UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-QSB

(Mark one)

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

For the quarterly period ended: September 30, 2004

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

For the transition period from ____________ to _____________

Commission file number: 0-26307

Nettel Holdings, Inc.

(Exact name of small business issuer as specified in its charter)

Florida

65-0827278

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

610 SW Broadway Ave, Suite 405, Portland, Oregon

97205

(Address of principal executive offices)

(Zip Code)

503-222-6018

(Issuer's telephone number)

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 report (s), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Common Stock, $.001 par value 22,219,927 shares outstanding as of September 30, 2004.

Transitional Small Business Disclosure Format: Yes __ No X

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Item 2. Management's Discussion and Analysis

Item 3. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Changes in Security

Item 3. Default Upon Senior Securities

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

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

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

FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2004 AND 2003

* The basic and diluted net loss per share has been stated to retroactively effect 50:1 reverse split on May 1, 2003.

* Weighted average number of shares used to compute basic and diluted loss per share for 2004 and 2003 is the same since the effect of dilutive securities is anti-dilutive.

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

NetTel Globalcommunication, Inc. ("NetTel") was incorporated on December 10, 1999 in the state of Delaware. NetTel began operations in March 2001 selling wireless communication devices and service activation with various providers. During 2002, NetTel began refurbishing and reselling used computer equipment and providing retail internet access. In April 2003, NetTel discontinued retail wireless and internet access sales, and began selling used computer equipment. In August of 2004 the Company began selling long distance minutes and prepaid calling cards to the wholesale market.

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

The merger of BSC with NetTel has been accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of NetTel obtained control of the consolidated entity (the "Company"). Accordingly, the merger of the two companies has been recorded as a recapitalization of the NetTel, with NetTel being treated as the continuing entity. The continuing company has retained December 31 as its fiscal year end. The historical results for the three-month and nine-month periods ended September 30, 2004 include NetTel and BSC, while the historical results for the three-month and nine-month periods ended September 30, 2003 include only the NetTel and BSC (from the acquisition date). Nettel Holdings, Inc. (formerly Bio Standard Corporation), ("BSC") was incorporated in the State of Florida on October 22, 1998. During 2002 BSC ceased all operations.

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

In determining the allowance to be maintained, management evaluates many factors including industry and historical loss experience. The allowance for doubtful accounts is maintained at an amount management deems adequate to cover estimated losses. The accounts receivable balance at September 30, 2004 and net revenues for the three-month and nine- month periods ending September 30, 2004 include amounts from two international customers that have a history of slow payment. The allowance for doubtful accounts is $500,000 at September 30, 2004.

Revenue Recognition Revenue is recognized when earned. The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. The Company recognizes revenue from telecommunications and internet services as services are provided; the Company recognizes sales from equipment when title transfers. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue. Cost of sales includes the cost of equipment sold and the cost of capacity for internet and wholesale minutes associated with the revenue recognized within the corresponding time period.

The Company expenses advertising costs as incurred. Advertising expenses for the nine-month period ended September 30, 2004 and 2003 were $1,608 and $882, respectively.

Expenditures for software development costs and research are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such software has been short. Consequently, costs otherwise capitalizable after technological feasibility is achieved are generally expensed because they are insignificant. The Company recorded research and development cost of $1,911,775 and $900,372 in the nine-month periods ended September 30, 2004 and September 30, 2003, respectively, for development of software products.

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

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

Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. There were no items of comprehensive income during the nine-month period ended September 30, 2004 and 2003, accordingly, a Statement of Comprehensive Loss is not presented.

In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock Based Compensation-Transition and Disclosure". SFAS No. 148 amends SFAS No. 123, "Accounting for Stock Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used, on reported results. The Statement is effective for the Companies' interim reporting period ending June30, 2004.

In compliance with FAS No. 148, the Company has elected to calculate the cost of options based on a fair value model at the grant date for its stock options issued to consultants under SFAS 123, and has made the applicable disclosures below. ($ in thousands, except per share amounts) :

The assumptions used in calculating the fair value of options granted using the Black-Scholes option- pricing model are as follows:

On May 15 2003, the FASB issued FASB Statement No. 150 ("SFAS 150"), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the statement of financial position. Further, SFAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. SFAS 150 affects an entity's classification of the following freestanding instruments: a) Mandatorily redeemable instruments b) Financial instruments to repurchase an entity's own equity instruments c) Financial instruments embodying obligations that the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments based solely on (i) a fixed monetary amount known at inception or (ii) something other than changes in its own equity instruments d) SFAS 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. The guidance in SFAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. For private companies, mandatorily redeemable financial instruments are subject to the provisions of SFAS 150 for the fiscal period beginning after December 15, 2003. The adoption of SFAS No. 150 does not have a material impact on the Company's financial position or results of operations or cash flows.

In December 2003, the Financial Accounting Standards Board (FASB) issued a revised Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46R). FIN 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. The Company does not hold any variable interest entities.

The Company owed $5,000 to an officer and employee of the company for un-reimbursed business expenses as of September 30, 2004. The amount is due on demand, unsecured and interest free.

The Company has not paid salaries to its employees and has accrued $110,533 in payroll liabilities for the past two years. $32,593 of the payroll liability balance was assumed by the Company from Bio Standard during the recapitalization transaction.

The Note Payable from an individual amounting $28,000 is due on demand after December 31, 2003. These notes are unsecured and bear the annual interest rate of 6% on the unpaid principal balance. Interest expense for this note for the nine-month periods ended September 30, 2004 and 2003 is $1,930 and $3,755, respectively.

An officer of the company loaned the Company $20,000 for operating capital during the nine-month period ended September 30, 2004. As of September 30, 2004 the balance owed the officer is $16,557. The amount is due on demand, unsecured and interest free.

On May 1, 2003, the Board of Directors declared a fifty to one reverse stock split of the Company's common stock. All references to number of shares, except shares authorized, and to per share information in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive basis.

On May 23, 2003 the Company issued 12,846,290 shares of Common Stock for acquisition of NetTel (note 1).

In January 2004 the Company issued 1,387,750 shares of Common Stock to consultants for engineering services and in March 2004, the Company issued 100,000 shares of Common stock to a consultant for engineering for a combined value of $873,772. In April 2004 the Company issued 500,000 shares of Common Stock to a consultant for consulting services relating to business development for the Company. In May 2004 the Company issued 2,016,050 shares of Common Stock to consultants for engineering services. The valuation of shares was based upon average market value of the shares at the time of the consummation of the transaction.

In January 2004, the Company granted a stock option to a consultant for 200,000 shares of the Company's Common Stock at $0.50 per share. The value of the option was calculated under SFAS 123 based on a fair value model at the grant date. $89,200 was recorded as consulting fees. In February 2004, the consultant exercised the option to purchase 200,000 shares of the Company's stock for $100,000.

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

The following is information for the Company's reportable segments for the nine months ended September 30, 2004:

The following is information for the Company's reportable segments for the three months ended September 30, 2004:

For the three-month period ended September 30, 2004, two customers provided 64% of the Company's net revenues, and for the nine-month period ended September 30, 2004, four customers provided 82% of the Company's net revenues. Three suppliers provided 93% and 82% of the Company's purchases for the three-month and nine-month periods ended September 30, 2004, respectively. For the three-month and nine month periods ended September 30, 2003, four customer provided 75% and 77%, respectively, of the net revenues and three suppliers provided 89% and 73%, respectively, of the Company's purchases. The accounts receivable balances due from these customers are $1,055,624 and $284,327 at September 30, 2004 and 2003, respectively. The accounts receivable balance at September 30, 2004 and net revenues for the three-month and nine- month periods ending September 30, 2004 include amounts from these two international customers that have a history of slow payment, therefore the Company has provided an allowance for doubtful accounts of $500,000 at September 30, 2004.

The accounts payable balances due to these suppliers are $161,812 and $0 at September 30, 2004 and 2003, respectively. The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral. Credit losses have not been significant.

The company leased a facility under a monthly lease. Total rental expense under this lease was $5,200 for the nine-month period ended September 30, 2003. July 1, 2003, the Company entered into a three-year lease for corporate office space in Portland, Oregon. Total rent expense under this lease was $18,000 for the nine-month period ended September 30, 2004. Lease commitments are as follows for the twelve month period ended September 30:

On May 5, 2004, Creative Vistas and ENTEC, a non-operative subsidiary of the Company, signed a stock exchange agreement (the "Agreement"), pursuant to which Creative Vistas agreed to issue 75,000,000 shares to the ENTEC shareholder in exchange for 100% of ENTEC's outstanding shares. ENTEC was owned 60% by the Company and 40% by the President of the Company, before this agreement (collectively, "ENTEC shareholders"). Upon completion of the Acquisition, ENTEC would become a wholly-owned subsidiary of Creative Vistas. An additional 2,000,000 shares would be issued to persons for services rendered in the Acquisition: 1,000,000 of those shares would be issued to Miller Capital Corporation, whose principal is Rudy R. Miller, Creative Vistas' current president and largest shareholder, who would resign as part of the Acquisition. Upon completion of the Acquisition, the Company would own 45,000,000 of the 87,000,000 shares of Creative Vistas' common stock; and the Company current officers and directors would become the officers and directors of Creative Vistas, resulting in a change of control of Creative Vistas.

Basic and diluted net loss per share for the three-month period ended September 30, 2004 and 2003 were determined by dividing net loss for the periods by the weighted average number of basic and diluted shares of common stock outstanding. Weighted average number of shares used to compute basic and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive.

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated deficit of $3,619,384 including a net loss of $1,955,429 for the nine-month period ended September 30, 2004. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken various steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue on in the subsequent year. Management devoted considerable effort during the period ended September 30, 2004, towards management of liabilities and improving the operations. The Company has succeeded in generating cash from operations for the nine-month period ended September 30, 2004. The management believes that the above actions will allow the Company to continue its operations through the next fiscal year.

On August 6, 2004, Creative Vistas and ENTEC terminated the Agreement. The company has written off the amount deposited in connection with the transaction amounting to $285,000, and has recorded the amount as part of general and administrative expense in the accompanying financial statements.

On November 1, 2004, the Company filed an SB2 registration statement. Upon becoming effective, the SB2 will allow the sale of up to 117,437,509 shares, based on current market prices and assuming full conversion of the convertible debenture. This number represents approximately 522% of the Company's current outstanding stock and includes up to 113,378,685 shares of common stock to be issued under the Standby Equity Distribution Agreement and up to 4,000,000 shares of common stock underlying a convertible debenture. Assuming the conversion of the $340,000 principal amount debenture on October 27, 2004, and a conversion price of $0.19 per share, the number of shares issuable upon conversion of the convertible debenture would be 1,789,474. Further, in the event that the Company draw down $250,000 under the Standby Equity Distribution, which is the maximum permitted advance within a seven-day period, the Company would be required to issue 1,342,642.32 shares of common on October 27, 2004 based on a purchase price of $0.1862.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" from liability for forward-looking statements. Certain information included in this Form 10-QSB and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by or on behalf of the Company) are forward-looking statements. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions that are not statements of historical facts. This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimates," "forecast," "project" and similar expressions identify forward-looking statements.

Such forward-looking statements involve important risks and uncertainties, many of which will be beyond the control of the Company. These risks and uncertainties could significantly affect anticipated results in the future, both short-term and long-term, and accordingly, such results may differ from those expressed in forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, changes in external competitive market factors or in the Company's internal budgeting process which might impact trends in the Company's results of operations, unanticipated working capital or other cash requirements, changes in the Company's business strategy or an inability to execute its strategy due to unanticipated change in the industries in which it operates, and various competitive factors that may prevent the Company from competing successfully in the marketplace. Although we believe that these assumptions were reasonable when made, these statements are not guarantees of future performance and are subject to certain risks and uncertainties, some of which are beyond our control, and are difficult to predict. Actual results could differ materially from those expressed in forward-looking statements.

Readers are cautioned not to place undue reliance on any forward-looking statements, which reflect management's view only as of the date of this report. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequence events or circumstances. Readers are also encouraged to review the Company's publicly available filings with the Securities and Exchange Commission.

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

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

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

The merger of the Company with NetTel has been accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of NetTel obtained control of the consolidated entity. Accordingly, the merger of the two companies has been recorded as a recapitalization of the NetTel, with NetTel being treated as the continuing entity. The continuing company has retained December 31 as its fiscal year end. The historical results for the nine-month period ended September 30, 2004 include NetTel and the Company, while the historical results for the nine-month period ended September 30, 2003 include NetTel and the Company from the acquisition date of May 23, 2003.

NetTel began operations in March 2001 selling wireless communication devices and service activation with various providers. During 2002, the Company began reselling used computer equipment and providing retail internet access. In April 2003, the Company discontinued retail wireless and internet access sales. Additionally, the Company began development of telecommunications software as well as a web security and financial software packages. In July 2003, the Company began marketing telecommunication minutes to a limited test market. In October 2003, in response to requests from customers concerned about technical support and customer service, the Company suspended telecommunication sales and marketing efforts to upgrade the infrastructure. In August 2004 the Company began selling telecommunication minutes and prepaid calling cards to the wholesale market using its upgraded technology.

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

The VoipXchange.net division of the Company has partnered with over 1,600 major VoIP network termination partners worldwide to access their network infrastructure. This allows VoipXchange.net to provide high-quality, low-cost "any-distance'' call termination to over 250 countries and territories. We operate our own, or in cooperation with other providers, a network of VoIP gateways throughout the world. These gateways are located mostly in difficult-to-reach countries or regions and provide local termination of international calls. VoipXchange.net offers this service to any international carrier, which is interested in reliable and inexpensive completion of its traffic to the VoipXchange.net's On-Net destinations.

In October 2003, in response to requests from customers concerned about technical support and customer service, the Company suspended telecommunication sales and marketing efforts to upgrade the infrastructure.

In April, we successfully completed the upgrading of our customer service and technical support center. In August, VoipXchange division successfully completed and passed several crucial load and compatibility testing of its Automated Voice Order Processing System (AVOP).

In the third quarter of 2004, we began filling orders received in the third quarter of 2003 and accepting new wholesale customers.

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

Customers pay a one-time activation fee and are assigned a PIN. To use the service from within one of the company's service areas, the customer simply dials the gateway from a telephone (a local call number), enters the PIN, and then dials in the long distance number in the usual way. Customers are not required to own computer equipment of any kind, nor do they need their own Internet access to use Access Power's phone-to-phone service. The Company plans to bill customers at the end of each month by charging their credit card.

The Company is marketing prepaid calling cards to persons traveling to destinations such as Mexico, Central and South America, Asia, Europe and other regions where long distance telephone calls are substantially more expensive than domestic long distance telephone calls. The company plans to market its prepaid calling cards through travel agents, tourist agencies, airline ticketing offices, tour companies, car rental agencies and hotel personnel in denominations of $15, $25, $30 and $50. The Company plans to have an automated voice response system to enable cardholders to add time to their calling cards by charging their credit card while on the phone.

The Company's PC-to-phone service offers customers the ability to call a regular telephone utilizing software installed on their multi-media personal computer. To initiate the service, the customer registers on the company's Web site and downloads the software.

A customer outside the U.S. dials a U.S. number (which never answers) and hangs up after one or two rings. The U.S. callback computer immediately calls back the caller utilizing a U.S. line. The caller then makes his call as usual. He may dial a U.S. number or a number in any other country, using the U.S. lines and is then billed at the Company's super low Callback rates. The Company International Callback Service can save its customers up to 85% on international long distance calling and can be used from any touch-tone telephone worldwide. Once customers are connected to the Callback Network, they can make international calls at low rates. The Company believes its callback rates to be the lowest in the world.

With LCF customers can place and receive calls anywhere in the world, regardless of time, location, or communications device. With real-time access to messages, including all of their voicemails, e-mails and faxes, customers are finally in control of how and when people reach them.

The application of Web click2Talk software may differentiate The Company from many communications companies. Having Web click2Talk on their Web site offers tremendous electronic commerce benefits to any company with a traditional call center. This technology allows consumers using their multi-media PC to view a company's Web site to click the Web click2Talk icon which (once installed on the consumer's PC) instantly dials a designated representative of that company, usually someone providing sales or support services. The Company believes Web click2Talk is the most advanced product of its kind. Its size (100KB) is small and thus able to be quickly installed and easy to use. It is downloaded and installed upon the first attempt to use it.

What sets The Company apart from other companies is its depth of experience and expertise in the integration of data and voice communications. A crucial aspect of The Company's potential to take the lead in VoIP is the ability to move fluidly between voice and data technologies. Existing VoIP solutions face the daunting challenge of transmitting high-volume communications smoothly between databased networks and traditional voice-based networks. To date, none of the previously dominant telecom carriers has been able to effectively implement VoIP on a worldwide scale. They lack the ability to integrate voice and data cost-effectively at high volumes and high quality levels.

The Company major objective is to market consistent "toll quality" long distance telephone service at a flat monthly rate utilizing Internet Protocol (IP) technology.

While there have been a large number of VoIP companies formed in recent years, with more to come, primary focus has been on the build out and development of international VoIP networks attempting to capture wholesale termination traffic. The Company believes that, in this very competitive landscape that offers many voice and data transmission options, leasing time (or purchasing minutes) on VoIP networks will quickly become a commodity business as the various competitors whittle away margin to gain market share. Recognizing this trend, the company feels it is imperative to not only offer a quality, nationwide network but, additionally to be an aggressive marketing organization constantly in search of value added products and services. As part of the Company's reintroduction of service in 2004, the Company is actively researching other related products and services to add to current products.

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

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

Entec Voice XML is a next generation telecom application service provider. The Company will provide customers with value-added voice services that are unique in their user utility, ease of application and use, presentation to users and cost advantage. Talking Technologies is making IVR technology more affordable and accessible to customers through standards-based technology. Talking Technologies next-generation IVR -- using VoiceXML enables companies to easily and quickly deploy automated phone services that can improve employee productivity, reduce costs, increase customer satisfaction, and create new revenue opportunities. This IVR allows companies to extend existing or new Web applications to be accessible by any phone at the lowest total cost of ownership. Entec games division is a developer of interactive entertainment software and technology for a variety of consoles and computer platforms.

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

Our future success depends on the growth in the use of the internet as a means of communications.

* If we fail to establish marketing relationships that provide us visibility, we may not be able to sufficiently increase our sales.

* Intense competition could reduce our market share and harm our financial performance.

* We face a risk of failure of computer and communications systems used in our business. Our computer systems and operations may be vulnerable to security breaches.

Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003

The Company's net revenue for the three-month period ended September 30, 2004 was $1,132,809 compared to $543,995 for the same period ended September 30, 2003. Revenues from telecommunication minutes and prepaid calling cards for the three-month periods ended September 30, 2004 and 2003 were $849,021 and $113,948 respectively. Used equipment sales and commissions on the sale of used equipment for the periods ended September 30, 2004 and 2003 were $283,788 and $430,047, respectively.

Gross margin was 26 percent of revenue for the three-month period ended September 30, 2004 compared to 69 percent for the same period ended September 30, 2003. The gross margin for the three-month period ended September 30, 2003 includes $271,000 of commissions on equipment sales with $0 cost of sales. Excluding this commission, the gross margin for 2003 is 40%, which resulted form a stronger computer equipment and higher sale prices overseas during 2003.

Operating expenses consisting primarily of research and development expense and general and administrative expense were $156,921 for the three-month period ended September 30, 2004 compared to $969,260 for the same period ended September 30, 2003. Research and development expense was $107,167 for the three-month period ended September 30, 2004 compared to $897,307 in the same period in 2003. These costs are primarily personnel costs for engineers developing software. Much of the software is nearing technological feasibility, therefore the personnel costs for three-month period ended September 30, 2004 decreased significantly. General and administrative expense was $334,754 in the period ended September 30, 2004 as compared $71,953 for the same period ended September 30, 2003. This increase was primarily related to an increase in the allowance for doubtful accounts of $285,000 off set by a decrease in the legal and professional fees in 2004.

Nine Months Ended September 30, 2004 Compared to Nine Months Ended September 30, 2003

The Company's net revenue for the nine-month period ended September 30, 2004 was $2,342,1889 compared to $649,875 for the same period ended September 30, 2003. Revenues from telecommunication minutes and prepaid calling cards for the nine-month periods ended September 30, 2004 and 2003 were $849,021 and $113,948 respectively. Equipment sales and commissions on the sale of equipment for the periods ended September 30, 2004 and 2003 were $1,493,167 and $518,033, respectively.

Gross margin was 45 percent of revenue for the nine-month period ended September 30, 2004 compared to 65 percent for the same period ended September 30, 2003. The gross margin for the nine-month period ended September 30, 2003 includes $271,000 of commissions on equipment sales with $0 cost of sales. Excluding this commission, the gross margin for 2003 is 40%. The gross margin varies with the mix of equipment sold.

Operating expenses consisting primarily of research and development expense and general and administrative expense were $2,726,904 for the nine-month period ended September 30, 2004 compared to $1,178,996 for the same period ended September 30, 2003. Research and development expense was $1,911,775 for the nine-month period ended September 30, 2004 compared to $900,372 in the same period in 2003. These costs are primarily personnel and consulting costs for engineers developing software. During 2004, the Company increased efforts to bring many of its software products to technological feasibility, thereby increasing the research and development costs during 2004. General and administrative expense was $1,094,724 in the period ended September 30, 2004 as compared $277,742 for the same period ended September 30, 2003. This increase was primarily related to an increase in the provision for doubtful accounts of $630,000, consulting fees of $89,000 which is a non-cash charge for the cost of options granted for consulting services based on a fair value model at the grant date calculated under SFAS 123, and a non-cash charge of $245,000 for the market value of the Company's common stock issued for consulting services relating to the ENTEC Agreement (see Note 14 to the Consolidated Financial Statements), offset by a non-cash charge for the nine-month period ended September 30, 2003 of $125,000 for the market value of the Company's stock issued to former directors for consulting services.

For the nine-month period ended September 30, 2004, the Company's primary source of cash was from the issuance of common stock for services and the increase in accounts payable. During this period, $59,507 was used for operating activities compared to $68,246 generated from operations during the same period ended September 30, 2003. The negative cash flow from operations for the nine-month period ended September 30, 2004 is primarily attributable to the net loss of $1,955,000 offset by $2,094,000 of non-cash stock and options issues for consulting fees, $224,000 net increase in accounts payable, accrued liabilities and customer deposits, reduced by an increase in accounts receivable of $443,000. The positive cash flow from operations during the nine-month period ended September 30, 2003 was attributable to the net loss for the period offset by $1,027,000 of non-cash stock issues for consulting fees and a $92,000 increase in accrued liabilities reduced by an increase of $294,000 in inventory.

The Company used cash $7,275 for investing activities during the nine-month period ended September 30, 2004 compared to $62,064 for the same period ended September 30, 2003.

During the nine-month period ended September 30, 2004, the Company provided $45,000 from financing activities. $100,000 was generated from the exercise of stock options which was reduced by the use of $55,000 to repay short-term debt as compared to $0 for the same period ended September 30, 2003.

The Company has incurred an accumulated deficit as of September 30, 2004 of $3,619,384. As shown in the accompanying consolidated financial statements, the Company has incurred losses in the nine-month period ended September 30, 2004. The future of the Company is dependent on its ability to generate cash from operations. There can be no assurance that the Company will be able to implement it current operating plan.

Within the 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with the participation of the Company's management, including its' President and Treasurer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the President and Treasurer have concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Subsequent to the date of their evaluation, there were no significant changes in the Company's internal controls or in other factors that could significantly affect the disclosure controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

There are no legal proceedings pending against the Company and the Company is unaware of any such proceedings contemplated against it.

Exhibit No.

Document Description

3(i)

Articles of Incorporation and amendments (filed as an Exhibit to the Company's Registration Statement on Form 10-SB/12g and incorporated herein by reference)

3(ii)

Bylaws (filed as an Exhibit to the Company's Registration Statement on Form 10-SB/12g and incorporated herein by reference)

10 (i) 1

Share Exchange Agreement between the Company and Palm Beach Rejuvenation Centres, Inc. dated September 19, 2002, attached as exhibit 10 (i) 1 to Form 8-K filed on September 30, 2002 (incorporated herein by reference)

10 (i) 2

Option Agreement between the Company and Palm Beach Rejuvenation Centres, Inc. dated September 19, 2002, attached as exhibit 10 (i) 2 to Form 8-K filed on September 30, 2002 (incorporated herein by reference)

31.1

32.1

Certifications of Chief Executive and Financial Officer

September 28, 2004 Standby Equity Distribution Agreement with Cornell Capital Partners, L.P.

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

By: /s/ Michael Nguyen

Michael Nguyen, Chief Executive and Financial Officer

Dated: November 15, 2004

Portland, Oregon

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATIONS

1. I have reviewed this quarterly report on Form 10-QSB of Nettel Holdings, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of material fact or omit to state a material face necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c. presented in this quarterly our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent, evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Nettel Holdings, Inc. on Form 10-QSB for the quarter ending September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Nguyen, Chief Executive and Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

ASSETS

CURRENT ASSETS:
Cash & cash equivalents	$	14,939
Accounts receivable, net		936,895
Prepaid expenses		500
Total current assets		952,334

PROPERTY AND EQUIPMENT, net		43,678
Deposits		8,200
	$	1,004,212

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	274,046
Accounts payable - related party		5,000
Payroll liabilities		110,533
Accrued expenses		52,743
Deferred revenue		21,889
Note payable - related party		16,557
Notes payable		28,000
Total current liabilities		508,768

STOCKHOLDERS' EQUITY
Preferred stock, $10 par value, 1,000 shares authorized,
1,000 shares issued and outstanding		10,000
Common stock, $0.001 par value, 250,000,000 shares authorized
22,219,927 shares issued and outstanding at September 30, 2004
18,016,127 shares issued and outstanding at December 31, 2003		19,704
Common Stock, $0.001 par value; to be cancelled		293
Additional paid-in capital		4,112,831
Less: Stock subscription receivable		(28,000)
Deficit accumulated		(3,619,384)
Total stockholders' equity		495,444

	$	1,004,212

	Three-Month Periods Ended September 30,		Nine-Month Periods Ended September 30,
	2004	2003	2004	2003

Net revenues	$ 1,132,809	$ 543,995	$ 2,342,188	$ 649,875

Cost of revenues	834,970	163,926	1,283,783	226,017

Gross profit	297,839	380,069	1,058,405	423,858

Operating expenses:
Research and development	107,167	897,307	1,911,775	900,372
Sales and marketing	-	-	5,405	882
General and Administrative	334,754	71,953	1,094,724	277,742
Total operating expenses	441,921	969,260	3,011,904	1,178,996

Operating Loss	(144,082)	(589,191)	(1,953,499)	(755,138)

Other Income (Expense)
Interest expense	(423)	(1,255)	(1,930)	(3,725)

Net loss	$ (144,505)	$ (590,446)	$ (1,955,429)	$ (758,863)

Basic net loss per share	$ (0.01)	$ (0.04)	$ (0.09)	$ (0.05)

Basic weighted average shares outstanding	22,673,165	16,146,429	21,438,984	14,782,134

Dilute net loss per share	$ (0.01)	$ (0.04)	$ (0.09)	$ (0.05)

Diluted weighted average shares outstanding	22,673,165	16,146,429	21,438,984	14,782,134

	2004	2003

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (1,955,429)	$ (758,863)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization	17,846	6,057
Fair market value of stock options granted	89,200	-
Common shares issued for services	2,004,887	1,026,881
(Increase) decrease in current assets:
Accounts receivables	(443,135)	(293,627)
Inventory	-	-
Prepaid expenses	9,186	(62,385)
Deposits	(6,000)	(5,100)
Increase (decrease) in current liabilities:
Accounts payable	185,862	62,788
Accrued expense and payroll liabilities	16,187	92,495
Customer deposits and deferred revenue	21,889	-
Total Adjustments	1,895,922	827,109
Net cash (used) provided by operating activities	(59,507)	68,246

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property & equipment	(7,275)	(62,064)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued	100,000	-
Repayment of note payable	(55,000)	-
Net cash provided by financing activities	45,000	-

Net Increase (decrease) in cash & cash equivalents	(21,782)	6,182

CASH & CASH EQUIVALENTS, BEGINNING BALANCE	36,721	2,609

CASH & CASH EQUIVALENTS, ENDING BALANCE	$ 14,939	$ 8,791

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$ -	$ -
Income tax	$ -	$ -

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Common shares issued for services	$ 2,004,887	$ 1,026,881
Stock issued for acquisition of subsidiary	$ -	$ 7,065,460

	Three month period ended Sept. 30, 2004	Nine month period ended Sept. 30, 2004

Net Income - as reported	$ (144)	$ (1,955)

Stock-Based employee compensation expense included in reported net income, net of tax	-	89

Total stock-based employee compensation expense determined under fair-value0based method for all rewards, net of tax	-	(89)

Pro forma net loss	$ (144)	$ (1,955)

Earnings per share:
Basic, as reported	$ (0.01)	$ (0.09)
Diluted, as reported	$ (0.01)	$ (0.09)
Basic, pro forma	$ (0.01)	$ (0.09)
Diluted pro forma	$ (0.01)	$ (0.09)

Risk-free interest rate	5.35%
Expected life of the options	2 years
Expected volatility	90%
Expected dividend yield	-

Outstanding at December 31, 2003	0
Granted	200,000
Forfeited	0
Exercised	(200,000)
Outstanding at September 30, 2004	0

(in thousands)	Equipment Segment	Telecommunications Segment	Unallocated	Total

Revenue
2004	$ 1,493,167	$ 849,021	$ -	$ 2,342,188
2003	518,033	113,948	17,894	649,875
Gross margin
2004	968,920	89,485	-	1,058,405
2003	402,522	17,558	3,778	423,858
Depreciation and amortization
2004	-	17,796	50	17,846
2003	-	6,007	50	6,057
Profit (Loss) from continuing operations before tax
2004	617,132	(863,643)	(1,706,988)	(1,953,499)
2003	401,168	(888,822)	(267,484)	(755,138)
Interest expense
2004	1,930	-	-	1,930
2003	3,725	-	-	3,725
Identifiable assets
2004	459,705	520,817	23,690	1,004,212
2003	325,314	60,318	52,841	438,473
Capital expenditures
2004	-	7,275	-	7,275
2003	-	61,864	200	62,064

(in thousands)	Equipment Segment	Telecommunications	Unallocated	Total

Revenue
2004	$283,788	$849,021	-	$1,132,809
2003	430,047	113,948	-	543,995
Gross margin
2004	208,354	89,485	-	297,839
2003	362,511	17,558	-	380,069
Depreciation and amortization
2004	6,201	17	-	6,218
2003	4,615	17	-	4,632
Profit (Loss) from continuing operations before tax
2004	208,355	77,616	(430,053)	(144,082)
2003	362,511	(884,381)	(67,321)	(589,191)
Interest expense
2004	423	-	-	423
2003	1,255	-	-	1,255
Identifiable assets
2004	459,705	520,817	23,690	1,004,212
2003	325,314	60,318	52,841	438,473
Capital expenditures
2004	-	-	-	-
2003	-	7,815	-	7,815

2004	24,300
2005	24,900
2006	12,600