SECURITIES AND EXCHANGE COMMISSION
            Washington, DC  20549

                 FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended DECEMBER 31, 2000

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934


       Commission file number 0-28887

           TELCO-TECHNOLOGY, INC.
(Name of Small Business Issuer in Its Charter)

Delaware                                        22-3328734
(State or other jurisdiction              (I.R.S. Employer
of incorporation or                         Identification
organization)                                      Number)

60 Bowers Lane
Closter, New Jersey                                 07624
(Address of principal                           (Zip Code)
executive offices)

Issuer's telephone number,
including area code:  (201) 768-2310

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock ($.001 par value)

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

         Yes    X       No

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B  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:    $0

As of March 31, 2001, the aggregate market value of the Common
Stock held by non-affiliates of the Issuer (3,715,819 shares) was
approximately $130,000.  The number of shares outstanding of the
Common Stock ($.0001 par value) of the Issuer as of the close of
business on March 31, 2001 was 9,469,944.

Documents Incorporated by Reference:  None

<PAGE>


        Forward-Looking Statements

     This report contains certain forward-looking statements
that are based upon the beliefs and assumptions of, and
information available to, the management of the Company at the
time such statements are made.  Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks",
"estimates", or variations of such words and similar expressions
are intended to identify such forward-looking statements.  The
statements are not guarantees of future performance and involve
certain risks, uncertainties and assumptions which are difficult
to predict.  Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-
looking statements.  The Company undertakes no obligation to
update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.

                   PART I

Item 1. Description of Business.

General Development

     Telco-Technology, Inc. (the "Company")  was organized
under the laws of the State of Nevada on November 23, 1993 under
the name Haycock Morrison Inc. ("Haycock").  In 1994, Haycock
completed the sale of certain shares of its Common Stock pursuant
to an exemption provided by Rule 504 of Regulation D promulgated
under the Securities Act of 1933, as amended (the "Securities
Act"). On January 27, 1995, Haycock entered into an acquisition
agreement with Telco Technology, Inc., a Delaware corporation
("Telco").  Pursuant to the terms of the acquisition, Haycock
issued 5,000 shares of its Common Stock which represented 60% of
the then outstanding Common Stock of Haycock.

     After giving effect to the above transaction, the Company
ceased all activities as Haycock and changed its name to Telco-
Technology, Inc.  The Company continued the business operations
then conducted by Telco of providing long distance telephone
services and computer networks for voice and data transmissions
which operations were primarily conducted in the State of
Massachusetts (the "Massachusetts Operations").  In 1998, the
Company was reorganized as a Delaware corporation.  The Company
continued such operations until June 1999.

     In June 1999, the Company sold the Massachusetts
Operations to a company affiliated with a former officer and
director of the Company in exchange for the return of 950,000
shares of Common Stock to the Company, and the assumption of all
liabilities of the Massachusetts Operations.  As part of the
agreement, the Company also agreed to forgive all officer loans
due from such individual  (which amounted to approximately
$118,000). As a result of the foregoing, the Company  has no
current business operations.  As such, the Company can now be
defined as a "shell" corporation, whose principal business
purpose at this time is to locate and consummate a merger or
acquisition with a private entity.  Because of the Company's
current status, in the event the Company does successfully
acquire or merge with an operating business opportunity, it is
likely that the Company's present shareholders will experience
substantial dilution and there will be a probable change in
control of the Company.

Business of the Company

     The Company has no current business operations and no
representation is made, nor is any intended, that the Company
will be able to carry on future business activities successfully.
Further, there can be no assurance that the Company will have the
ability to acquire or merge with an operating business, business
opportunity or property that will be of material value to the
Company.

<PAGE>

     Management plans to investigate, research and, if
justified, potentially acquire or merge with one or more
businesses or business opportunities. The Company currently has
no commitment or arrangement, written or oral, to participate in
any business opportunity and management cannot predict the nature
of any potential business opportunity it may ultimately consider.
Management will have broad discretion in its search for and
negotiations with any potential business or business opportunity.

     The Company has determined to initially limit its search
for a potential business or business opportunity to firms
involved or intending to be involved in the telecommunications
and/or internet industries.  In this regard, the Company will not
restrict its search to any specific geographical location, and
the Company may participate in a business venture of virtually
any kind or nature.   In addition, the Company may determine at a
future date to seek a potential business or business opportunity
in another industry in the event the Company does not consummate
a transaction with a business or business opportunity in the
telecommunications and/or internet industries.

     The discussion of the business under this caption is
purposefully general and not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter
into potential business opportunities.  No assurance can be
given, however, that any transaction will in fact be consummated.

     Management anticipates that it may be able to participate
in only one potential business venture, due primarily to the
Company's limited financing.  This lack of diversification should
be considered a substantial risk to the Company because it will
not permit the Company to offset potential losses from one
venture against gains from another.

     The Company may seek a business opportunity in the form
of firms which have recently commenced operations, or which wish
to utilize the public marketplace in order to raise additional
capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate
purposes.   In some instances, a business opportunity may involve
the acquisition or merger with a company which does not need
substantial additional cash but which desires to establish a
public trading market for its Common Stock.  A company which
seeks the Company's participation in attempting to consolidate
its operations through a merger, reorganization, asset
acquisition, or  some other form of combination may  desire to do
so to avoid what it may deem to be adverse consequences of
undertaking a public offering itself.  Factors considered may
include time delays,  significant expense, loss of  voting
control and the inability or  unwillingness to comply with
various federal and state laws enacted for the protection of
investors.

     The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky.  Because of general economic conditions, rapid
technological advances being made in some industries, and
shortages of available  capital, management believes that there
are numerous firms seeking even the limited additional capital
which the Company will have and/or the benefits of a publicly
traded corporation.  Such perceived benefits of a publicly traded
corporation may include facilities or improving the terms on
which additional equity financing may be sought, providing
liquidity for the principals of a business, creating a means for
providing incentive stock options  or similar benefits to key
employees, providing liquidity (subject  to restrictions of
applicable statutes) for all shareholders, and other factors.
Potentially available business opportunities may occur in many
different industries and at various stages of development, all
of  which  will  make  the  task of comparative investigation and
analysis of such business opportunities extremely difficult and
complex.

     The Company has insufficient capital with  which to
provide the owners of business opportunities with any significant
cash or other assets.  However, management believes the Company
will offer owners of business opportunities the opportunity to
acquire a controlling ownership interest in a public company at
substantially less cost than is required to conduct an initial
public offering.  The owners of the business

<PAGE>

opportunities will,
however, incur significant post-merger or acquisition
registration  costs in the event they wish to register a portion
of their shares for subsequent sale.  The Company will also incur
significant legal and accounting costs in connection with the
acquisition of a business opportunity including the costs of
preparing Form 8-K's, agreements and related reports and
documents.  Nevertheless, management of the Company has not
conducted market research and is not aware of statistical data
which would support the perceived benefits of a  merger or
acquisition transaction for the owners of a business
opportunity.

Evaluation of Opportunities

     The analysis of new business opportunities will be
undertaken by or under the supervision of the Company's Chairman
of the Board, who is not a professional business  analyst.
Management intends to concentrate on identifying preliminary
prospective business opportunities  which may be brought to its
attention through present contacts of the Company's officers and
directors, such as but not limited to attorneys, accountants,
financial advisors, bankers, businessmen and others who work with
businesses which may desire to go public.  From time to time,
such contacts may refer their contacts, clients, acquaintances
and others to the Company.   In analyzing prospective business
opportunities, management will  consider such matters as the
available technical, financial, and  managerial resources;
working capital and other financial requirements; history or
operation, if any; prospects for the future; nature of present
and expected competition; the quality  and experience of
management services which may be available and the depth of that
management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the
Company; the potential for growth or  expansion; the potential
for profit; the perceived public recognition or acceptance of
products, services, or trades; name  identification; and other
relevant factors.  Management of the Company will meet personally
with management and key personnel of the firm sponsoring the
business opportunity as part  of its investigation.  To the
extent possible, the Company  intends to utilize written reports
and personal investigation to evaluate the above factors.

     It may be anticipated that any opportunity in which the
Company participates will present certain risks.  Many of these
risks cannot be adequately identified prior to selection of the
specific opportunity,  and  shareholders of the Company must,
therefore, depend on the ability of management to identify and
evaluate such risks. In the case of some of the opportunities
available to the Company, it may be anticipated that the
promoters thereof have been unable to develop a going concern or
that such business is in its development stage in that it has not
generated significant revenues from its principal business
activity prior to the  Company's participation, and there is a
risk, even after the Company's participation in the activity and
the related expenditure  of the Company's funds, that the
combined enterprises will still  be unable to become a going
concern or advance beyond the development stage.  Many of the
opportunities may involve new and untested products,  processes,
or market strategies which may not succeed.  Such risks will be
assumed by the Company and, therefore, its shareholders.

Acquisition of Opportunities

     In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity.  It may also
purchase  stock or assets of an existing business.  It should be
noted  that the Company likely has insufficient capital with
which to make any acquisitions.  Accordingly, in any of the
transactions  alluded to herein, it is likely that the
consideration utilized to make any acquisitions will consist of
equity securities.

     In the event that an acquisition is made utilizing
primarily equity securities (as is expected to be the case), the
percentage ownership of present shareholders will be diluted,
the extent of dilution depending

<PAGE>

upon the amount so issued.
Persons acquiring shares in connection with any acquisition of a
business may obtain an amount of equity securities sufficient to
control the Company.  In addition, the Company's Directors may,
as part of the terms of the acquisition  transaction, resign and
be replaced by new directors without a  vote of the Company's
shareholders.  Further, if the Company were  to issue substantial
additional securities in any acquisition,  such issuance might
have an adverse effect on the trading market  in the Company's
securities in  the future.

     It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of this
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter.  The  issuance  of
substantial additional securities and their potential sale into
any trading market in the Company's securities  may have a
depressive effect on such market.

     The Company intends to structure a merger or acquisition
in such a manner as to minimize Federal and State tax
consequences  to the Company and to any target company.  Under
Section 368 of  the Internal Revenue Code of 1986, as amended
(the "Code"), a statutory merger or consolidation is an exempt
transaction and may be tax-free if effected in accordance with
State law.  A tax-free  reorganization  may  require the  Company
to  issue  a  substantial number of its securities in exchange
for the securities  or assets of a target firm.  Accordingly, the
proportional interests of the shareholders of the Company prior
to such transaction or reorganization may be substantially less
than the  proportional interest of such shareholders in the
reorganized entity.  Even if a merger or consolidation is
undertaken in accordance with the Code, there is no assurance
that Federal and State tax regulations will not change in the
foreseeable future  and result in the Company incurring a
significant tax liability.

     As part of the Company's investigation, management of the
Company intends to  meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check references of management and key personnel, and
take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management
expertise.

     The manner in which the Company participates in an
opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties,
the management of the opportunity, and the relative negotiating
strength of the Company and such other management.

     With respect to any mergers or acquisitions, negotiations
with target company management will be expected to focus on the
percentage of the Company which target company shareholders would
acquire in exchange for their shareholdings in the target
company.  Depending upon, among other things, the target
company's assets and  liabilities, the Company's shareholders
will in all likelihood  hold a lesser percentage ownership
interest in the Company  following any merger or acquisition.
The percentage ownership  may be subject to significant reduction
in the event the Company acquires a target company with
substantial assets.  Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on
the percentage of shares held by  the Company's  shareholders.

     The Company will participate in a business opportunity
only after the negotiation and execution of appropriate written
agreements.  Although the terms of such agreements cannot be
predicted, generally such agreements will require specific
representations and warranties by all of the parties thereto,
will  specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the
parties prior to such closing, will outline the manner of bearing
costs if the transaction is not closed, will set forth remedies
on default, and will include miscellaneous other terms.

<PAGE>

     It is anticipated that the investigation of specific
business opportunities and the negotiation, drafting and
execution  of relevant agreements, disclosure documents, and
other instruments  will require substantial management time and
attention and  substantial costs for accountants, attorneys, and
others.   If a decision is made not to participate in a specific
business  opportunity, the costs theretofore incurred in the
related investigation would not be recoverable.  Furthermore,
even if an  agreement is reached for the participation in a
specific business  opportunity, the failure to consummate that
transaction may result in the loss to the Company of the related
costs incurred.

     Further, companies subject to Section 13 or 15(d) of the
Exchange Act must furnish certain information about significant
acquisitions, including certified financial statements for the
company or companies acquired covering at least two years.
Consequently, if targeted acquisition prospects do not have, or
are unable to obtain, the requisite certified financial
statements, such acquisitions by the Company would appear to be
inappropriate.

Competition

     The Company is aware that there are many other public
companies with only nominal assets that are also searching for
operating businesses and other business opportunities as
potential acquisition or merger candidates.  The Company will be
in direct competition with these other public companies in its
search for business opportunities.  In addition, the Company
expects to encounter substantial competition in its efforts to
attract business opportunities from business development
companies, venture capital partnerships and corporations, venture
capital affiliates of large industrial and financial
institutions, small business investment companies and wealthy
individuals.  Competition in the search for business
opportunities is principally based upon experience in connection
with identifying and effecting business acquisitions, financial
and personnel resources and technical expertise.  Many of these
entities have significantly greater experience, financial and
personnel resources, and managerial and technical capabilities
than the Company and in all likelihood will be in a better
position than the Company to obtain access to attractive business
opportunities.  In  view of the Company's limited financial
resources and personnel, the Company will continue to be at a
significant competitive disadvantage in identifying possible
business opportunities and successfully completing a business
combination.

     In the event the Company acquires or merges with a
business or business opportunity in the telecommunications and/or
internet industries, the Company will face significant
competition. The telecommunications and internet  industries are
highly  competitive.  It is anticipated that many of the
Company's potential competitors will have greater financial,
technical, operational, marketing and other  resources and
experience than the Company.  In addition, the telecommunications
and internet industries are typified by well established and
better financed companies with a long established and highly
recognized market presence.

     The markets in the telecommunications and internet
industries  can be significantly influenced by the marketing and
pricing decisions of larger industry participants and there are
limited barriers to entry in many of the telecommunications and
internet markets.  The Company expects competition in these
markets to intensify in the future.

     The telecommunications and internet industries are also
subject to rapid and significant changes in technology, including
frequent new service and product introductions, evolving industry
standards, and rapid obsolescence of equipment.  Competition from
the effect of technological changes on the Company's operations,
in the event  the Company acquires or merges with a business or
business opportunity in the telecommunications or internet
industries, cannot be predicted and could have a material adverse
effect on the Company's future business, financial condition, and
results of operations.   Technological advancements,

<PAGE>

telecommunications reform and the continuing commercialization of
the internet have all contributed to transforming the once
traditional telecommunications industry.  Well established long
distance companies, regional Bell operating companies, internet
service providers and cable companies are continuing to build,
upgrade and enter  many different markets in the
telecommunications and internet industries, which could
materially impact the Company's presence in any of the
telecommunications and/or internet industries.  In addition, in
the future the Company's most significant competitors may be new
entrants to the communications and information services industry.

Research and Development

     Prior to the Company becoming a "shell" corporation, the
Company did not spend any funds for research and development
during the last two fiscal years.

Regulation

     Although the Company is subject to regulation under the
Exchange Act, management believes the Company will not be subject
to regulation under the Investment Company Act of 1940, insofar
that the Company will not be engaged in the business of investing
or trading in securities.  Such Act defines an "investment
company" as an issuer which is or holds itself out as being
engaged primarily in the business of investing, reinvesting or
trading of  securities.  Although management believes that the
Company will not be subject to regulation under such Act insofar
that the Company does not intend to engage in such  activities,
the Company has obtained no formal determination as to the status
of the Company under such Act.  The Company could be expected to
incur significant  registration and compliance costs if required
to register under the Investment Company Act of 1940.
Accordingly, management will continue to review the Company's
activities from time to time with a view toward reducing the
likelihood the Company could be classified as an "investment
company".

     In the event the Company acquires or merges with a
business or business opportunity in the telecommunications and/or
internet industries, the Company expects that its business will
be subject to various regulations.  Generally, the
telecommunications industry is subject to the provisions of the
Telecommunications Act of 1996 and Federal Communication
Commission ("FCC") regulations thereunder, as well as applicable
laws and regulations of the various states administered by the
relevant state authorities.  Certain aspects of the internet
industry are also subject to the Telecommunications Act of 1996
and regulations of the FCC.  There can be no assurance that the
Company will be able to comply with any such regulations. In
addition, regulations may be enacted in the future which may have
a material adverse effect on the business of the Company.

Employees

     As of the date hereof, and other than the services
provided by its Chairman and Donalson Capital Corporation, the
Company does not have any full or part time employees and has no
plans for retaining employees until such time as the Company's
business warrants the expense, or until the Company successfully
acquires or merges with an operating business. The Company may
find it necessary to periodically hire part-time clerical help on
an as-needed basis.

Uncertainties and Risk Factors

     In addition to other information and financial data set
forth elsewhere in this report, the following risk factors should
be considered carefully in evaluating the Company.

<PAGE>

     NO CURRENT BUSINESS OPERATIONS; NON-ARM'S LENGTH
TRANSACTION.  In June 1999, the Company  sold its then current
business operations to Total Technology, Inc.,  a company
affiliated with Robert Powell, Sr., a former officer and director
of the Company,  in exchange for the return of 950,000 shares of
Common Stock to the Company, and the assumption of all
liabilities of such operations. As part of the agreement, the
Company also agreed to forgive all officer loans due from such
individual  (which amounted to approximately $118,000).  As a
result, the Company  has no current business operations. While
management believes the agreement to sell the Massachusetts
Operations contains terms which generally are comparable to those
which have been reached in arm's-length negotiations with
unaffiliated parties, the agreement was reached while Mr. Powell
was managing the Massachusetts Operations and therefore is not
the result of arm's length negotiations between independent
parties.  Management believes, however, that the transaction was
completed on terms no less favorable than would have been
achieved with unaffiliated third parties.  With no current
business operations, the Company  can now be defined as a "shell"
corporation, whose principal business purpose at this time is to
locate and consummate a merger or acquisition with a private
entity.  There is no assurance the Company's intended merger or
acquisition activities will be successful or result in revenue or
profit to the Company.  The likelihood of success of the Company
must be considered in light of the risks, expenses, difficulties
and delays frequently encountered in connection with the
operation and development of a new business.  There is nothing at
this time upon which to base an assumption that any business or
business opportunity the Company acquires will prove successful,
and there is no assurance that it will be able to operate
profitably.

     EXTREMELY LIMITED CAPITALIZATION.  The Company has
insufficient capital with which to make any significant asset
acquisitions.  Accordingly, in any of the transactions alluded
to herein, it is likely that the consideration utilized to make
any acquisitions will consist of equity securities.  In addition,
inasmuch as the Company's capitalization is limited and the
issuance of additional Common Stock will result in a dilution of
interest for present shareholders, it is unlikely  the Company
will be capable of negotiating more than one merger  or
acquisition.  Consequently, the Company's lack of diversification
may  subject  the  Company to economic  fluctuation within a
particular industry in which a target company  conducts business.

     LACK OF PROFITABILITY; CONTINUING LOSSES; AND DOUBTFUL
ABILITY TO CONTINUE AS A GOING CONCERN.  The Company has incurred
net losses from continuing operations of approximately $171,000
and $283,000 in 2000 and 1999, respectively.  As a result of the
Company's recurring  losses from operations, the Company's
independent auditor's report, dated February 9, 2001, for the
year ended December 31, 2000, states that these conditions raise
substantial doubt about the Company's ability to continue as a
going concern.  With the sale of the Massachusetts Operations in
June 1999, the Company's only operating division, the Company has
no current operations.  Management expects that this transaction
will allow the Company to focus on other business opportunities
in its attempt to locate and consummate a merger or acquisition
with a private entity.  There can be no assurance, however, that
the Company will be able to acquire any business or business
opportunity or that any business or business opportunity the
Company acquires will prove successful or  will be able to
operate profitably.

     COMPETITION FOR BUSINESS OPPORTUNITIES.  The Company is
aware that there are many other public companies with only
nominal assets that are also searching for operating businesses
and other business opportunities as potential acquisition or
merger candidates.  The Company will be in direct competition
with these other public companies in its search for business
opportunities.  In addition, the Company expects to encounter
substantial competition in its efforts to attract business
opportunities from business development companies, venture
capital partnerships and corporations, venture capital affiliates
of large industrial and financial institutions, small business
investment companies and wealthy individuals.  Competition in the
search for business opportunities is principally based upon
experience in connection with identifying and effecting business
acquisitions, financial and personnel resources and technical
expertise.

<PAGE>


Many of these entities have significantly greater
experience, financial and personnel resources, and managerial and
technical capabilities than the Company and in all likelihood
will be in a better position than the Company to obtain access to
attractive business opportunities.  In  view of the Company's
limited financial resources and personnel, the Company will
continue to be at a significant competitive disadvantage in
identifying possible business opportunities and successfully
completing a business combination.

     LACK OF MARKET RESEARCH OR IDENTIFICATION OF ACQUISITION
OR MERGER CANDIDATE.  The Company has neither conducted nor have
others made available to it results of market research concerning
the availability of potential business  opportunities.
Therefore, management has no assurance that market demand exists
for a merger or acquisition as contemplated by the Company.
Although the Company has determined to initially limit its search
for a potential business or business opportunity to firms
involved or intending to be involved in the telecommunications
and/or internet industries, there is no assurance the Company
will be able  to acquire a business opportunity on terms
favorable to the  Company.

     CONFLICTS OF INTEREST - POSSIBLE NEGOTIATION OR OTHERWISE
GRANT OF CONSENT BY MANAGEMENT TO PURCHASE OF MANAGEMENT'S COMMON
STOCK.  As a condition to or in connection with a proposed merger
or acquisition transaction, management may actively negotiate or
otherwise consent to the purchase of all or a portion of  its
shares of Common Stock.  In connection with any such stock
purchase transaction, it is possible that a premium may be paid
for management's shares of Common Stock and that the other
shareholders in the Company may not receive any portion  thereof
in the event such premium may be paid.  Any transaction
structured in such manner may present management with conflicts
of interest and as a result of such conflicts, may possibly
compromise management's fiduciary duties to the Company's
shareholders, as the potential would therefore exist for
management to consider its own personal pecuniary benefit rather
than the best interests of the Company's other shareholders.  In
this regard, management and control shareholders, if any,
generally have a fiduciary obligation under Delaware law to not
effect transactions which are not in good faith furtherance of
rational corporate purposes or are unfair to unaffiliated
stockholders.    Further, the Company's other shareholders may
not be afforded an opportunity to otherwise participate in any
particular stock buy-out transaction.  Additionally, in any such
transaction, it is possible, although not presently intended,
that the Company may borrow funds to be used directly or
indirectly to purchase management's shares.

     POSSIBLE CHANGE IN CONTROL AND MANAGEMENT.  The
successful completion of a merger or acquisition may result in a
change of control of the Company.  Any such change in control may
also result in the resignation or removal of the Company's
present management.

     REGULATION.   Although the Company is subject to
regulation under the Exchange Act, management believes the
Company will not be subject to regulation under the Investment
Company Act of 1940, insofar that the Company will not be engaged
in the business of investing or trading in securities.  Such Act
defines an "investment  company" as an issuer which is or holds
itself out as being engaged primarily in the business of
investing, reinvesting or trading of  securities.  Although
management believes that the Company will not be subject to
regulation under such Act insofar that the Company does not
intend to engage in such  activities, the Company has obtained no
formal determination as to the status of the Company under such
Act.  The Company could be expected to incur significant
registration and compliance costs if required to register under
the Investment Company Act of 1940.  Accordingly, management will
continue to review the Company's activities from time to time
with a view toward reducing the likelihood the Company could be
classified as an "investment company".

     TAXATION.   In  the course of any acquisition or  merger
the Company may undertake, a substantial amount of attention
will be focused upon federal and state tax consequences to both
the Company and the "target" company.  Presently, under Section
368 of the Internal Revenue Code of 1986, as amended, a

<PAGE>

statutory
merger or consolidation is an exempt transaction and may be tax-
free if effected in accordance with State law.  While the Company
expects to undertake any merger or acquisition so as to minimize
federal and state tax consequences to both the Company and the
"target" company, there is no assurance that such business
combination will meet the statutory requirements of a
reorganization or that the parties will obtain the intended tax-
free treatment upon a transfer of stock or  assets. A
nonqualifying reorganization could result in the imposition of
both federal and state taxes which may have substantial adverse
effect on the Company.

     LIMITATION ON LIABILITY OF DIRECTORS.  The  Company's
Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its
shareholders for monetary damages resulting from breaches of his
fiduciary duty of care as a director, including breaches which
constitute gross negligence.  As a result, the rights of the
Company  and its shareholders to obtain monetary damages for acts
or omissions of directors will be more limited than they would be
in the absence of such provision.  The provision would not apply
to a violation of a director's responsibility under the Federal
securities laws.

     POSSIBLE USE OF DEBT FINANCING; DEBT OF AN ACQUIRED
BUSINESS.  There are currently no limitations relating to the
Company's ability to borrow funds to increase the amount of
capital available to the Company to effect a business combination
or otherwise finance the operations of an acquired business.  The
amount and nature of any borrowings by the Company will depend on
numerous considerations, including the Company's capital
requirements, the Company's perceived ability to meet debt
service on such borrowings, and then-prevailing conditions in the
financial markets, as well as general economic conditions.  There
can be no assurance that debt financing, if required or otherwise
sought, will be available on terms deemed to be commercially
acceptable and in the best interest of the Company.  The
inability of the Company to borrow funds required to effect or
facilitate a business combination, or to provide funds for an
additional infusion of capital into an acquired business, may
have a material adverse effect on the Company's financial
condition and future prospects.  Additionally, to the extent that
debt financing ultimately proves to be available, any borrowings
may subject the Company to various risks traditionally associated
with incurring of  indebtedness, including the risks of interest
rate fluctuations and insufficiency of cash flow to pay principal
and interest.   Furthermore, an acquired business may already
have previously-incurred debt financing and, therefore, the risks
inherent thereto, as discussed above.

     COMPETITION IN THE TELECOMMUNICATIONS AND INTERNET
INDUSTRIES.  In the event the Company acquires or merges with a
business or business opportunity in the telecommunications and/or
internet industries, the Company will face significant
competition. The telecommunications and internet  industries are
highly  competitive.  It is anticipated that many of the
Company's potential competitors will have greater financial,
technical, operational, marketing and other  resources and
experience than the Company.  In addition, the telecommunications
and internet industries are typified by well established and
better financed companies with a long established and highly
recognized market presence.

     GOVERNMENT REGULATIONS IN THE TELECOMMUNICATIONS AND
INTERNET INDUSTRIES.  In the event the Company acquires or merges
with a business or business opportunity in the telecommunications
and/or internet industries, the Company expects that its business
will be subject to various regulations.  Generally, the
telecommunications industry is subject to the provisions of the
Telecommunications Act of 1996 and Federal Communication
Commission ("FCC") regulations thereunder, as well as applicable
laws and regulations of the various states administered by the
relevant state authorities.  Certain aspects of the internet
industry are also subject to the Telecommunications Act of 1996
and regulations of the FCC.  There can be no assurance that the
Company will be able to comply with any such regulations. In
addition, regulations may be enacted in the future which may have
a material adverse effect on the business of the Company.

<PAGE>

     CUMULATIVE VOTING AND PRE-EMPTIVE RIGHTS.  There are no
pre-emptive rights in connection with the Company's Common Stock.
Therefore, current shareholders of the Company will be  in all
likelihood significantly diluted in their percentage ownership of
the Company in  the event the Company issues shares of stock in
connection with  an acquisition of a buisness or business
opportunity.  Cumulative voting in the election of directors is
not  allowed.  Accordingly, the holders of a majority of the
shares  of  Common Stock, present in person or by proxy, will be
able to  elect all of the Company's Board of Directors.

     DIVIDENDS.   At the present time the Company does not
anticipate paying dividends on its Common Stock in the
foreseeable future.  Any future dividends will depend on
earnings, if any, of the Company, its financial requirements and
other  factors.

     POTENTIAL FUTURE SALES PURSUANT TO RULE 144.  Certain
shares of Common Stock presently held by management and others
are "restricted securities" as that term is defined in Rule 144,
promulgated under the Securities Act.  Under Rule 144, a person
(or persons whose shares are aggregated) who has satisfied a one-
year holding period, may, under certain circumstances sell within
any three-month period a number of shares which does not exceed
the greater of 1% of the then outstanding shares of Common Stock,
or the average weekly trading volume during the four calendar
weeks prior to such sale.  Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation
by a person  who is not an affiliate of the Company and who has
satisfied a two-year holding period.  Such holding periods have
already been satisfied in many instances.  Therefore, actual
sales or the prospect of sales of such shares under Rule 144 in
the future may depress the prices of the Company's securities.

     ISSUANCE OF SHARES IN MERGER OR ACQUISITION.  Any
acquisition effected by the Company may result in  the issuance
of additional Common Stock or Preferred Stock without shareholder
approval and may result in substantial dilution in the percentage
of the Company's securities held by the Company's  then-
shareholders.  Moreover, the Common Stock or Preferred Stock
issued in any such  merger or acquisition transaction may be
valued on an arbitrary or non arm's-length basis by management of
the Company, resulting in  an additional reduction in the
percentage of securities held by  the Company's then-
shareholders.

     PENNY STOCK RULES.  The Company's Common Stock is covered
by a Securities and Exchange Commission rule that imposes
additional sales practice requirements on broker/dealers who sell
such securities to persons other than established customers and
accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000
jointly with their spouses). For transactions covered by the
rule, the broker/dealer must make a special suitability
determination for the purchaser and have received the purchaser's
written agreement to the transaction prior to the sale.
Consequently, the rule may  affect the ability of shareholders in
this offering to sell their shares in the secondary market.  In
addition, Securities and Exchange Commission rules impose
additional sales practice requirements on broker/dealers who sell
penny securities. These rules require a  summary of certain
essential items. The items include the risk of investing in penny
stocks in both public offerings and secondary marketing; terms
important to an understanding of the function of the penny stock
market, such as "bid" and "offer" quotes, a dealers "spread" and
broker/dealer compensation; the broker/dealer compensation, the
broker/dealers duties to its customers, including the disclosures
required by any other penny stock disclosure rules; the customers
rights and remedies in cases of fraud in penny stock
transactions; and, the NASD's toll free telephone number and the
central number of the North American Securities Administrators
Association, for information on the disciplinary history of
broker/dealers and their associated persons.  The additional
burdens imposed upon broker/dealers by such requirements may
discourage broker/dealers from effecting transactions in the
Common Stock, which could severely limit the market of the
Company's Common Stock.

<PAGE>

     RESTRICTIONS ON TRANSFERABILITY; LIMITED TRADING MARKET.
Only a limited trading market for the Common Stock currently
exists.  The market price of the Common Stock, which currently is
listed on the OTC Bulletin Board under the symbol TTXI, has, in
the past, fluctuated substantially over time and may in the
future be highly volatile.  In addition, the Company believes
that relatively few market makers make a market in the Company's
Common Stock.  The actions of any of these market makers could
substantially impact the volatility of the Company's Common
Stock.

     SECURITIES AND EXCHANGE COMMISSION AND MARYLAND
INVESTIGATION.   In May 1997, the Company was notified by the
Securities and Exchange Commission of a formal order of a
private, non-public investigation of certain issues related to
the Company's stock trading. In August 1997, the Company supplied
copies of various books and records, and the Commission deposed
several of the Company's officers.  No further notification has
been received since then from the Commission.  While there can be
no assurance,  in the event any further action is taken by  the
Commission, management does not expect such will result in an
unfavorable outcome to the Company or have a material adverse
effect.

     In February 2000, the Maryland Division of Securities (the
"Maryland Division") notified the Company that as a result of its
review of  information supplied by the Company in December 1998,
it appears the Company violated the Maryland Securities Act. The
Maryland Division suggested that in lieu of commencing an
administrative action against the Company, the Company consider a
negotiated settlement which the Company indicated to the Maryland
Division that it would like to achieve. While certain discussions
resulted therefrom between the Maryland Division and counsel to
the Company, no further notification or correspondence has been
received from the Maryland Division since March 2000.  Although
the outcome of such matter or the definitive terms of any such
settlement cannot be predicted with certainty at this time,
management is hopeful that it will be able to effect a negotiated
settlement which will not have a material adverse effect on the
Company.

Item 2.   Description of Property.

     The Company currently maintains its offices in the home of
its Chairman located at 60 Bowers Lane, Closter, New Jersey 07624
pursuant to an oral agreement on a rent-free, month-to-month
basis.  It is contemplated that at such future time as an
acquisition or merger transaction may be completed, the Company
will secure commercial office space from which it will conduct
its business.  Until such an acquisition or merger, the Company
lacks any basis for determining the kinds of office space or
other facilities necessary for its future business.  The Company
has no current plans to secure such commercial office space.  It
is also possible that a merger or acquisition candidate would
have adequate existing facilities upon completion of such a
transaction, and the Company's principal offices may be
transferred to such existing facilities.

Item 3.  Legal Proceedings.

     There are no material pending legal proceedings to which
the Company is a party or to which any of its property is
subject.

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

     No matter was submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders.

<PAGE>

                   PART II

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

     (a)  Market Information.

     The Company's Common Stock is presently being traded in
the over-the-counter market under the symbol "TTXI" and is listed
on the OTC Bulletin Board.  The following chart sets forth the
range of the high and low bid quotations for the Company's Common
Stock for each period indicated.  The quotations represent prices
between dealers and do not include retail markups, markdowns,
commissions or other adjustments and may not represent actual
transactions.

                                       Bid Prices

Period                              High          Low

Year ended December 31, 1998:

Jan. 1, 1998 to March 31, 1998     $0.44          $0.19
April l, 1998 to June 30, 1998     $0.50          $0.19
July 1, 1998 to Sept. 30, 1998     $0.44          $0.20
Oct. 1, 1998 to Dec. 31, 1998      $0.21          $0.12

Year ended December 31, 1999:

Jan. 1, 1999 to March 31, 1999     $0.19          $0.12
April l, 1999 to June 30, 1999     $0.19          $0.10
July 1, 1999 to Sept. 30, 1999     $0.19          $0.08
Oct. 1, 1999 to Dec. 31, 1999      $0.13          $0.08

Year ended December 31, 2000:

Jan. 1, 2000 to March 31, 2000     $0.40          $0.08
April l, 2000 to June 30, 2000     $0.40          $0.10
July 1, 2000 to Sept. 30, 2000     $0.14          $0.06
Oct. 1, 2000 to Dec. 31, 2000      $0.08          $0.05

     (b)  Holders.

     As of March 31, 2001, there were approximately 230 record
holders of the Company's Common Stock.

     (c)  Dividends.

     The Company has never declared any cash dividends on its
Common Stock and does not anticipate declaring cash dividends in
the foreseeable future.

<PAGE>

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

     The following discussion should be read in conjunction
with the Financial Statements and Notes thereto (the "Financial
Statements") included in this report and is qualified in its
entirety by the foregoing.

Overview

     Telco-Technology, Inc. (the "Company")  was organized
under the laws of the State of Nevada on November 23, 1993 under
the name Haycock Morrison Inc. ("Haycock").  In 1994, Haycock
completed the sale of certain shares of its Common Stock pursuant
to an exemption provided by Rule 504 of Regulation D promulgated
under the Securities Act of 1933, as amended (the "Securities
Act"). On January 27, 1995, Haycock entered into an acquisition
agreement with Telco Technology, Inc., a Delaware corporation
("Telco").  Pursuant to the terms of the acquisition, Haycock
issued 5,000 shares of its Common Stock which represented 60% of
the then outstanding Common Stock of Haycock.

     After giving effect to the above transaction, the Company
ceased all activities as Haycock and changed its name to Telco-
Technology, Inc.  The Company continued the business operations
then conducted by Telco of providing long distance telephone
services and computer networks for voice and data transmissions
which operations were primarily conducted in the State of
Massachusetts (the "Massachusetts Operations").  In 1998, the
Company was reorganized as a Delaware corporation.  The Company
continued such operations until June 1999.

     In June 1999, the Company sold the Massachusetts
Operations to a company affiliated with a former officer and
director of the Company in exchange for the return of 950,000
shares of Common Stock to the Company, and the assumption of all
liabilities of the Massachusetts Operations.  As part of the
agreement, the Company also agreed to forgive all officer loans
due from such individual  (which amounted to approximately
$118,000).  As a result of the foregoing, the Company  has no
current business operations.  As such, the Company can now be
defined as a "shell" corporation, whose principal business
purpose at this time is to locate and consummate a merger or
acquisition with a private entity.

     The disposal of the Massachusetts Operations has been
accounted for as a discontinued operation  and, accordingly, its
net assets (liabilities) have been segregated from continuing
operations in the balance sheet included in the Financial
Statements, and its operating results are segregated and reported
as discontinued operations in the statements of operations and
cash flows included in the Financial Statements.

Plan of Operation

     In 1999, management decided that it would be in the best
interests of the Company and its stockholders to seek additional
business opportunities and sell the Massachusetts Operations, its
then sole business operations. As a result of the sale of the
Massachusetts Operations which occurred in June 1999, the Company
has no current business operations.

     Management plans to investigate, research and, if
justified, potentially acquire or merge with one or more
businesses or business opportunities. The Company currently has
no commitment or arrangement, written or oral, to participate in
any business opportunity and management cannot predict the nature
of any potential business opportunity it may ultimately consider.
Management will have broad discretion in its search for and
negotiations with any potential business or business opportunity.

<PAGE>

     The Company has determined to initially limit its search
for a potential business or business opportunity to firms
involved or intending to be involved in the telecommunications
and/or internet industries.  In this regard, the Company will not
restrict its search to any specific geographical location, and
the Company may participate in a business venture of virtually
any kind or nature.   In addition, the Company may determine at a
future date to seek a potential business or business opportunity
in another industry in the event the Company does not consummate
a transaction with a business or business opportunity in the
telecommunications and/or internet industries.  See, also, Part
I, Item 1 for a more detailed discussion of the Company's plan of
operation.

Liquidity and Capital Resources

     On December 31, 2000, the Company had a working capital
deficit of approximately $14,000, an equity to debt ratio of
approximately 10.8 to 1, and stockholders' equity of
approximately $184,000.  At December 31, 2000, the Company had
approximately $3,000 in cash, total assets of approximately
$201,000 and total liabilities of approximately $17,000. On
December 31, 1999, the Company had  working capital of
approximately $1,000, an equity to debt ratio of approximately
8.4 to 1, and stockholders' equity of approximately $219,000.  At
December 31, 1999, the Company had approximately $27,000 in cash,
total assets of approximately $245,000 and total liabilities of
approximately $26,000.

     As a result of the sale of the Massachusetts Operations,
the Company has no current business operations.   As such, the
Company can now be defined as a "shell" corporation, whose
principal business purpose at this time is to locate and
consummate a merger or acquisition with a private entity.
Management expects that the sale of the Massachusetts Operations
will allow the Company to focus on other business opportunities
in its attempt to locate and consummate such a merger or
acquisition. In view of the Company's current limited cash
position, the Company intends to complete such a transaction in
the next twelve months.  It should be noted  that the Company
likely has insufficient capital with which to make any
acquisitions.  Accordingly, in any of the transactions to merge
with or acquire a private entity, it is likely that the
consideration utilized to make any acquisitions will consist of
equity securities.

     In January 2001, the Company in a private placement of
securities sold 100,000 shares of Common Stock at $.15 per share
to a director of the Company for gross proceeds of $15,000 for
working capital. However, in order to meet certain additional
working capital needs and operating expenses in the next twelve
months in the Company's attempt to locate and effect a business
combination, it may be necessary for the Company to attempt to
raise additional funds.  In the event the Company does attempt to
raise capital most likely the only method available to the
Company would be a private sale of its securities.  Because of
the current status of the Company as a "shell" corporation, it is
unlikely that it would be able to obtain additional funding from
either a bank or other commercial lender.  There can be no
assurance  that the Company will be able to obtain additional
funding when needed, or that such funding, if available, can be
obtained on terms acceptable to the Company.  In addition, there
can be no assurance that the Company will be able to acquire any
business or business opportunity within such period of time or at
any time at all, or that any business or business opportunity the
Company acquires will prove successful or  will be able to
operate profitably.

Item 7. Financial Statements.

     See the Financial Statements annexed to this report.

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

     None.

<PAGE>

                  PART III

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

     Set forth below are the present directors and executive
officers of the Company.  Directors are elected to serve until
the next annual meeting of shareholders and until their
successors have been elected and have qualified.  Officers are
appointed to serve until the meeting of the Board of Directors
following the next annual meeting of shareholders and until their
successors have been elected and qualified.  None of the
directors and officers is related to any other director or
officer of the Company except as otherwise set forth below.

                       Present Position        Has Served as
Name             Age   and Offices             Director Since

Donald R. McKelvey  55  Chairman of the Board,    1995
                        President, Treasurer
                        and Director

Robert W. McKelvey  43  Secretary and Director    1999

Thomas N. Fischetti 47  Director                  1999

     Set forth below are brief accounts of the business
experience during the past five years of each director and
executive officer of the Company and each significant employee of
the Company.

     DONALD R. McKELVEY has been a Director, Chairman of the
Board and Treasurer of the Company for more than the past five
years since January 1995 and also became its President in March
1999.  Mr. McKelvey is also the sole officer, director and
stockholder of Donalson Capital Corp., a company formed by Mr.
McKelvey in 1983,  which provides certain consulting services to
the Company.  Donald R. McKelvey is the brother of Robert W.
McKelvey.

     ROBERT W. McKELVEY has been a Director and Secretary of
the Company since March 1999.  Since December 1994, he has been a
Regional Manager of Legaledge Software which provides computer
software products to primarily corporate law departments, law
firms and government agencies.  From February 1987 to December
1994, he was employed by Positek, Inc., a Philadelphia based
software publisher, initially in the position of a Regional
Manager and then as Mid-Atlantic District Manager.  Robert W.
McKelvey is the brother of Donald R. McKelvey.

     THOMAS N. FISCHETTI has been a Director of the Company
since March 1999.   Mr. Fischetti is the President and majority
shareholder of Allmike Metal Technology, Inc., a New Jersey based
developer, designer and manufacturer of products targeted for the
wireless and fibre optic telecommunications markets.  He has been
involved with such company for more than the past five years.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities
of the Company.  Officers, directors and greater than

<PAGE>

10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.  To the
Company's knowledge, during the  year ended December 31, 2000,
all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied
with except that Donald R. McKelvey filed one report late
relating to one transaction.

Item 10.  Executive Compensation.

     The following summary compensation table sets forth
information concerning the annual and long-term compensation for
services in all capacities to the Company for the  years ended
December 31, 2000, 1999 and 1998, of those persons who were, at
December 31, 2000 (i) the chief executive officer and (ii) the
other most highly compensated executive officers of the Company,
whose annual base salary and bonus compensation was in excess of
$100,000 (the named executive officers):

                      Summary Compensation Table

                      Annual
                      Compensation


Name and Principal        Fiscal
Position                  Year      Salary Bonus

Donald R. McKelvey(2)     2000      $0       $0
Chairman of the Board,    1999      $0       $0
and President             1998      $0       $0


                              Long-Term
                              Compensation

                                   Restricted
Name and Principal       Fiscal    Stock          All Other
Position                 Year      Value(1)       Compensation

Donald R. McKelvey        2000     $ 20,000      $133,105(2)
Chairman of the Board,    1999     $   0         $ 95,812(2)
and President             1998     $490,000      $120,817(2)

___________________
     (1)  In December 2000, the Company issued 500,000 shares of
     Common Stock to Donalson Capital Corporation ("Donalson")
     in payment of consulting fees due to Donalson as of
     December 31, 2000.  Donalson agreed to accept such shares
     in full payment of the entire balance due to Donalson as
     of such date which was in the amount of $118,042 and that
     in the event the valuation which may be attributed to such
     shares does not equal the entire balance due than any
     difference shall be deemed waived and forgiven by
     Donalson. Of such amount, $98,042 was deemed forgiven.
     Mr. McKelvey is the sole officer, director and stockholder
     of Donalson.  In addition, in 1999, the Company issued
     3,000,000 shares of Common Stock to Mr. McKelvey for
     additional compensation for 1998.  The expense was accrued
     for 1998.  In addition, in December 1998, the Company
     issued 500,000 shares of Common Stock to Mr. McKelvey for
     additional compensation for 1998.   Dollar values of
     awards  are based on the average of the bid and asked
     prices of the Company's Common Stock on the dates of
     grant.

     (2)  Consists of (i) cash payments made in 1998, 1999 and 2000
     to Donalson Capital Corporation ("Donalson") for
     consulting fees of $100,000, $80,000 and $20,000,
     respectively, (ii) 7.50% per annum imputed interest on the
     officers interest-free loans and (iii) $98,042 of cash
     compensation in 2000 which was not paid to Donalson but
     was forgiven as of December 31, 2000.  (See  Part III,
     Item 12).

Compensation of Directors

     Since inception, no director has received any cash
compensation for his services as such.  In the past, directors
have been and will continue to be reimbursed for reasonable
expenses incurred on behalf of the Company.

<PAGE>

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

     The following table sets forth, as of March 31, 2001, (i)
the number of shares of Common Stock  owned of record or
beneficially, or both, by each person who owned of record, or is
known by the Company to have beneficially owned, individually, or
with his associates, more than 5% of such shares then
outstanding; (ii) the number of shares owned beneficially by each
Director of the Company and each executive officer of the
Company; and (iii) the number of shares owned beneficially by all
Directors and executive officers as a group.  Except as otherwise
indicated below, each of the persons listed below has sole voting
and investment power with respect to his or her shares.


                                    Amount and Nature
               Name of Beneficial   of Beneficial      Percent
Title of Class Owner                Ownership          of Class

Common Stock   Donald R. McKelvey    5,552,125(1)       58.6%
Common Stock   Thomas N. Fischetti     202,000(2)        2.1%
Common Stock   Robert W. McKelvey        - (3)            -
Common Stock   Ina McWey               500,000           5.3%

Common Stock   All Executive Officers
               and Directors as
               a Group               5,754,125          60.7%


     (1)  Includes 5,012,500 shares held by Donald R. McKelvey and
     539,625 shares held by Donalson Capital Corporation
     ("Donalson").  Mr. McKelvey is the sole shareholder of
     Donalson and, by virtue of such ownership, Mr. McKelvey
     may be deemed the beneficial owner of the shares held by
     Donalson.  The  address for Mr. McKelvey is 60 Bowers
     Lane, Closter, New Jersey.

     (2)  Includes 192,000 held by Mr. Fischetti and 10,000 shares
     held by Allmike Metal Technology, Inc.  ("Allmike").
     Mr. Fischetti is the majority  shareholder and President
     of Allmike and, by virtue thereof, Mr. Fischetti may be
     deemed the beneficial owner of the shares held by
     Allmike.  The  address for Mr. Fischetti is 65 Anderson
     Avenue, Moonachie, New Jersey.

     (3)  The address for Mr. McKelvey is 126 Barley Road,
     Ivyland, Pennsylvania.


Item 12. Certain Relationships and Related Transactions.

     During 1998, the Company issued 500,000 shares of Common
Stock to Donald R. McKelvey for additional compensation and
agreed to issue an additional 3,000,000 shares of Common Stock
to him for additional compensation in 1999.  Such additional
3,000,000 shares were issued in January 1999.

     In March 1995, the Company entered into a three year
consulting agreement with Donalson Capital Corporation
("Donalson"), a company owned by Donald R. McKelvey.  Such
agreement provided for a fee of $120,000 per year and was paid
for in full by the Company  issuing 120,000 shares of Common
Stock in 1996.  Such agreement was extended from March 1998 to
December 1998  at a rate of $10,000 per month.  In January
1999, the Company entered into a new three year consulting
agreement with Donalson providing for a monthly fee of $10,000
during the term. At December 31, 2000, a balance of $118,042
was owed to Donalson under the agreement.  In connection with
the balance due as of December 31, 2000, the Company issued
500,000 shares of Common Stock to Donalson wherein Donalson
agreed to accept such shares in full payment of the entire
balance due to Donalson as of such date and that in the event
the valuation which may

<PAGE>

be attributed to such shares does not
equal the entire balance due than any difference shall be
deemed waived and forgiven by Donalson.  In connection
therewith, such shares were valued at $20,000 and $98,042 was
deemed forgiven.

     In June 1999, and pursuant to an Acquisition and Stock
Transfer Agreement among the Company, Robert Powell, Sr. and
Total Technology, Inc., a company affiliated with Mr. Powell
("Total Technology"), the Company sold and transferred all of
the Massachusetts Operations to Total Technology.  Pursuant to
the agreement, Mr. Powell returned 950,000 shares of the
Company's Common Stock to the Company and Total Technology
assumed all liabilities of the Massachusetts Operations.  As
part of the agreement, the Company also agreed to forgive all
officer loans due from Mr. Powell (which amounted to
approximately $118,000). Mr. Powell, who is no longer
employed by the Company, served as President of the Company
until March 1999 and managed the Company's Massachusetts
Operations until it was transferred to Total Technology.

     At December 31, 2000 and 1999, there were officer loans
outstanding to the Company in the amounts of $198,006 and
$218,006, respectively.  In June 1999, such officer loans due
from Mr. Powell (approximately $118,000) were forgiven as part
of the consideration in connection with the sale and transfer
of the Massachusetts Operations.  The balance of the loans are
due from Mr. McKelvey.  Such loans are unsecured, non-interest
bearing with no specific terms of repayment.

     The Company currently maintains its offices in the home
of Donald R. McKelvey  pursuant to an oral agreement on a rent-
free, month-to-month basis.  The Company has provided for rent
of $1,500 per month in its financial statements.  Therefore,
rental expense of $18,000 per year is reflected for the years
2000 and 1999.

Item 13.  Exhibits and Reports on Form 8-K.

     (a)  Exhibits.

               3.1  Certificate of Incorporation (Delaware)(1)
               3.2  Certificate of Amendment (Delaware) (filed
                    October 19, 1994)(1)
               3.3  Certificate of Amendment (Delaware) (filed
                    December 19, 1997)(1)
               3.4  Certificate of Merger (Delaware)(1)
               3.5  Articles of Merger (Nevada)(1)
               3.6  By-Laws(1)
               4.1  Specimen Certificate for shares of Common
                    Stock(1)
               4.2  Agreement and Plan of Merger(1)
               10.1 Consulting Agreement with Donalson Capital
                    Corporation(1)
               10.2 Acquisition and Stock Transfer Agreement by and
                    among the Company, Robert Powell, Sr. and Total
                    Technology, Inc.(1)
___________________________

               (1)  Filed as an exhibit to the Company's
          Registration Statement on Form 10-SB filed on
          January  13, 2000, and incorporated by reference
          herein.

     (b)  Reports on Form 8-K.

     Listed below are reports on Form 8-K filed during the
last quarter of the period covered by this report:

     None.

<PAGE>

                 SIGNATURES

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

                    TELCO-TECHNOLOGY, INC.
                    (Registrant)


                    By:/s/ Donald R. McKelvey
                    Donald R. McKelvey,
                    Chairman of the Board, President
                    and Treasurer


                    Dated: April 13, 2001

     Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant, and in the capacities and
on the dates indicated:

Signature                 Title                        Date

/s/ Donald R. McKelvey  Chairman of the Board,       4/13/01
Donald R. McKelvey      President, Treasurer
                        and Director
                        (Principal Executive Officer
                        and Principal Accounting
                        and Financial Officer)

/s/ Robert W. McKelvey   Secretary and Director      4/13/01
Robert W. McKelvey

/s/ Thomas N. Fischetti  Director                    4/13/01
Thomas N. Fischetti


<PAGE>


TELCO-TECHNOLOGY, INC.

FINANCIAL STATEMENTS

DECEMBER 31, 2000



INDEX


PAGE

INDEPENDENT AUDITORS' REPORT                F2

BALANCE SHEETS                              F3

STATEMENTS OF OPERATIONS                    F4

STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY                     F5

STATEMENTS OF CASH FLOWS                    F6-F7

NOTES TO FINANCIAL STATEMENTS               F8-F16



<PAGE>



KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
15 MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038

- TEL (212) 406-7272 - FAX (212) 513-1930


INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Telco-Technology, Inc.

We have audited the accompanying balance sheets of Telco-
Technology, Inc. as of December 31, 2000 and 1999 and the
related statements of operations, changes in stockholders'
equity and cash flows for the years then ended.  These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the statement of financial condition is 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 financial statements referred to above
present fairly, in all material respects, the
financial position of Telco-Technology, Inc. as of December 31,
2000 and 1999 and the results of its' operations and cash flows
for the years then ended in conformity with generally accepted
accounting principles.

As discussed in Note 3, in June, 1999, the Company disposed of
its Massachusetts operation (its only operating division).
Management expects that this transaction will allow the Company
to focus on other business opportunities.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern.  As
discussed in Note 9 to the financial statements, the Company
has suffered recurring losses from operations that raise
substantial doubt about the ability to continue as a going
concern.  Management's plans regarding these matters are also
described in     Note 9.  The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.


Kempisty & Company
Certified Public Accountants, P.C.
New York, New York
February 9, 2001

F2

<PAGE>

                             TELCO-TECHNOLOGY, INC.

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2000
<PAGE>

                             TELCO-TECHNOLOGY, INC.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                 December 31,   December 31,
                                                                     2000           1999
                                                                 -----------    -----------
<S>                                                              <C>            <C>
                      ASSETS

Current Assets
    Cash and cash equivalents                                    $     3,245    $    26,965
                                                                 -----------    -----------
              Total Current Assets                                     3,245         26,965

Other Assets
    Prepaid expenses                                                     200             --
    Loan receivable from officer (Note 8)                            198,006        218,006
                                                                 -----------    -----------
               Total Other Assets                                    198,206        218,006
                                                                 -----------    -----------

                  TOTAL ASSETS                                   $   201,451    $   244,971
                                                                 ===========    ===========


       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
    Accounts payable and accrued expenses                        $    17,119    $    18,000
    Due to related party (Note 4)                                         --    $     8,042
                                                                 -----------    -----------
           Total Current Liabilities                                  17,119         26,042

Commitment and Contingencies (Note 5)

Stockholders' Equity
    Preferred stock $.001 par value; 2,000,000 shs authorized;
        no shares issued or outstanding                                   --             --
    Common stock $.001 par value; 13,000,000 shs authorized;
        issued 9,369,944 and 8,869,944 respectively (Note 7)           9,370          8,870
    Capital in excess of par value                                 3,110,911      2,975,369
    Deficit                                                       (2,935,949)    (2,765,310)
                                                                 -----------    -----------
           Total Stockholders' Equity                                184,332        218,929
                                                                 -----------    -----------

               TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $   201,451    $   244,971
                                                                 ===========    ===========
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       F3
<PAGE>

                             TELCO TECHNOLOGY, INC.

                            STATEMENTS OF OPERATIONS


                                                          For the Year Ended
                                                              December 31,
                                                      -------------------------
                                                          2000          1999
                                                      -----------   -----------

Sales revenues                                        $        --   $        --

Cost of sales                                                  --            --
                                                      -----------   -----------

Gross profit                                                    0             0

General and administrative expenses                       170,639       286,569
                                                      -----------   -----------

    Loss from operations                                 (170,639)     (286,569)

Other income and expenses
    Interest income                                            --         3,472
                                                      -----------   -----------

(Loss) from continuing operations before taxes           (170,639)     (283,097)

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

Net (loss) from continuing operations                    (170,639)     (283,097)

(Loss) from discontinued operations
          (net of income taxes)                                --       (65,070)
                                                      -----------   -----------

Net loss                                              $  (170,639)  $  (348,167)
                                                      ===========   ===========

Basic and diluted earnings (loss) per common share:

     Continuing operations                            $     (0.02)  $     (0.03)
     Discontinued operations                                   --         (0.01)
                                                      -----------   -----------

Total                                                 $     (0.02)  $     (0.04)
                                                      ===========   ===========

Basic and diluted average shares outstanding            8,871,314     8,782,629
                                                      ===========   ===========

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       F4
<PAGE>

                             TELCO-TECHNOLOGY, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                   Common Stock
                                ($.001) Par Value                        Capital In
                           --------------------------     Stock To       Excess Of
                             Shares         Amount        be Issued      Par Value       Deficit         Total
                           -----------    -----------    -----------    -----------    -----------    -----------
<S>                          <C>          <C>            <C>            <C>            <C>            <C>
January 1, 1999              6,762,944    $     6,763        390,720    $ 2,768,135    $(2,417,143)   $   748,475

Shares issued for
  services                      12,000             12           (720)           708             --              0

Shares issued to
  Chairman                   3,000,000          3,000       (390,000)       387,000             --              0

Shares received for
  Massachusetts
  operation                   (950,000)          (950)            --       (202,929)            --       (203,879)

Shares issued for
  services                      45,000             45             --          4,455             --          4,500

Rent adjustment from
  related party                     --             --             --         18,000             --         18,000

Net loss                            --             --             --             --       (348,167)      (348,167)
                           -----------    -----------    -----------    -----------    -----------    -----------
December 31, 1999            8,869,944          8,870             --      2,975,369     (2,765,310)       218,929

Rent adjustment from
  related party                     --             --             --         18,000             --         18,000

Shares issued for
payable to related party       500,000            500             --         19,500             --         20,000

Debt forgiveness by
related party for
consulting services                 --             --             --         98,042             --         98,042

Net loss                            --             --             --             --       (170,639)      (170,639)
                           -----------    -----------    -----------    -----------    -----------    -----------
December 31, 2000            9,369,944    $     9,370    $        --    $ 3,110,911    $(2,935,949)   $   184,332
                           ===========    ===========    ===========    ===========    ===========    ===========
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       F5
<PAGE>

                             TELCO-TECHNOLOGY, INC.

                            STATEMENTS OF CASH FLOWS


                                                         For the Year Ended
                                                            December 31,
                                                     -------------------------
                                                         2000          1999
                                                     -----------   -----------

OPERATING ACTIVITIES
 Net income or (loss) from continuing operations     $  (170,639)  $  (283,097)
 Adjustments to reconcile net income or (loss)
    to net cash used by operating activities:
 Forgiveness of debt for consulting services              98,042            --
 Stock issued for payable                                 20,000            --
 Common stock issued for services                             --         4,500
 Rent adjustment                                          18,000        18,000
 Changes in operating assets of continuing
    operations:
 Due to related party                                     (8,042)       40,000
 Prepaid expense                                            (200)
 Accounts payable                                           (881)           --
                                                     -----------   -----------
 Net cash used by continuing operations                  (43,720)     (220,597)

 Net cash provided by discontinued operations                 --         1,031

INVESTING ACTIVITIES
 Loans made to officers                                       --       (50,000)
 Repayment of officers' loans                             20,000        69,812
                                                     -----------   -----------
 Net cash provided by investing activities                20,000        19,812
                                                     -----------   -----------

 Increase (decrease) in cash                             (23,720)     (199,754)
 Cash at beginning of period                              26,965       226,719
                                                     -----------   -----------
 Cash at end of period                               $     3,245   $    26,965
                                                     ===========   ===========

Supplemental Disclosures of Cash Flow Information:
 Cash paid during year for:
    Interest                                         $        --   $        --
                                                     ===========   ===========
    Income taxes                                     $        --   $        --
                                                     ===========   ===========

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       F6
<PAGE>

                             TELCO-TECHNOLOGY, INC.

                      STATEMENTS OF CASH FLOWS (continued)


                                                         For the Year Ended
                                                            December 31,
                                                     -------------------------
                                                         2000          1999
                                                     -----------   -----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

   Non-cash investing and financing activities:

   Issuance of common stock for payment of
      amounts due to a related party                 $    20,000   $        --

   Forgiveness of debt by a related party for
      consulting services                            $    98,042   $        --

   Issuance of common stock for services             $        --   $     4,500

   Receipt of common stock for forgiveness of
     officer loan and net assets of discontinued
     operation                                       $        --   $   204,942


                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       F7

<PAGE>





TELCO-TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999



Note 1-     ORGANIZATION AND OPERATIONS


The Company was incorporated as Haycock Morrison Inc. in the
state of Nevada on November 23, 1993.  On January 27, 1995
Haycock entered into an acquisition agreement with Telco-
Technology, Inc. ("Telco").  Pursuant to the acquisition terms,
Haycock issued 5,000 shares of stock, which represented 60% of
the outstanding shares of Haycock's common stock.

After giving effect to the above transaction, the Company ceased
all activities as Haycock and changed its name to Telco-
Technology, Inc.  Telco continued its business operations
of providing long distance telephone services and computer
networks for voice and data transmissions.  In 1998 the Company
was reorganized as a Delaware Corporation.

On June 15, 1999, the Company sold its Massachusetts operation
to a company affiliated with a former officer and director of
the Company in exchange for the return of 950,000
shares of stock to the Company, and the assumption of all
liabilities of the Massachusetts operation.  The agreement also
includes the cancellation of the former officer's debt to
the Company.  As a result of this sale the Company can now be
defined as a "shell" corporation, whose principal business is to
locate and consumate a merger or acquisition with an ongoing
business.


Note 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company
considers all highly liquid investments with a maturity of three
months or less at acquisition to be cash equivalents.

Income Taxes


The Company previously adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", ("SFAS
No.109") which requires the asset and liability method of
accounting for income taxes.  Enacted statutory tax rates are
applied to  temporary differences arising from the differences
in financial statement carrying amounts and the tax basis of
existing assets and liabilities.  Due to the uncertainty of the
realization of income tax benefits, (Note 6), the adoption of
SFAS No. 109 had no effect on the financial statements of the
Company.


F8

<PAGE>




TELCO-TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999


Note 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)


Earnings (Loss) Per Share


During 1998 the Company adopted SFAS No. 128, "Earnings Per
Share", which requires the reporting of both basic and diluted
earnings per share.  Net income per share-basic is computed by
dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period.

Concentration of Credit risk

Financial instruments which potentially subject the Company to
concentration of credit risk consist of cash deposits at
commercial banks and receivables from an officer and director
of the Company.

Cash and cash equivalents are temporarily invested in interest
bearing accounts at one financial institution and may, at times,
exceed insurable amounts.  The Company believes it mitigates its
risk by investing in or through major financial institutions.
Recoverability is dependent upon the performance of the
institution.

Receivables from an officer of the Company (Note 8) are
unsecured and represent a concentration of credit risk due to
the common employment and financial dependency of
this individual on the Company.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting   principles requires the Company's
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from
those estimates.

Comprehensive Income

Effective January 1, 1998 the Company adopted Statement of
Financial Accounting  Standards No. 130, "Reporting
Comprehensive Income" ("SFAS No. 130"). SFAS No.
130 requires an entity to report comprehensive income and its
components and increases financial reporting disclosures. This
standard has no impact on the Company's financial
position, cash flows or results of operations since the
Company's comprehensive income is the same as its reported net
income for 2000 and 1999.


F9



<PAGE>



TELCO-TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999


Note 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)


Fair Value of Financial Instruments


Cash and cash equivalents, accounts receivable, accounts
payable, accrued liabilities and loans receivable from officers
are reflected in the financial statements at fair value
because of the short-term maturity of these instruments.


Accounting Policies Applied to Discontinued Operations


Revenue Recognition


Revenues are recorded at the time of shipment of products or
performance of services. (Applied to discontinued operations)

Depreciation and Amortization

The cost of furniture and equipment is depreciated over the
estimated useful lives of the related assets.  The cost of
leasehold improvements is amortized over the lesser of the
length of the related lease or the estimated useful life of the
assets. Depreciation is computed on a straight line basis for
financial reporting purposes and on an accelerated
basis for income tax purposes. (Applied to discontinued
operations)


Inventories

Inventories are stated at the lower of cost determined by the
FIFO method, or market.


F10

<PAGE>

TELCO-TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999


Note 3-     DISCONTINUED OPERATIONS

In June, 1999 the Company sold its Massachussetts operations to
a former officer and director of the Company, and a new company
he is affiliated with, formed to acquire the Company's
Massachusetts operation.  The sales agreement required the
officer to return 950,000 shares of the Company's restricted
common stock to the Company and as part of this agreement
approximately $118,000 in monies due the Company was forgiven.
The Company transferred approximately $151,000 in assets and
$65,000 in liabilities to the   new company, which also assumed
all future liabilities of the Massachusetts operation, as
defined in the agreement.  The Company valued the 950,000 shares
of the Company's common stock it received at the net book value
of the assets transferred and loan forgiven or approximately
$205,000.  Due to the related party nature of the sale, the
Company recognized no gain or loss on the transaction. After
this transaction, the officer   no longer owned any of the
Company's common stock.

The disposal of the Massachusetts operation has been accounted
for as a discontinued operation and, accordingly, its net assets
(liabilities) have been segregated from continuing operations in
the accompanying balance sheet, and its operating results are
segregated and reported as discontinued operations in the
accompanying statements of operations and cash flows.

Information relating to the discontinued Massachusetts
operations for the six months   ended June 30, 1999 is
approximately as follows:

                      Six months
                      ended
                      June 30, 1999

Net sales                  $    537,000
Cost of sales                  (459,000)
Gross profit                     78,000
Operating costs                (143,000)
Income (loss) before
 income taxes                   (65,000)
Less income tax benefit
 (expense)                         -
Net (loss) income          $    (65,000)



F11

<PAGE>

TELCO-TECHNOLOGY, INC.


NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999

Note 4-     RELATED PARTY TRANSACTIONS


On December 31, 2000 the Company issued 500,000 shares of $.001
par value common stock to Donalson Capital Corporation
("Donalson"), a company owned by the Chairman of
the Board of Telco-Technology, Inc.  The shares were issued in
full satisfaction of the remaining balance payable to Donalson
for consulting services of $118,042 at December 31, 2000.


In March, 1995 the Company entered into a three year consulting
agreement with Donalson.  This three year agreement, providing
for a fee of $120,000 per year was paid for in full by the
Company issuing 120,000 shares of common stock in 1996.  The
expense was amortized over the 36 month period of the agreement.
In March 1998, the agreement was extended to December 1998 at a
rate of $10,000 per month.  In January 1999, the Company entered
into a new three year consulting agreement with Donalson
expiring in December 2001, providing for a $10,000 monthly fee
during the term of the agreement.  At December 31, 2000 and
1999, a balance of $-0- and $8,042, respectively
was owed under the agreement.

In December of 1998, an officer of the Company received 500,000
shares of restricted common stock as additional compensation.
The Company valued this stock at $0.20 per share, or $100,000.
Additionally, the Company agreed to issue 3,000,000 restricted
shares valued at $0.13 per share or $390,000 for services
performed during 1998,  These shares which were issued in 1999
were valued at market prices in effect on the date the
Company committed to the additional compensation.

The Company currently maintains its offices in the home of its
Chairman pursuant to an oral agreement on a rent free, month to
month basis.  The Company has provided for rent of $1,500 per
month in its financial statements.  Therefore, rent expense of
$18,000 per year is reflected for the years 2000 and 1999.

Note 5-     COMMITMENTS AND CONTINGENCIES

Securities and Exchange Commission Investigation

In May 1997, the Company was notified by the Securities and
Exchange Commission of a formal order of a private, non-public
investigation of certain issues related to the Company's
stock trading.  In August 1997, the Company supplied copies of
various books and records to the Commission who then deposed
some of the Company's officers.  Since that time,
the Company has received no further notification from the
Commission.  Based upon its examination of this matter and
discussions with Counsel, management does not expect,
in the event any further action is taken by the Commission, that
such action will result in an unfavorable outcome to the Company
or have a material adverse effect.

F12

<PAGE>

TELCO-TECHNOLOGY, INC.


NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999


Note 5-     COMMITMENTS AND CONTINGENCIES (continued)

State of Maryland Division of Securities


In February 2000, the Maryland Division of Securities (the
"Maryland Division") notified the Company that it appears to
have violated Maryland's securities laws in relation to a
private placement of securities in 1997.  While the Company
entered discussions to negotiate a settlement, no further
notification or correspondence has been received from the
Maryland Division since March 2000.  Although the outcome of
such matter or the definitive terms of any such settlement
cannot be predicted with certainty at this time, management is
hopeful that it will be able to effect a negotiated settlement
which will not   have a material adverse effect on the company.

Note 6-     INCOME TAXES

The provision (benefit) for income taxes consists of the
following:


                       Year ended December 31,
                       2000      1999

Current:
Federal tax expense   $(58,000) $(112,000)
State tax expense     (8,800)   (32,000)
Deferred:
Federal tax expense   58,000    112,000
State tax expense     8,800      32,000
                   $    -         $    -


A reconciliation of differences between the statutory U.S.
federal income tax rate and the Company's effective tax rate
follows:
                                Year ended December 31,
                                2000      1999


Statutory federal income tax    34%       34%
State income tax-net of
federal benefit                 5%        5%
Valuation allowance            -39%      -39%
                                0%        0%



F13

<PAGE>

TELCO-TECHNOLOGY, INC.


NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999

Note 6-     INCOME TAXES (continued)


The components of deferred tax assets and liabilities were as
follows:
                                      December 31,
                                    2000        1999
Deferred tax assets:

Net operating loss carryforward  $2,860,000    $2,690,000
Total deferred tax assets         2,860,000     2,690,000
Valuation allowance              (2,860,000)   (2,690,000)
Net deferred tax assets          $    -        $    -


SFAS No, 109 requires a valuation allowance to be recorded when
it is more likely than not that some or all of the deferred tax
assets will not be realized.  At December 31, 2000,
a valuation allowance for the full amount of the net deferred
tax asset was recorded because of continuing losses and
uncertainties regarding the amount of taxable income
that would be generated in future years.

The Company recognized losses for the years ended December 31,
2000, 1999 and 1998.  The amount of available additional net
operating loss carryforwards are approximately $170,000 for
2000, $377,000 for 1999, $703,000 for 1998, $800,000 for 1997,
$510,000 for 1996 and $300,000 for 1995.  The net operating loss
carryforwards, if not utilized, will expire in the years 2005
through 2015.  The use of these carryforwards is subject to
limitations imposed by the Internal Revenue Service in the event
of a change in control.

Note 7-     COMMON STOCK

On December 31, 2000 the Company issued 500,000 shares of $.001
par value common stock in satisfaction of a payable to a related
party of $118,042.

During 1999 the Company issued 57,000 shares of common stock to
unrelated parties for consulting fees, professional fees, public
relations fees and finders fees.  The stock wasvalued at prices
ranging from $0.06 to $0.169 per share. These values were based
upon both current market prices at the time the shares were
issued, and whether the shares were free-trading or restricted.
(No discount for restricted common stock was taken.)  The
above share issuances resulted in expenses of $4,500 in 1999.

Reincorporation and Exchange of Stock

In January 1998, the Company changed its corporate domicile from
Nevada to Delaware in a tax-free statutory merger.  The
reorganization changed the authorized shares of
common stock outstanding from 50,000,000 to 13,000,000 common
stock shares (par value per share remained unchanged) and
authorized 2,000,000 shares of preferred stock.

F14

<PAGE>

TELCO-TECHNOLOGY, INC.


NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999


Note 7-     COMMON STOCK (continued)

During 1998 the Company issued 500,000 restricted shares of
common stock to an officer and director for additional
compensation.  The Company issued 3,000,000 additional
restricted shares of common stock to this person, in 1999 for
1998 services.


Preferred Stock

The Company has authorized 2,000,000 shares of preferred stock,
but none are issued or outstanding.

The Board of Directors of the Company is authorized to provide
for the issuance from time to time, in one or more series, of
any number of shares of Preferred Stock, and to fix the
designations, powers, preferences, rights, qualifications,
limitations and restrictions of each such series.

Note 8-     LOANS TO OFFICERS

                         December 31,      December 31,
                         2000              1999


Loan to officer          $198,006          $218,006


The loans to an officer are unsecured, non-interest bearing with
no specific terms of repayment.  At June 30, 1999 the balance of
the loan to the former officer of approximately $118,000 was
forgiven as part of the sale of the Massachusetts operation
(Note 3).

Note 9-     FINANCIAL RESULTS AND LIQUIDITY

The Company has incurred net losses from continuing operations
of $170,000 and $283,000 in 2000 and 1999, respectively.

With the sale of the Company's only operating division in June,
1999 (see Note 3) the Company has no operations.

Management expects that this transaction will allow the Company
to focus on other business opportunities.



F15

<PAGE>

TELCO-TECHNOLOGY, INC.


NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2000 and 1999





Note 10-    SUBSEQUENT EVENT



On January 15, 2001 the Company in a private placement of
securities sold 100,000 shares of common stock $.001 par value
for $0.15 per share for gross proceeds of $15,000 for working
capital.



F16