----------

      Total stockholders' equity                                        554,090
                                                                    -----------

        Total liabilities and stockholders' equity                  $ 1,543,635
                                                                    ===========


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


                                      F-3

<PAGE>


                                                   TMEX USA, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                For the Years Ended December 31,
--------------------------------------------------------------------------------


                                                        1999           1998
                                                   ------------    ------------
                                                                   (as restated)

Revenues                                           $    413,999    $     80,145

Cost of sales                                           542,566          10,259
                                                   ------------    ------------

Gross profit (loss)                                    (128,567)         69,886
                                                   ------------    ------------

Operating expenses
  Compensation and related benefits                   1,714,641         183,953
  Selling, marketing, and advertising                    19,191          26,179
  General and administrative                            852,363         681,907
                                                   ------------    ------------

      Total operating expenses                        2,586,195         892,039
                                                   ------------    ------------

Loss from operations                                 (2,714,762)       (822,153)
                                                   ------------    ------------

Other income (expense)
  Interest income                                         3,128            --
  Interest expense                                       (4,436)       (222,760)
  Realized loss on available-for-sale securities           --           (62,250)
  Gain on sale of property and equipment                  2,427            --
                                                   ------------    ------------

      Total other income (expense)                        1,119        (285,010)
                                                   ------------    ------------

Loss before provision for income taxes               (2,713,643)     (1,107,163)

Provision for income taxes                                  800             800
                                                   ------------    ------------

Net loss                                           $ (2,714,443)   $ (1,107,963)
                                                   ============    ============

Basic and diluted loss per share                   $      (0.25)   $      (0.15)
                                                   ============    ============

Weighted-average shares outstanding                  10,848,741       7,531,816
                                                   ============    ============


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


                                      F-4

<PAGE>


                                                   TMEX USA, INC. AND SUBSIDIARY
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                For the Years Ended December 31,
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                             Common Stock
                                        Common Stock          Committed       Additional
                                 ---------------------    ----------------      Paid-In    Subscription  Accumulated
                                   Shares       Amount    Shares    Amount      Capital     Receivable     Deficit         Total
                                 ----------    -------    ------   -------    -----------   ----------   -----------    -----------
<S>                              <C>           <C>        <C>      <C>        <C>            <C>         <C>            <C>
Balance, December 31, 1997,
  as previously reported          5,578,886    $ 5,579        --   $    --    $ 2,417,872    $     --    $(1,161,909)   $ 1,261,542
Prior period adjustment              87,700         87                            208,886     (22,500)    (1,271,473)    (1,085,000)
                                 ----------    -------    ------   -------    -----------    --------    -----------    -----------
Balance, December 31, 1997,
  as restated                     5,666,586      5,666        --        --      2,626,758     (22,500)    (2,433,382)       176,542
Common stock issued for
  cash, pursuant to an
  offering under Regulation D       495,943        496                            203,854                                   204,350
Common stock issued for
  cash                            1,039,959      1,040                            358,642                                   359,682
Common stock issued in
  connection with the
  conversion of a note
  payable                         1,000,000      1,000                            399,000                                   400,000
Common stock issued to
  officers and employees
  for services                      308,250        308                             77,917                                    78,225
Common stock issued to
  third parties for services        715,600        716                            249,699                                   250,415
Interest and compensation
  expense related to the
  issuance of stock options                                                        25,340                                    25,340
Payment received for common
  stock subscribed                                                                             22,500                        22,500
Net loss                                                                                                  (1,107,963)    (1,107,963)
Quasi reorganization,
  restated                                                                     (3,541,345)                 3,541,345
                                 ----------    -------    ------   -------    -----------    --------    -----------    -----------
</TABLE>


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


                                      F-5

<PAGE>


<TABLE>
<CAPTION>
                                                             Common Stock
                                        Common Stock          Committed       Additional
                                 ---------------------    ----------------      Paid-In     Subscription    Accumulated
                                   Shares       Amount    Shares    Amount      Capital     Receivable     Deficit         Total
                                 ----------    -------    ------   -------    -----------   ----------   -----------    -----------
<S>                              <C>           <C>        <C>      <C>        <C>            <C>         <C>            <C>
Balance, December 31, 1998,
  as restated                     9,226,338    $ 9,226        --   $    --    $   399,865    $     --    $        --    $   409,091
Common stock issued for
  cash, pursuant to an
  offering under Regulation D        44,947         45                             28,455                                    28,500
Common stock issued for
  services, pursuant to an
  offering under Regulation D        30,000         30                             29,970                                    30,000
Common stock issued for
  cash                              966,386        966                            866,810                                   867,776
Common stock issued to
  officers and employees
  for services                    1,922,500      1,923                          1,396,077                                 1,398,000
Common stock issued to
  third parties for services        182,360        182                            184,984                                   185,166
Common stock issued in
  connection with the
  conversion of a note payable,
  pursuant to an offering under
  Regulation D                      315,789        316                            299,684                                   300,000
Common stock committed for
  services                                                50,000    50,000                                                   50,000
Net loss                                                                                                  (2,714,443)    (2,714,443)
                                 ----------    -------    ------   -------    -----------    --------    -----------    -----------
Balance, December 31, 1999       12,688,320    $12,688    50,000   $50,000    $ 3,205,845    $     --    $(2,714,443)   $   554,090
                                 ==========    =======    ======   =======    ===========    ========    ===========    ===========
</TABLE>


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


                                      F-6

<PAGE>


                                                   TMEX USA, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                For the Years Ended December 31,
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                              1999           1998
                                                          -----------    ------------
                                                                         (as restated)
<S>                                                       <C>            <C>
Cash flows from operating activities
  Net loss                                                $(2,714,443)   $(1,107,963)
  Adjustments to reconcile net loss to net cash
    used in operating activities
      Accounts receivable - bad debt                           20,943             --
      Due from related parties - bad debt                       6,761             --
      Depreciation and amortization                           184,748         86,655
      Gain on sale of property and equipment                   (2,427)            --
      Realized loss on available-for-sale securities               --         62,250
      Issuance of common stock for services                 1,663,166        328,640
      Interest expense recorded in connection with
        conversion of a note payable into common stock             --        200,000
      Interest and compensation expense related to the
        issuance of stock options                                  --         25,340
  (Increase) decrease in
    Accounts receivable                                      (291,189)        14,026
    Due from related parties                                       --          4,151
    Prepaid expenses and other current assets                 (47,052)        22,050
  Increase (decrease) in
    Accounts payable and accrued expenses                     196,099        (27,942)
    Accrued compensation and related benefits                   9,450          1,987
    Due to related party                                           20        (10,573)
    Income taxes payable                                           --            800
    Deferred revenue                                          264,943             --
                                                          -----------    -----------
        Net cash used in operating activities                (708,981)      (400,579)
                                                          -----------    -----------
Cash flows from investing activities
  Purchase of property and equipment                         (198,955)      (309,064)
  Proceeds from sale of available-for-sale securities          22,000             --
  Proceeds from sale of property and equipment                  4,000             --
                                                          -----------    -----------
        Net cash used in investing activities                (172,955)      (309,064)
                                                          -----------    -----------
Cash flows from financing activities
  Borrowings on note payable                                       --        300,000
  Borrowings on convertible note payable to stockholder       125,000             --
  Principal payments on note payable                          (12,468)        (2,254)
  Stock subscription collected                                     --         22,500
  Proceeds from issuance of common stock                      896,276        564,032
                                                          -----------    -----------
        Net cash provided by financing activities           1,008,808        884,278
                                                          -----------    -----------
</TABLE>


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


                                      F-7

<PAGE>


                                                   TMEX USA, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                For the Years Ended December 31,
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                              1999           1998
                                                          -----------    ------------
                                                                         (as restated)
<S>                                                       <C>            <C>
        Net increase in cash                              $   126,872    $   174,635

Cash, beginning of year                                       248,515         73,880
                                                          -----------    -----------

Cash, end of year                                         $   375,387    $   248,515
                                                          ===========    ===========


Supplemental disclosures of cash flow information

  Interest paid                                           $     4,436    $       360
                                                          ===========    ===========

  Income taxes paid                                       $       800    $       800
                                                          ===========    ===========
</TABLE>

Supplemental schedule for non-cash investing and financing activities

During the year ended December 31, 1999, the Company  entered into the following
non-cash transactions:

o    Purchased equipment through long-term debt financing totaling $260,694

o    Issued  common stock in  connection  with the  conversion of a note payable
     totaling $300,000

o    Received  an equity  investment  as payment on a related  party  receivable
     totaling $15,500

During the year ended December 31, 1998, the Company  entered into the following
non-cash transaction:

o    Issued common stock valued at $400,000 in connection with the conversion of
     a note payable totaling $200,000 plus accrued interest of $200,000


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


                                      F-8

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 1 - ORGANIZATION AND BUSINESS

     Business Activities

     TMEX USA, Inc.  ("TMEX"),  previously  Swiss  Cellular  Laboratories,  Inc.
     ("SCL"), is a Nevada corporation  organized in July 1987 for the purpose of
     providing  wholesale and retail  telecommunication  service.  TMEX provides
     telephone,  video, data,  private network,  and Internet services via laser
     communication  links to  wholesalers  and retailers  throughout  the United
     States and Mexico and through its own  switching  stations and the purchase
     of wholesale telephone service with major carriers.

     TMEX S.A. de C.V.  ("TMEX  Mexico") is a majority owned  subsidiary of TMEX
     established  for the purpose of  supporting  telecommunication  services in
     Mexico.

     Organization

     Effective June 30, 1995, the Board of Directors of NuTek, Inc.,  previously
     Swiss Technique,  Inc., approved the pro rata distribution of approximately
     90%  (270,000  shares) of the 300,000  outstanding  shares of TMEX as a tax
     free  dividend  to the  holders of record of NuTek,  Inc.  stock.  Such was
     effected for the purpose of facilitating  the ability of TMEX to expand and
     diversify its business.

     Effective  April 30, 1996,  TMEX and TMEX USA, Inc. a Missouri  corporation
     ("TMEX  Missouri")  entered into a Plan of  Reorganization  and  Agreement,
     whereby  TMEX issued  1,300,000  shares of common stock in exchange for the
     net assets of TMEX Missouri  valued at $488,220.  In  connection  with this
     agreement, TMEX Missouri was dissolved as a corporation.

     SCL was a public  company listed on NASDAQ's  over-the-counter  market with
     dormant operations and no assets or liabilities.

     Quasi Reorganization

     Effective  December  31,  1998,  the Board of  Directors of TMEX elected to
     reduce additional paid-in capital by the amount of the accumulated  deficit
     as  of  December  31,  1998   totaling   $3,541,345  as  part  of  a  quasi
     reorganization.  The balance sheet  accounts were not restated as no assets
     or liabilities were deemed by management to be impaired.


                                      F-9

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation

     The accompanying  consolidated financial statements include the accounts of
     TMEX and its  wholly  owned  subsidiary,  TMEX  Mexico  (collectively,  the
     "Company"). All intercompany accounts and transactions have been eliminated
     in the consolidation.

     Basis of Presentation

     The accompanying financial statements have been prepared in conformity with
     generally accepted accounting principles which contemplate  continuation of
     the Company as a going concern.  However, since the Company's inception, it
     has incurred  net losses of  $6,255,788,  and as of December 31, 1999,  its
     total  current  liabilities  exceeded its current  assets by  $113,034.  In
     addition,  cash used in operating  activities totaled $708,981 for the year
     ended December 31, 1999. Recovery of the Company's assets is dependent upon
     future  events,  the  outcome of which is  indeterminable.  The  successful
     transition to the  attainment of  profitable  operations is dependent  upon
     obtaining  adequate  financing  or capital  and  achieving a level of sales
     adequate to support the Company's cost structure. In view of these matters,
     realization  of a major portion of the assets in the  accompanying  balance
     sheet  is  dependent  upon the  Company's  ability  to meet  its  financing
     requirements and the success of its plans to generate sufficient  revenues.
     The  financial  statements do not include any  adjustments  relating to the
     recoverability  and classification of recorded asset amounts or amounts and
     classification of liabilities that might be necessary should the Company be
     unable to continue in existence.

     Management of the Company plans to raise  additional  equity capital and to
     continue to develop its  business to achieve  sufficient  revenues to cover
     its cost structure.

     Estimates

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

     Fair Value of Financial Instruments

     The Company  measures its financial  assets and  liabilities  in accordance
     with generally accepted accounting principles.  The carrying amounts of the
     Company's  financial  instruments,  including  cash,  accounts  receivable,
     accounts payable and accrued expenses.  The amounts shown for notes payable
     also  approximate  fair value because current interest rates offered to the
     Company for debt of similar maturities are substantially the same.


                                      F-10

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Property and Equipment

     Property and equipment are recorded at cost.  Depreciation and amortization
     are provided using the Modified  Accelerated Cost Recovery System ("MACRS")
     method,  which  approximates  the  double-declining  method over the assets
     estimated useful lives as follows:

          Equipment                                                     5 years
          Office furniture                                              7 years
          Leasehold improvements           shorter of lease term or useful life

     Maintenance and minor replacements are charged to expense as incurred.

     Accounting for the Impairment of Long-Lived Assets

     The Company adopted Statement of Financial  Accounting  Standards  ("SFAS")
     No.  121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
     Long-Lived  Assets to be  Disposed  of." SFAS No. 121  requires  impairment
     losses  to be  recorded  on  long-lived  assets  used  in  operations  when
     indicators  of  impairment  are  present  and the  undiscounted  cash flows
     estimated  to be  generated  by  those  assets  are less  than the  assets'
     carrying  amount.  Management  determined  that there was no  impairment of
     long-lived assets for all periods presented.

     Investments in Available-for-Sale Securities

     The Company  accounts for its investments  under the provisions of SFAS No.
     115,  "Accounting for Certain  Investments in Debt and Equity  Securities."
     Available-for-sale securities,  representing an investment in the Company's
     prior parent,  were reported at fair market value with  unrealized  holding
     gains and losses included as a separate  component of stockholders'  equity
     until realized.  During the year ended December 31, 1998, management of the
     Company  determined  that the decline in the fair market was not temporary.
     Accordingly,   during  the  year  ended  December  31,  1998,  the  Company
     recognized a realized loss totaling $62,250. During the year ended December
     31, 1999,  all  available-for-sale  securities  were sold,  resulting in an
     insignificant realized loss.


                                      F-11

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Stock-Based Compensation

     SFAS No. 123,  "Accounting for Stock-Based  Compensation,"  establishes and
     encourages  the use of the  fair  value  based  method  of  accounting  for
     stock-based  compensation  arrangements  under which  compensation  cost is
     determined using the fair value of stock-based  compensation  determined as
     of the date of  grant  and is  recognized  over the  periods  in which  the
     related  services are  rendered.  The statement  also permits  companies to
     elect to  continue  using the  current  implicit  value  accounting  method
     specified  in  Accounting  Principles  Bulletin  ("APB")  Opinion  No.  25,
     "Accounting  for Stock  Issued to  Employees,"  to account for  stock-based
     compensation  issued to employees.  The Company has elected to use the fair
     value based method. For stock-based  compensation  issued to non-employees,
     the Company uses the fair value method of accounting  under the  provisions
     of SFAS No. 123.

     Loss per Share

     The  Company  calculates  loss per share in  accordance  with SFAS No. 128,
     "Earnings Per Share." SFAS No. 128 replaced the presentation of primary and
     fully  diluted  loss per share with the  presentation  of basic and diluted
     loss per share. Basic loss per share excludes dilution and is calculated by
     dividing  loss  available to common  stockholders  by the  weighted-average
     number of common shares outstanding for the period.  Diluted loss per share
     includes the potential  dilutive  effects that could occur if securities or
     other  contracts  to issue common  stock were  exercised or converted  into
     common stock  ("potential  common stock") that would then share in the loss
     of the Company.

     As of December 31, 1999 and 1998,  the Company had potential  common stock,
     including options and warrants.  The effects of such potential common stock
     were not  included in diluted  loss per share as their  effects  would have
     been anti-dilutive.

     Income Taxes

     Deferred  income taxes are  recognized for the tax  consequences  in future
     years of differences  between the tax basis of assets and  liabilities  and
     their financial  reporting amounts at each period end, based on enacted tax
     laws and  statutory  tax  rates  applicable  to the  periods  in which  the
     differences are expected to affect taxable income. Valuation allowances are
     established,  when  necessary,  to reduce deferred tax assets to the amount
     expected to be realized.  The provision for income taxes represents the tax
     payable  for the  period,  if any,  and the  change  during  the  period in
     deferred tax assets and liabilities.


                                      F-12

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Comprehensive Income

     For the year ended  December  31, 1999,  the Company  adopted SFAS No. 130,
     "Reporting  Comprehensive Income." This statement establishes standards for
     reporting comprehensive income and its components in a financial statement.
     Comprehensive income as defined includes all changes in equity (net assets)
     during a period from non-owner sources. Examples of items to be included in
     comprehensive  income, which are excluded from net income,  include foreign
     currency  translation  adjustments  and  unrealized  gains  and  losses  on
     available-for-sale securities. Comprehensive income is not presented in the
     Company's  financials  statements since the Company did not have any of the
     items of comprehensive income in any period presented.

     Revenue Recognition

     The Company  recognizes  revenues for  contracted  one-time  services  upon
     completion of the services.  The Company  recognizes  revenues for sales of
     equipment and supplies upon shipment of the goods.

     The Company  recognizes  revenues  associated  with phone debit cards based
     upon actual  usage.  Amounts  collected by the Company for the sale of such
     cards are deferred, net of related commissions, until such time amounts are
     used by the  cardholder.  As of December 31, 1999, the Company had deferred
     revenues totaling $264,943 related to unused phone debit cards.

     Recently Issued Accounting Pronouncements

     In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 136, "Transfer of Assets to a Not-for-Profit Organization or Charitable
     Trust that Raises or Holds Contributions for Others." This statement is not
     applicable to the Company.

     In June 1999,  the FASB  issued SFAS No. 137,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities."  This statement is not applicable to
     the Company.

     Reclassifications

     Certain  amounts  have been  reclassified  in the prior  year  balances  to
     conform to the current year presentation.


NOTE 3 - RISKS AND UNCERTAINTIES

     Technological Obsolescence

     The  telecommunications  industry is characterized  by rapid  technological
     advancement and change.  Should demand for the Company's  products prove to
     be significantly  less than anticipated,  the ultimate  realizable value of
     such products could be substantially less than the amounts reflected in the
     accompanying balance sheet.


                                      F-13

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 3 - RISKS AND UNCERTAINTIES (Continued)

     Reliance on Independent Service Providers

     The Company is party to various  contracts with service providers to obtain
     "direct  access  links" that provide  telecommunications  connections.  The
     agreements  specify  minimum  usage and  payment  amounts  and  require the
     Company to prepay  estimated  monthly usage and pay certain  one-time costs
     for initial  installation costs, as defined.  The Company has the option to
     terminate  these  agreements,  subject  to early  termination  charges,  to
     reimburse  the  service   provider  for   installation   costs  related  to
     connections provided.

     The  Company  is also party to a contract  with a reseller  to provide  the
     manufacturing  and  distribution of prepaid debit phone cards,  whereby the
     reseller is obligated to sell minimum amounts, as defined,  and the Company
     is obligated to provide the underlying  service for cards sold at specified
     rates.  Fraudulent calls are at the expense of the reseller.  The agreement
     can be terminated,  as defined,  and renews automatically on a year-to-year
     basis, as defined.

     The  Company  relies on these  carriers  to  provide  service in the United
     States  and  Mexico.  Should  the  Company  be  unable  to  maintain  these
     contracts,  use  specified  minimums,  or to obtain  service to support its
     current or future operations,  the Company could experience difficulties in
     supplying  telecommunications  service to its customers or could experience
     excessive  costs in  relation  to  revenues,  which  would  have a material
     adverse effect on the financial position and operations of the Company.

     Government Regulation

     The  telecommunication   industry  is  subject  to  regulation  by  various
     governmental  authorities  in the United  States and other  countries.  The
     Company's  services  currently are required to obtain  regulatory  approval
     from the  Federal  Communications  Commission  ("FCC").  Management  of the
     Company believes appropriate approvals by the FCC have been granted.  There
     can be no assurance that regulatory renewal,  approvals, or clearances will
     be granted by the FCC on a timely basis, or at all. Not obtaining necessary
     regulatory  approvals in the United States or in other countries would have
     an adverse  effect on the  Company's  business,  financial  condition,  and
     results of operations.

     Listing and Maintenance Criteria for Over-the-Counter

     The Company has been  notified by the  Securities  and Exchange  Commission
     that the Company is  required  to file as a reporting  company by April 19,
     2000.  There is no  assurance  that the  Company  will be able to obtain or
     maintain the standards of a reporting company on the over-the-counter.


                                      F-14

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 4 - CONCENTRATIONS OF RISK

     Cash

     As of  December  31,  1999,  the  Company  maintained  cash  balances  with
     financial  institutions  totaling  $174,322 in excess of federally  insured
     amounts of $100,000.

     Major Customers and Suppliers

     During the year ended  December 31, 1999, the Company had one customer that
     represented  85% of net sales and had one  customer  that  represented  96%
     accounts  receivable.  During the year ended December 31, 1998, the Company
     had one customer that represented 66% of net revenues.

     During the year ended  December  31,  1999,  the  Company  had two  service
     providers  that  represented  81% and 12% of purchases.  As of December 31,
     1999,  such service  suppliers  represented 56% and 21%,  respectively,  of
     accounts payable.


NOTE 5 - PROPERTY AND EQUIPMENT

     Property and equipment as of December 31, 1999 consisted of the following:

          Equipment                                               $1,142,551
          Furniture and fixtures                                      22,376
          Leasehold improvements                                      29,776
                                                                  ----------
                                                                   1,194,703
          Less accumulated depreciation and amortization             371,513
                                                                  ----------
               Total property and equipment                       $  823,190
                                                                  ==========


NOTE 6 - NOTE PAYABLE

     As of December  31,  1999,  note  payable  consisted of a note payable to a
     financial  institution  bearing  interest  at 12.23% per annum,  secured by
     certain  equipment,  payable  monthly at $8,690,  including  principal  and
     interest, and maturing in October 2002.


                                      F-15

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 6 - NOTE PAYABLE (Continued)

     As of December 31, 1999,  scheduled  future  maturities of the note payable
     were as follows:

          Year Ending
          December 31,
          ------------
              2000                                                 $ 78,160
              2001                                                   88,271
              2002                                                   81,795
                                                                   --------
                                                                    248,226
              Less current portion                                   78,160
                                                                   --------
                   Long term portion                               $170,066
                                                                   ========


NOTE 7 - COMMITMENTS AND CONTINGENCIES

     Leases

     The   Company   leases  its   facilities   and  certain   equipment   under
     non-cancelable,  operating lease agreements,  expiring through August 2001.
     The Company also leases certain facilities on a month-to-month basis.

     As of December 31, 1999,  future  aggregate  minimum  annual lease payments
     under operating lease  arrangements  for the years ending December 31, 2000
     and 2001, total $40,200 and $14,000, respectively.

     For the years  ended  December  31,  1999 and 1998,  rent  expense  totaled
     $44,734 and $32,128, respectively.  Rent expense is included in general and
     administrative expenses in the accompanying statements of operations.

     Internet Service Agreement

     The Company has an Internet service  agreement with a provider that expires
     in May 2001,  whereby for monthly service,  the Company is obligated to pay
     $1,136 per  month.  As of  December  31,  1999,  future  aggregate  minimum
     payments  under this  agreement for the years ending  December 31, 2000 and
     2001, total $13,632 and $4,885, respectively.


                                      F-16

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)

     Employment Contracts

     On April 12, 2000, the Company  entered into contracts with three officers,
     whereby for  successive  one-year  terms,  the  employees  will  receive an
     aggregate annual base salary totaling $340,000 and will be entitled to cash
     bonuses equal to 2% of net profits, as defined.

     In October  1999,  the Company  entered into a three-year  contract with an
     employee,  which provides for successive automatic one-year renewals unless
     terminated,  as defined.  The Company is  obligated to pay a base salary of
     $5,000 per month through December 1999, $10,000 per month from January 2000
     through  October 2000,  and 10% annual  increases  thereafter,  plus a 1.5%
     commission on all sales of debit cards. The Company also committed to issue
     50,000 shares of common stock upon signing the  agreement,  and  contingent
     bonus  compensation  is to be paid  totaling  up to  960,000  shares of the
     Company's  common  stock  over a period of three  years in equal  quarterly
     installments  of 80,000 shares,  provided the employee meets minimum profit
     targets, as defined.  For the year ended December 31, 1999, included in the
     accompanying  statement of  operations  is  compensation  expense  totaling
     $50,000,   representing  the  fair  market  value  (based  on  recent  cash
     transactions) of the 50,000 committed shares of common stock.

     Litigation

     The  Company is party to various  matters of  litigation  that arise in the
     normal  course  of  business.  Management  believes  there  will not be any
     significant  impact to the Company's  financial position or operations as a
     result of these matters.


NOTE 8 - RELATED PARTY TRANSACTIONS

     Due to Related Party

     As of December 31, 1999, due to related party consists of amounts due to an
     entity  owned by the  President  and major  stockholder  of the Company for
     operating services provided.

     Convertible Note Payable to Stockholder

     Effective  December  21,  1999,  the  Company  issued a note  payable  to a
     stockholder  for  cash  used  for   operations.   The  note  is  unsecured,
     non-interest  bearing,  and is convertible  into  restricted  shares of the
     Company's common stock at a conversion rate of $1.25 per share. The note is
     payable or convertible on demand any time after March 15, 2000.


                                      F-17

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 9 - CAPITAL TRANSACTIONS

     Common Stock Offerings

     Commencing in June 1998,  the Company began selling  shares of common stock
     under  Regulation  D,  Rule  504 of the  Securities  Exchange  Act of 1934,
     permitting  the sale of stock  with an  aggregate  cash  offering  price of
     $1,000,000  or less.  Under Rule 504,  the  Company  was exempt from filing
     complete  registration  statements for this  offering.  Free trading common
     stock was issued for cash under this  offering.  During  1998,  the Company
     issued 495,943 shares for cash totaling $204,350,  or ranging from $0.20 to
     $0.64 per share, pursuant to this offering. During 1999, the Company issued
     44,947  shares for cash totaling  $28,500,  or ranging from $0.50 to $1 per
     share,  and  issued  30,000  shares  for  services  valued  at $1 per share
     pursuant to this offering. Insignificant costs were incurred in association
     with issuance of these shares.

     In March 1999,  the Company issued 315,789 shares of common stock under the
     Regulation D offering,  discussed  below, in connection with the conversion
     of a $300,000  convertible  note payable,  or at a conversion rate of $0.95
     per share. In connection with the conversion,  the parties agreed to modify
     an option to purchase common stock of the Company.  The original option was
     granted in October 1998, whereby the note holder had the option to purchase
     280,000 shares of the Company's  restricted  common stock for cash at $1.25
     per share at the time of  conversion  of the note  payable  into  shares of
     common  stock  through  October 16,  1999.  In March 1999,  such option was
     terminated,  and an existing stockholder issued options to the note holder.
     Included in the  accompanying  statement of operations is interest  expense
     totaling  $22,400,  representing  the value ascribed to these options.  The
     value of these  options  was  estimated  at the  date of  grant  using  the
     Black-Scholes option-pricing model.

     Common Stock Issued for Cash

     In December 1997, the Company accepted a subscription for 30,000 restricted
     shares of common stock valued at $0.75 per share, or $22,500.  Such amounts
     were collected in 1998.

     During 1998, the Company issued 1,039,959 restricted shares of common stock
     for cash totaling $359,682, or ranging from $0.13 to $0.69 per share.


                                      F-18

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 9 - CAPITAL TRANSACTIONS (Continued)

     Common Stock Issued for Cash (Continued)

     During 1999, the Company issued 966,386  restricted  shares of common stock
     for cash totaling $867,776, or ranging from $0.35 to $2 per share.

     No offering  costs were  incurred in  association  with the issuance of the
     above common stock issued for cash.

     Common Stock Issued for Services

     The Company  values all shares issued for services  based on the fair value
     of the common shares issued for such services.

     During 1998, the Company issued 715,600  restricted  shares of common stock
     for legal,  professional,  and  outside  services  valued at  $250,415,  or
     ranging  from $0.125 to $0.50 per share.  The Company  also issued  308,250
     restricted  shares of common stock for salaries and bonuses to officers and
     employees valued at $78,225, or ranging from $0.125 to $0.50 per share.

     During 1999, the Company issued 182,360  restricted  shares of common stock
     for legal,  professional,  and  outside  services  valued at  $185,166,  or
     ranging  from $0.35 to $2 per share.  The  Company  also  issued  1,922,500
     restricted  shares of common stock for salaries and bonuses to officers and
     employees valued at $1,398,000, or ranging from $0.60 to $1.90 per share.

     Other Common Stock Transactions

     In February 1997, the Company sold 86,000 units for cash at $0.75 per unit.
     Each  unit  consisted  of one  share of common  stock  and one  warrant  to
     purchase one share of common stock for cash at $0.75 per share. The warrant
     was  exercisable  between June 1, 1998 and June 30, 1998, and expired.  The
     value ascribed to the warrants totaled $30,100. The value of these warrants
     was estimated at the date of grant using the  Black-Scholes  option-pricing
     model.

     In April 1998, the Company  issued  1,000,000  restricted  shares of common
     stock in  connection  with the  conversion of a $200,000  convertible  note
     payable.  Interest expense totaling  $200,000,  representing the difference
     between the principal  amount and the value of the restricted  shares,  has
     been recorded in the accompanying statement of operations.


                                      F-19

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 9 - CAPITAL TRANSACTIONS (Continued)

     Options and Warrants

     On April 12, 2000, the Board of Directors approved and adopted an incentive
     stock  option  and  non-qualified   stock  option  plan  (the  "Plan")  for
     directors,  officers, key employees, and consultants. The Plan provides for
     the  granting of options for common  shares at exercise  prices equal to or
     exceeding  the fair market value at the date of grant,  as determined by an
     option  committee  consisting  of a minimum of three  parties  (the "Option
     Committee"),  as  defined.  Options  become  exercisable  over a period  as
     determined  by  the  Option  Committee.  In  no  event  are  options  to be
     exercisable  after 10 years from the date of grant.  The Board of Directors
     has authorized a total of 5,000,000  shares to be available for grant under
     the Company's stock option plans.

     Options  granted under the Plan may be either  "incentive  stock  options,"
     within  the  meaning  of  Section  422 of the  Internal  Revenue  Code,  or
     "non-qualified stock options," as determined by the Option Committee at the
     time of grant.  No incentive  stock option may be granted to any person who
     owns stock  possessing  more than 10% of the  combined  voting power of all
     classes  of the  Company's  stock or of its  parent  ("10%  Stockholders"),
     unless  the  exercise  price is at least  equal to 110% of the fair  market
     value on the date of grant. Options may be granted under the Plan for terms
     of up to five years,  except for  incentive  stock  options  granted to 10%
     Stockholders, which are limited to three-year terms.

     The exercise price in the case of incentive stock options granted under the
     Plan must be at least equal to the fair market value of the common stock as
     of the date of grant.  No  incentive  stock  options  may be  granted to an
     optionee under the Plan if the aggregate  fair market value  (determined on
     the date of grant) of the  stock  with  respect  to which  incentive  stock
     options are  exercisable  by such  optionee in any calendar  year under all
     such plans of the Company and its affiliates exceeds $100,000.

     No options have been granted under the Plan.

     During 1997, in connection with a consulting agreement for common stock and
     warrants,  the Company issued two options, each for 50,000 shares of common
     stock.  The two options were  exercisable at $0.10 and $0.25,  subject to a
     share value exceeding $1 and $2, respectively, for five consecutive trading
     days. The options expired in June 1998. The Company  recorded  compensation
     expense totaling $36,000, representing the value ascribed to these options.
     The value of these  options  was  estimated  at the date of grant using the
     Black-Scholes option-pricing model.

     During 1998,  options for 42,000 shares of common stock  exercisable  at $1
     were issued in connection  with services  provided.  The options expired in
     December 1998. The value  ascribed to these options was  insignificant  and
     was estimated at the date of grant using the  Black-Scholes  option-pricing
     model and was insignificant.


                                      F-20

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 9 - CAPITAL TRANSACTIONS (Continued)

     Options and Warrants (Continued)

     The  following  summarizes  options and  warrants  granted and  outstanding
     through December 31, 1999:

                                 Number of Shares                    Weighted-
                               --------------------                  Average
                                             Non-                    Exercise
                               Employee    Employee       Total       Price
                               --------    --------       -----       -----
     Balance, December 31,
       1997                          --     186,000      186,000      $ 0.44
         Granted                     --     322,000      322,000      $ 1.22
         Expired, cancelled          --    (186,000)    (186,000)     $(0.44)
                               --------    --------     --------
     Balance, December 31,                  322,000      322,000        1.22
       1998                          --          --           --      $   --
         Expired, cancelled          --    (322,000)    (322,000)     $(1.22)
                               --------    --------     --------
     Balance, December 31,
       1999                          --          --           --      $   --
                               ========    ========     ========


NOTE 10 - INCOME TAXES

     The components of the income tax provision for the years ended December 31,
     1999 and 1998 were as follows:

                                                 1999           1998
                                                -----           -----

          Current                               $ 800           $ 800
          Deferred                                 --              --
                                                -----           -----
              Total                             $ 800           $ 800
                                                =====           =====


                                      F-21

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 10 - INCOME TAXES (Continued)

     Income tax expense (benefit) for the years ended December 31, 1999 and 1998
     differed from the amounts computed  applying the federal  statutory rate of
     34% to pre-tax income as a result of:

                                                           1999         1998
                                                        ---------    ---------
     Computed "expected" tax benefit                    $(922,979)   $(346,107)
     Deferred state tax benefit                           (64,546)          --
     Expenses not deducted for tax purposes               550,643      174,556
     Change in beginning of the year balance of the
        valuation allowance for deferred tax assets       437,154      171,823
     State and local income taxes, net of tax benefit         528          528
                                                        ---------    ---------
              Total                                     $     800    $     800
                                                        =========    =========

     Significant components of the Company's deferred tax assets and liabilities
     for federal and state income taxes as of December 31, 1999 consisted of the
     following:

     Deferred tax assets
         Net operating loss carryforwards                        $ 782,779
         Value of stock options not exercised                       38,402
         Other                                                       2,696
         Valuation allowance                                      (784,622)
                                                                 ---------

              Total deferred tax assets                             39,255

     Deferred tax liabilities
         Depreciation and amortization                              (9,019)
         State taxes                                               (30,236)
                                                                 ---------

                  Total                                          $      --
                                                                 =========

     The  valuation  allowance  for  deferred tax assets as of December 31, 1999
     totaled approximately  $785,000.  The net change in the valuation allowance
     for the year ended  December  31,  1999 was an  increase  of  approximately
     $419,000.

     As  of  December  31,  1999,   the  Company  had  net  tax  operating  loss
     carryforwards  of  approximately  $2,071,000  available  to  offset  future
     federal  taxable  income and tax  liabilities.  The  federal  carryforwards
     expire in  varying  amounts  through  2019.  The  Company  also had net tax
     operating loss carryforwards of approximately  $890,000 available to offset
     future   California   taxable  income  and  tax   liabilities.   The  state
     carryforwards expire through 2004.


                                      F-22

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 11 - PRIOR PERIOD ADJUSTMENTS

     As of December 31, 1998, the Company did not reflect  charges to operations
     for certain  assets or the valuation of certain  issuances of stock.  As of
     December 31, 1998, this resulted in a decrease to assets totaling  $29,356,
     an increase to common stock  totaling $90, and a net decrease to additional
     paid-in capital totaling $29,386.  The impact for 1998 of these adjustments
     was  reduced  by  the  offsetting  the  adjustment  related  to  the  quasi
     reorganization   (see  Note  1)  totaling   $1,864,282,   representing  the
     additional  adjustment  required to reclassify the  accumulated  deficit to
     additional paid-in capital.

     As of December 31, 1997, the Company did not reflect the transferor's  cost
     basis for assets purchased from an officer and stockholder, the issuance of
     certain  shares of common stock,  or the valuation of certain  issuances of
     stock,  options, and warrants.  As of December 31, 1997, this resulted in a
     decrease to investments  totaling  $1,085,000,  an increase to common stock
     totaling $87, an increase to additional  paid-in capital totaling $208,886,
     and an increase to the accumulated deficit totaling $1,271,473.

     Accordingly,  the 1998 and 1997 financial statements and balances have been
     restated.


NOTE 12 - YEAR 2000 ISSUE

     The issue whether computer systems would properly recognize  date-sensitive
     information when the year changed to 2000 resulted in no system failures to
     the Company. The Company is dependent on computer processing in the conduct
     of its business activities.

     While the Company has taken steps to communicate with outside suppliers, it
     cannot  guarantee  that they have all taken the necessary  steps to prevent
     any service interruption that may affect the Company.

     Based  on  the  current  operations  of  the  Company's  computer  systems,
     management  believes there will not be any additional costs related to this
     issue.


NOTE 13 - SUBSEQUENT EVENTS

     Capital Transactions

     In February and March 2000, the Company accepted  subscriptions for 667,250
     shares of the  Company's  common stock for cash ranging from $1.45 to $1.55
     per share,  or an aggregate of $937,915,  net of costs of $62,085.  The per
     share price included a 30% discount.


                                      F-23

<PAGE>


                                                 TMEX USA, INC. AND SUBSIDIARIES
                                      CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
                                                               December 31, 1999
--------------------------------------------------------------------------------


NOTE 13 - SUBSEQUENT EVENTS (Continued)

     Capital Transactions (Continued)

     Subsequent to the year ended December 31, 1999 and through the date of this
     report,  the Company issued  544,000 shares of restricted  common stock for
     services  valued at $0.80 to $1.75 per share,  or an aggregate of $796,450.
     The Company also issued 24,786  shares of restricted  common stock for cash
     at $1.75 per share to two individuals, or an aggregate of $43,376.


                                      F-24

<PAGE>



<PAGE>

Item 8.  Changes in and Disagreements with Accountants.

There have been no changes in or  disagreements  with our accountants  since our
formation  required  to be  disclosed  pursuant to Item 304 of  Regulation  S-B,
except for the following:

In February  2000,  our former  accountant,  the firm of Haynie and  Company,  a
California corporation ("Haynie"), resigned as our independent auditor. Haynie's
reports on the financial statements for either of the past two (2) years did not
contain an adverse  opinion or  disclaimer  of opinion and the reports  were not
modified  as to audit scope or  accounting  principles.  The  decision to change
accountants  was  recommended and approved by our Board of Directors and did not
result from any disagreement  regarding our policies or procedures.  In February
2000,  we engaged  new  accountants,  the firm of  Singer,  Lewak,  Greenbaum  &
Goldstein, LLP as the principal accountants to audit our financial statements. A
correspondence  from Haynie dated April 12, 2000 specifying that our disclosures
regarding  the change in  accountants  are true and  correct is attached to this
Form 10-KSB as Exhibit 99.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons.

Executive Officers and Directors.  We are dependent on the efforts and abilities
of certain of our senior  management.  The  interruption  of the services of key
management could have a material  adverse effect on our operations,  profits and
future development,  if suitable replacements are not promptly obtained. We have
entered  into  employment  agreements  with  our  key  executives;  however,  no
assurance can be given that each  executive  will remain with us during or after
the term of his or her employment agreement.  In addition,  our success depends,
in part,  upon our  ability to  attract  and retain  other  talented  personnel.
Although we believe that our  relations  with our personnel are good and that we
will continue to be successful in attracting and retaining qualified  personnel,
there can be no assurance  that we will be able to continue to do so. All of our
officers and directors will hold office until their resignation or removal.

Our  principal  executive  officers  and  the  directors  are  specified  in the
following table:

================================================================================
Name                                   Age     Position
--------------------------------------------------------------------------------
Cooper Lee                             23      President, Director
--------------------------------------------------------------------------------
Crofton Cooper                         74      Chief Executive Officer,
                                               Secretary, Treasurer, Director
--------------------------------------------------------------------------------
Cecil Zeringue                         33      Vice President, Director
--------------------------------------------------------------------------------
Ray Taylor                             64      Vice President
================================================================================

Cooper Lee. Mr. Lee is the  President  and a director of the Company since 1995.
Mr. Lee is primarily  responsible for our technology  development as well as our
computer  networking  infrastructure.  Mr. Lee, whose specialty is computer code
programming,  has developed an advanced computer network  infrastructure,  which
was  designed to minimize the human  involvement  necessary to manage the system
and,  therefore,  allows  us  to  offer  communication-networking   services  at
significant lower rates. In 1994 while attending  Nicholls State University as a
student,  Mr.  Lee began  teaching  computer  classes  and was  responsible  for
maintaining 600 of the school's 1,400 computers.

Crofton Cooper. Mr. Cooper is the Chief Executive Officer, Secretary,  Treasurer
and a director of the Company since 1995.  Mr.  Cooper has extensive  background
and  experience in corporate  finance,  including both private and public

                                       13

<PAGE>


equity financing and has financed our operations  since our inception.  Prior to
joining the Company in 1995, Mr. Cooper  concentrated his business activities as
a real estate developer in Orange, Los Angeles, and Riverside counties.

Cecil  Zeringue.  Cecil  Zeringue  is the Vice  President  of  Operations  and a
director  of the  Company  since  1995.  Mr.  Zeringue  is  responsible  for our
operations.  Prior to joining  the  Company in 1995,  Mr.  Zeringue  managed the
day-to-day  operations of Valley Electric,  an electrical supply house in Houma,
Louisiana. Mr. Zeringue graduated with a Masters of Business Administration from
Nicholls State  University in 1993 and a Bachelor of Science in Computer Science
in 1989.

Ray Taylor.  Mr.  Taylor is the  Executive  Vice  President  of Marketing of the
Company.  From 1997 to the present, Mr. Taylor has been responsible for the real
estate  acquisitions of our network POPs. Mr. Taylor is responsible for contract
negotiations,  both in the United  States and Mexico.  Mr.  Taylor has also been
responsible  for pricing and rate  structures  for the wholesale  voice traffic.
Prior to joining the Company in 1997,  Mr.  Taylor was a real estate  developer,
specializing in locating properties and performing market analysis.

Crofton Cooper, the Chief Executive Officer, Secretary, Treasurer and a director
of the Company,  is the  grandfather of Cooper Lee, the President and a director
of the Company. There are no orders,  judgments,  or decrees of any governmental
agency or administrator, or of any court of competent jurisdiction,  revoking or
suspending  for cause any  license,  permit or other  authority to engage in the
securities  business or in the sale of a particular  security or  temporarily or
permanently  restraining any officer or director of the Company from engaging in
or  continuing  any  conduct,  practice or  employment  in  connection  with the
purchase  or sale of  securities,  or  convicting  such  person of any felony or
misdemeanor involving a security, or any aspect of the securities business or of
theft  or of any  felony,  nor  are  any of the  officers  or  directors  of any
corporation or entity affiliated with the Company so enjoined.

Section 16(a) Beneficial  Ownership  Reporting  Compliance.  We do not presently
have  knowledge  as to whether all of our  officers,  directors,  and  principal
shareholders  have filed all reports  required to be filed by those  persons on,
respectively,  Form 3 (Initial Statement of Beneficial Ownership of Securities),
a Form 4 (Statement of Changes of Beneficial Ownership of Securities), or a Form
5 (Annual Statement of Beneficial Ownership of Securities).

Item 10.  Executive Compensation

Any compensation received by our officers,  directors,  and management personnel
will be determined  from time to time by our Board of  Directors.  Our officers,
directors,  and management  personnel  will be reimbursed for any  out-of-pocket
expenses incurred on our behalf.

Summary  Compensation Table. The table set forth below summarizes the annual and
long-term  compensation for services in all capacities to the Company payable to
our Chief Executive Officer and our other whose total annual salary and bonus is
anticipated to exceed $50,000 during the year ending  December 31, 2000. We have
adopted an incentive  stock option plan for our executive  officers  which would
result in additional compensation.

<TABLE>
<CAPTION>
<S>                                 <C>         <C>                 <C>                <C>                       <C>
===============================================================================================================================
Name and Principal Position         Year     Annual Salary ($)     Bonus ($)        Other Annual         All Other Compensation
                                                                                  Compensation ($)
-------------------------------------------------------------------------------------------------------------------------------
Cooper Lee, President               2000        $52,000             None               None                      None
-------------------------------------------------------------------------------------------------------------------------------
Crofton Cooper, Chief Executive
Officer, Secretary, Treasurer       2000        $52,000             None               None                      None
-------------------------------------------------------------------------------------------------------------------------------
Cecil Zeringue, Vice-President      2000        $52,000             None               None                      None
-------------------------------------------------------------------------------------------------------------------------------
Ray Taylor, Vice-President          2000        $13,000             None               None                      None
===============================================================================================================================
</TABLE>


Compensation  of  Directors.  Directors  who are also  employees  of the Company
receive no extra compensation for their service on our Board of Directors.

                                       14

<PAGE>


Employment  Contracts.  On April 12, 2000, we entered into employment  contracts
with Cooper Lee, Crofton Cooper and Cecil Zeringue.

In October 1999, we entered into a three-year  employment  contract with Michael
Garone,  which  provides  for  successive  automatic  one-year  renewals  unless
terminated.  We are  obligated to pay a base salary of $5,000 per month  through
December 1999,  $10,000 per month from January 2000 through October 2000 and 10%
annual increases  thereafter.  Mr. Garone is also entitled to a sales commission
of 1.5% on all sales of debit  calling  cards.  We are also  obligated  to issue
50,000  shares of our  $.001  par  value  common  stock  upon  execution  of the
agreement.  Mr.  Garone may also be entitled to 960,000  shares of our $.001 par
value  common  stock  during a  period  of three  years  to be  issued  in equal
quarterly  installments  of 80,000  shares,  provided that Mr. Garone  satisfies
minimum profit targets, specified in the employment contract.

Shares Issued as Compensation for Services. In 1999, our officers,  director and
other  employees,  were issued  1,922,500  shares of our $.001 par value  common
stock as compensation for their services to us;  specifically,  their continuing
efforts related to the development of certain  technology which will be utilized
by us in our  business  operations.  Those shares were valued at what we believe
was the fair market  value at the time of  issuance,  which ranged from $0.60 to
$1.90 per share.

We believe  that we will issue an  indeterminable  amount of shares of our $.001
par value common stock as  compensation  for the services of officers,  director
and other employees in the year 2000.

Indemnification  Agreements.  On April 12, 2000, we entered into indemnification
agreements with Cooper Lee, Crofton Cooper and Cecil Zeringue  pursuant to which
we agree to  indemnify  each  such  person  for all  expenses  and  liabilities,
including  criminal monetary  judgments,  penalties and fines,  incurred by such
person in  connection  with any criminal or civil action  brought or  threatened
against such person by reason of such person being or having been our  executive
officer or  director.  In order to be  entitled to  indemnification  by us, such
person must have acted in good faith and in a manner such person  believed to be
in our best  interests and, with respect to criminal  actions,  such person must
have had no reasonable cause to believe his or her conduct was unlawful.

DISCLOSURE OF POSITION OF COMMISSION  REGARDING  INDEMNIFICATION  FOR SECURITIES
ACT LIABILITIES:

INSOFAR AS INDEMNIFICATION  FOR LIABILITIES  ARISING UNDER THE SECURITIES ACT OF
1933 MAY BE PERMITTED TO DIRECTORS,  OFFICERS OR PERSONS CONTROLLING THE COMPANY
PURSUANT TO THE FOREGOING PROVISIONS,  THE COMPANY HAS BEEN INFORMED THAT IN THE
OPINION OF THE  SECURITIES  AND EXCHANGE  COMMISSION,  SUCH  INDEMNIFICATION  IS
AGAINST  PUBLIC  POLICY  AS  EXPRESSED  IN THE  SECURITIES  ACT OF 1933  AND IS,
THEREFORE, UNENFORCEABLE.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following  table sets forth  certain  information  regarding the  beneficial
ownership of our common  stock as of December  31,  1999,  by (i) each person or
entity known by us to be the beneficial owner of more than 5% of the outstanding
shares of our  common  stock,  (ii) each of our  directors  and named  executive
officers, and (iii) all of our directors and executive officers as a group.

                                       15

<PAGE>


<TABLE>
<CAPTION>
<S>                           <C>                                     <C>                                              <C>
===============================================================================================================================
Title of Class                Name and Address of Beneficial          Amount and Nature of Beneficial         Percent of Class
                              Owner                                   Owner
-------------------------------------------------------------------------------------------------------------------------------
$.001 Par Value Common        David Lohrey                            850,000 shares                                    6.71%
Stock                         6 Leeward Rd
                              Belvedere, CA 94920
-------------------------------------------------------------------------------------------------------------------------------
$.001 Par Value Common        Cooper Lee, 5031 Birch Street,          1,500,000 shares, President,                     11.85%
Stock                         Suite G, Newport Beach,                 Director
                              California 92660
-------------------------------------------------------------------------------------------------------------------------------
$.001 Par Value Common        Crofton Cooper, 5031 Birch              2,400,000 shares, Chief Executive                18.96%
Stock                         Street, Suite G, Newport Beach,         Officer, Secretary, Treasurer,
                              California 92660                        Director
-------------------------------------------------------------------------------------------------------------------------------
$.001 Par Value Common        Cecil Zeringue, 5031 Birch              436,749 shares, Vice President,                   3.45%
Stock                         Street, Suite G, Newport Beach,         Director
                              California 92660
-------------------------------------------------------------------------------------------------------------------------------
$.001 Par Value Common        Ray Taylor, 5031 Birch Street,          400,000 shares, Vice President                    3.16%
Stock                         Suite G, Newport Beach,
                              California 92660
-------------------------------------------------------------------------------------------------------------------------------
$.001 Par Value Common                                                All directors and named executive                37.42%
Stock                                                                 officers as a group
===============================================================================================================================
</TABLE>


Beneficial  ownership is determined in accordance  with the rules of the SEC and
generally  includes  voting or investment  power with respect to securities.  In
accordance with SEC rules, shares of our common stock which may be acquired upon
exercise of stock options or warrants  which are currently  exercisable or which
become  exercisable  within  60  days  of the  date  of  the  table  are  deemed
beneficially  owned by the optionees.  Subject to community property laws, where
applicable,  the persons or  entities  named in the table above have sole voting
and investment power with respect to all shares of our common stock indicated as
beneficially owned by them.

Changes in  Control.  We are not aware of any  arrangements  which may result in
"changes in control"  as that term is defined by the  provisions  of Item 403 of
Regulation S-B.

Item 12.  Certain Relationships and Related Transactions.

Transactions with Promoters.

Not applicable.

Related Party Transactions.  There have been no related party transactions which
would be required to be disclosed pursuant to Item 404 of Regulation S-B, except
for the following:

As of December 31, 1999, a trade payable of $59,798 for cash used for operations
was due to Myles Reid Services,  a Delaware corporation owned by Crofton Cooper,
who is the Chief Executive  Officer,  a director and a major  stockholder of the
Company.

On December 21, 1999, we issued a promissory note for $125,000  payable to Jeryl
Rochelle,  a  shareholder  of the  Company,  for cash used for  operations.  The
promissory  note is  unsecured,  non-interest  bearing and is  convertible  into

                                       16

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restricted  shares of our $.001 par value common  stock at a conversion  rate of
$1.25 per share.  The  promissory  note is payable or  convertible on demand any
time after March 15, 2000.


Item 13.  Exhibits and Reports on Form 8-K

3.1    Articles of Incorporation*
       (Charter Document)

3.2    Certificate of Amendment to Articles of Incorporation*
       (Charter Document)

3.3    Bylaws*

10.1   Employment Agreement with Crofton Cooper*
       (material contract)

10.2   Employment Agreement with Cooper Lee*
       (material contract)

10.3   Employment Agreement with Cecil Zeringue*
       (material contract)

10.4   Employment Agreement with Michael Garone*
       (material contract)

10.5   Indemnification Agreement with Crofton Cooper*
       (material contract)

10.6   Indemnification Agreement with Cooper Lee*
       (material contract)

10.7   Indemnification Agreement with Cecil Zeringue*
       (material contract)

10.8   Stock Option Plan*

27.    Financial Data Schedule

99     Correspondence from former accountants

*      Previously filed as exhibits to Registration  Statement on Form 8-A filed
       concurrently herewith.

                                       17

<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned in the City of Newport Beach, California, on April 12, 2000.

                                                     TMEX USA, Inc.,
                                                     a Nevada corporation


                                                     By:  /s/ Cooper Lee
                                                          ----------------------
                                                          Cooper Lee
                                                     Its: President


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

TMEX USA, Inc.


/s/ Crofton Cooper                                April 12, 2000
-------------------------------------------
Crofton Cooper, Chief Executive
Officer, Secretary, Treasurer, Director


/s/ Cecil Zerinque                                April 12, 2000
-------------------------------------------
Cecil Zeringue, Vice President, Director