Form 10KSB for Skyway Communications Holding Corp

10KSB 1 skyway.htm Form 10KSB for Skyway Communications Holding Corp

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

Annual Report Under Section 13 or 15(d) of the

SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For Fiscal Year Ended April 30, 2003

Commission File #0-32033

SKYWAY COMMUNICATIONS HOLDING CORP.
(Exact name of registrant as specified in its charter)

Florida
(State or other jurisdiction of incorporation or organization)

65-0881662
(IRS Employer Identification Number)

6021 - 142nd Avenue North
Clearwater, FL 33760
(Address of principal executive offices ) (Zip Code)

727.535.8211
(Registrant's telephone no., including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.0001 par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the 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. ( )

Revenues for year ended April 30, 2003,: $0

Aggregate market value of the voting common stock held by non-affiliates of the
registrant as of July 7, 2003, was: $8,367,560

Number of shares of the registrant's common stock outstanding as of July 7,
2003 was: 57,200,000

Transfer Agent as of July 7, 2003: Corporate Stock Transfer
3200 Cherry Creek Drive, Suite 430
Denver, Colorado 80209

PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT. We were incorporated under the name Mastertel, Inc. in the
State of Florida on December 16, 1998 as a wholly owned subsidiary of
i-Incubator.com, Inc. (now known as Inclusion, Inc.), a public company that
formerly traded on the NASDAQ OTC Electronic Bulletin Board. On December 2,
1999, the Company filed a Certificate of Amendment changing the name of the
Company to i-Teleco.com, Inc. On April 17, 2003, the Company filed a Certificate
of Amendment changing the name of the Company to SkyWay Communications Holding
Corp.

On June 20, 2003, SWYC Acquisition Corporation, a Florida corporation and our
wholly owned subsidiary, merged, pursuant to an Amended and Restated Agreement
and Plan of Merger, dated as of June 19, 2003, with and into Sky Way Aircraft,
Inc., a Nevada corporation. The merger closed on June 27, 2003. In connection
with the merger, we moved our headquarters to 6021 - 142nd Avenue North,
Clearwater, FL 33760.

CURRENT BUSINESS OF ISSUER. We are developing a ground to air in-flight aircraft
communication network that we anticipate will facilitate homeland security and
in-flight entertainment. We are focused on bringing to the market a network
supporting aircraft-related services including anti-terrorism support, real time
in-flight surveillance and monitoring, WIFI or wireless access to the Internet,
telephone service and enhanced entertainment service for commercial and private
aircraft throughout the United States. Based on the final upgrading of a
previous airborne telephone and communications network, we intend to provide
broadband connectivity between the ground and in-flight aircraft throughout the
U.S. using technology that provides a broadband high-speed data transmission. We
intend to be the communications solution for commercial and private aircraft
owners wanting real time access to on-board security systems, aircraft health
and welfare monitoring, avionics operations and for passengers wanting real time
high-speed access to the internet. Our network will enable third party
applications that can personalize the in-flight entertainment experience,
provide real time access to flight management avionics with long-term data
storage and also support for ground monitoring of in-flight surveillance systems
that are being designed with the goal of enhancing current airline security
standards. However, we will only provide the network. Other parties will use
their applications on our network to provide these types of services.

Sky Way Aircraft was formed to utilize now-patented wireless data transmission
software technology developed by Mr. Brent Kovar, our President. This technology
is a software program for data indexing, which is similar to data compression
but which mitigates data loss problems associated with compression. This
technology permits faster and less expensive transmission of data, video, voice
and audio between the ground and an airplane or other homeland security related
ground locations than using traditional, non-indexed data transmission
mechanisms. This is because indexed data takes up less transmission space, and
thus travels faster and costs less to transmit than non-indexed data
transmission. The technology is licensed to us under an irrevocable, perpetual
exclusive worldwide license agreement.

EMPLOYEES

As of April 30, 2003, we employed a total of one person, on a part time basis.
As of July 31, 2003, we had 4 employees, of which 2 are management, 1 of which
is sales and 1 of which is administrative.

Our employees are not represented by a labor union. We believe that our
relations with our employees is good.

ITEM 2. DESCRIPTION OF PROPERTY

At April 30, 2003, we shared office space in a building located at 1680 Michigan
Avenue, Miami Beach, Florida. The facility is leased pursuant to a month to
month lease. The primary tenant is Atlas Equity Group, Inc. Michael D. Farkas,
our principal shareholder is the President and sole shareholder of Atlas Equity
Group, Inc. The ultimate landlord is not affiliated with us. No rent was charged
to us. We believe that this space is sufficient for us at April 30, 2003.

ITEM 3. LEGAL PROCEEDINGS

We are not presently parties to any litigation, nor to the our knowledge and
belief is any litigation threatened or contemplated that will have a material
effect on our company.

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

None as of April 30, 2003

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

On July 7, 2003, there were 43 shareholders of record of our common stock.
Our common stock currently available for trading on the NASDAQ OTC
Electronic Bulletin Board under the symbol "SWYC."

High and Low Sales Prices for each quarter within the last two fiscal years.*

------------- ------------- -------------
Period Low High
------------- ------------- -------------
Q1 2002 $.01 $.07
------------- ------------- -------------
Q2 2002 $.03 $.06
------------- ------------- -------------
Q3 2002 $.02 $.04
------------- ------------- -------------
Q4 2002 Less than $.01 $.02
------------- ------------- -------------
Q1 2003 $.01 $.01
------------- ------------- -------------
Q2 2003 $.01 $.28
------------- ------------- -------------

* The quotations reflect inter-dealer prices, without mark-up, mark-down or
commission and may not represent actual transactions.

DIVIDENDS

Any payment of cash dividends in the future will be dependent upon: the amount
of funds legally available therefore; our earnings; financial condition; capital
requirements; and other factors which the Board of Directors deems relevant.

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

The following plan of operation provides information which management believes
is relevant to an assessment and understanding of our results of operations and
financial condition. The discussion should be read along with our financial
statements and notes thereto. SkyWay Communications Holding Corp., is a
development - stage company. Because the Company has not generated any revenue,
it intends to report its plan of operation below.

The following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results, expectations and plans discussed in these
forward-looking statements.

The Company's operations have been devoted primarily to developing a business
plan and raising capital for future operations and administrative functions. The
Company intends to grow through internal development, strategic alliances, and
acquisitions of existing businesses. Because of uncertainties surrounding its
development, the Company anticipates incurring development stage losses in the
foreseeable future. The ability of the Company to achieve its business
objectives is contingent upon its success in raising additional capital until
adequate revenues are realized from operations.

PERIOD FROM DECEMBER 16, 1998 (DATE OF INCEPTION) THROUGH APRIL 30, 2003.

Our cumulative net losses since the inception are attributable to the fact that
we have not derived any revenue from operations to offset out business
development expenses.

Net loss since inception have amounted to ($391,044), primarily consisting of
accounting ($56,751), legal ($31,246), salary ($179,739), corporate fees
($27,415) and website development fees ($18,538).

YEAR ENDED DECEMBER 31, 2002

Development stage loss during the year ended December 31, 2002 was ($43,919).

Expenses for the year ended December 31, 2002 were primarily accounting
($19,688), legal ($4,250), and corporate fees ($7,654). These fees are related
to the Company's regulatory filings.

THE FISCAL PERIOD ENDED APRIL 30, 2003

Development stage loss during the four months ended April 30, 2003 was ($33,579).

Expenses for the four months ended April 30, 2003 were primarily accounting
($7,940), consulting ($11,199), legal ($6,495), and corporate fees ($4,319).
These fees are related primarily to the Company's regulatory filings and
general business consulting services.

Liquidity and Capital Resources

Despite capital contributions and both related party and third party loan
commitments, the company from time to time experienced, and continues to
experience, cash flow shortages that have slowed the Company's growth and
development.

The Company has primarily financed its activities from sales of capital stock of
the Company and from loans from related and third parties. A significant portion
of the funds raised from the sale of capital stock has been used to cover
working capital needs such as salaries and professional fees.

For the four months ended April 31, 2003, we had a net loss of $33,579. Our
accumulated deficit since inception is $391,044. Such accumulated losses have
resulted primarily from costs incurred in the development of web site, salary
and various professional fees.

During 2000 and 2001, the Company incurred liabilities for payroll taxes. As of
March 31, 2003, approximately $69,000, including interest and penalties, remains
unpaid. Included in this amount is a notice of federal tax lien filed against
the Company by the Internal Revenue Service ("IRS") totaling approximately
$46,000. The Company is currently attempting to negotiate a settlement with the
IRS.
Pursuant to the provisions of a proposed acquisition of ECI Communications, Inc.
("ECI") which was later aborted, the Company received a loan from ECI for
$25,000. The loan as amended was due January 20, 2002 and bears interest at the
rate of one and a half percent (1.5%) per month.

At December 31, 2001, the Company had notes to three related parties outstanding
aggregating $96,100. The notes incurred interest at rates ranging from 10% to
11%. In March 2002, the notes to two of the related parties aggregating $92,500
were converted into 20,384,028 shares of the Company's common stock.

During 2002, the Company obtained notes from a stockholder totaling $6,000. The
note incurs interest at the rate of 10% per annum and was due August 13, 2002.

On April 17, 2003, the Company issued 4,079,148 shares common stock to Michael
D. Farkas at $0.005 per share for the conversion of promissory notes in the
amounts of $20,396 including accrued interest of $406. In addition, Atlas Equity
Group, Inc. converted $711 of expenses it was owed into 142,170 shares of common
stock. In addition Michael D. Farkas or any of his affiliated parties shall
have, for a period of three months, the right to invest an amount not to exceed
$100,000 at $0.005 per share. In May 8, 2003, the purchase price of the
additional shares was amended from $0.005 per share to 50% of the average
closing price of the Company's common stock as reported on the OTC:BB or other
exchange during the 20 days preceding the investment.

The Company continues to experience cash flow shortages, and anticipates this
continuing through the foreseeable future. Management believes that additional
funding will be necessary in order for it to continue as a going concern. The
Company is investigating several forms of private debt and/or equity financing,
although there can be no assurances that the Company will be successful in
procuring such financing or that it will be available on terms acceptable to the
Company.

ITEM 7. FINANCIAL STATEMENTS

The financial statements of the Company, together with the report of auditors,
are included in this report after the signature pages.

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

Our accountants are Seligson & Giannattasio, LLP, 901 North Broadway, Suite 24,
North White Plains, NY 10603. We intend to retain the firm of Pritchett, Siler &
Hardy, P.C., independent auditors for future accounting services.

At no time has there been any disagreements with such accountants regarding any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. On September 27, 2002, we hired Domenick Davi, CPA
to replace Salibello & Broder as our independent auditors. Subsequently on March
15, 2003 we replaced Domenick Davi with Seligson & Giannattasio. At no time has
there been any disagreements with either Domenick Davi or Salibello & Broder
regarding any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.

PART III

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

The directors and officers of the Company and its subsidiaries, as of April 30,
2003, are set forth below. The directors hold office for their respective term
and until their successors are duly elected and qualified. Vacancies in the
existing Board are filled by a majority vote of the remaining directors. The
officers serve at the will of the Board of Directors.

WITH COMPANY
NAME AGE SINCE DIRECTOR/POSITION
______________ ______________ ______________ ______________
Jamee Kalimi 33 1999 President, Vice President,
Secretary and Director

Jamee M. Kalimi has been our Vice President, Secretary and Director since
inception and President since July 7, 2001. She resigned as an officer effective
upon closing of the merger, June 27, 2003, and director effective on or about
July 15, 2003. Ms. Kalimi was previously President and Director of
i-Incubator.com, Inc.(now known as Inclusion, Inc.) a publicly traded company
previously listed on the OTC Electronic Bulletin Board. (OTC:BB INQU). Ms.
Kalimi is also President of i-CarAuction.com, Inc., and Schoolwurks, Inc., which
were both subsidiaries of i-Incubator.com, Inc. She has an active real estate
license in the State of Florida which she obtained in 1995. She has been an
assistant to the President of Atlas Equity Group, Inc. from February 1998 to
date. She worked as a Real Estate Sales and Leasing Manager for Sclar Realty
from April 1996 to February 1998 and President of AvJam Communications, Inc.
from January 1994 to April 1996.

All officers and directors listed above will remain in office until the next
annual meeting of our stockholders, and until their successors have been duly
elected and qualified. There are no agreements with respect to the election of
Directors. We have not compensated our Directors for service on our Board of
Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors
and each Executive Officer serves at the discretion of our Board of Directors.
We do not have any standing committees. Our Board of Directors may in the future
determine to pay Directors' fees and reimburse Directors for expenses related to
their activities.

None of our Officers and/or Directors have filed any bankruptcy petition, been
convicted of or been the subject of any criminal proceedings or the subject of
any order, judgment or decree involving the violation of any state or federal
securities laws within the past five (5) years.

CERTAIN LEGAL PROCEEDINGS

Our sole director, nominee for director, or executive officer has not
appeared as a party in any legal proceeding material to an evaluation of his
ability or integrity during the past five years.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth compensation paid to Ms. Kalimi, our former
President. No other executive officer received compensation in excess of $60,000
during that period.

------------------ ------------------ ------------------ ------------------
Name Position Year Compensation
------------------ ------------------ ------------------ ------------------
Joshua Lurie CEO 2001 $65,384
------------------ ------------------ ------------------ ------------------
Jamie Kalimi CEO 2001 0
------------------ ------------------ ------------------ ------------------
2002 0
------------------ ------------------ ------------------ ------------------
2003 $85,000
------------------ ------------------ ------------------ ------------------

Pursuant to a Bonus Stock Issuance Agreement May 30, 2003, Ms. Kalimi, our prior
president, received 500,000 shares of common stock for services valued at
$85,000 or $.17 per share.

No other annual compensation, including a bonus or other form of compensation;
and no long-term compensation, including restricted stock awards, securities
underlying options, LTIP payouts, or other form of compensation, were paid to
this individual during these periods.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors and executive officers, and persons who beneficially own more than 10%
of a registered class of our equity securities, to file reports of beneficial
ownership and changes in beneficial ownership of our securities with the SEC on
Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of
Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial
Ownership of Securities). Directors, executive officers and beneficial owners
of more than 10% of our Common Stock are required by SEC regulations to furnish
us with copies of all Section 16(a) forms that they file. Except as otherwise
set forth herein, based solely on review of the copies of such forms furnished
to us, or written representations that no reports were required, we believe that
for the fiscal year ended April 30, 2003 beneficial owners complied with Section
16(a) filing requirements applicable to them except for late filings by Ms.
Kalimi and Mr. Farkas.

Employment Agreements.

At the closing of the merger, we entered into employment agreements
with Mr. Kent, our new CEO, and Mr. Kovar, our new president, as follows:

o Employment Term: 3 years

o Compensation: Base Salary of $150,000 per annum, increased by a
minimum ten (10%) percent on the first anniversary of the
appointment date and on each anniversary date thereafter during the
employment term. In addition, a grant of stock options to purchase
210,000 shares of common stock of that vest as follows: 70,000 on
the 1st anniversary of the appointment date; 70,000 on the 2nd
anniversary of the appointment date; and 70,000 on the 3rd
anniversary of the appointment date. The option exercise price shall
be the closing market price for the common stock on the appointment
date, and the exercise period will be three years from the vesting
date.

o Termination: The agreement may be terminated upon death, disability,
cause and without cause as set forth in the agreement.

o Confidentiality and Assignment of Inventions: The agreement contains
confidentiality provisions and also requires an assignment of all
inventions without further compensation than already stated in
the agreements.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of July 7, 2003, information with respect to
the beneficial ownership of the Company's Common Stock by (i) each person known
by the Company to own beneficially 5% or more of such stock, (ii) each Director
of the Company who owns any Common Stock, and (iii) all Directors and Officers
as a group, together with their percentage of beneficial holdings of the
outstanding shares.

Security Ownership of Beneficial Owners (1):

TITLE OF CLASS NAME & ADDRESS AMOUNT PERCENT
_______________ _______________ _______________ _______________

Common Stock Michael D. Farkas (2) 23,111,556 40.4%
294 South Coconut Lane
Miami, Florida 33131

Ostonian Securities 6,182,526 10.8%
60 St. James Street
London, SW1A 1LE
United Kingdom

Security Ownership of Management:

TITLE OF CLASS NAME & ADDRESS AMOUNT PERCENT
_______________ _______________ _______________ _______________

Common Stock Jamee Kalimi 184,049 *
3310 Oak Drive
Hollywood, Florida 33021

All directors and executive 184,049 *
officers as a group (1 person)

(1) The persons named in this table have sole voting and investment power with
respect to all shares of common stock reflected as beneficially owned by
each.

(2) Includes 2,577,300 shares held by Farkas Group, Inc., 18,130,416 shares
held by Atlas Equity Group, Inc., and 2,153,217 shares held by GSM
Communications, Inc. Michael D. Farkas is the sole shareholder and
principal of each of these entities. In addition, includes the 58,575
shares which he personally owns and the 192,048 shares held by his wife
Rebecca Brock.

* Less than 1% of the outstanding shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During 2002, the Company obtained notes from a stockholder totaling $6,000. The
note incurs interest at the rate of 10% per annum and was due August 13, 2002.
These notes were converted to common stock on April 17, 2003 (See Note 9).

On March 14, 2002, the Company issued 14,201,502 shares of common stock to Atlas
Equity Group at $0.005 per share for the conversion of promissory notes in the
amount of $64,750 and accrued interest of $6,258.

On March 14, 2002, the Company issued 6,182,526 shares of common stock to
Ostonian Securities Ltd. at $0.005 per share for the conversion of past due
promissory notes in the amount of $27,750 and accrued interest of $3,163.

On April 17, 2003, the Company issued 4,079,148 shares of common stock to
Michael Farkas in exchange for the $20,395.74 in loans advances and accrued
interest outstanding at the time. On the same date, the Company issued 142,170
shares of common stock to Atlas Equity Group in exchange for $711 in promissory
notes.

In May 2001, the Company issued 1,000,000 shares of its common stock in
consideration for management services rendered. The Company has valued these
services at $100, the approximate market value of the shares on the date of
issuance.

On May 30, 2003, the Company entered into an agreement with its then president.
Pursuant to the agreement, the Company agreed to issue 500,000 shares of the
Company's common stock as a bonus. The shares will be valued at $.17 per share,
the value of the shares on the date of the agreement.

On June 2, 2003, the Company entered into an Investment Banking/Advisory
Agreement with Atlas Capital Services for non-exclusive financing services and
merger and acquisition services. Upon closing of an acquisition Atlas was to be
paid 2,330,493 shares of the Company's common stock for services rendered in
connection with the acquisition. Upon completion of a financing, Atlas is to be
paid a fee totaling 10% of the financing secured.

Until the closing of the merger, we shared office space in a building located at
1680 Michigan Avenue, Miami Beach, Florida. The facility was leased pursuant to
a month to month lease. The primary tenant is Atlas Equity Group, Inc. Michael
D. Farkas, our principal shareholder is the President and sole shareholder of
Atlas Equity Group, Inc. The ultimate landlord is not affiliated with us. No
rent is being charged to us.

In connection with the merger, we entered into additional transactions with our
management and our beneficial owners. We are not a subsidiary of any parent
company. After the merger, we have one wholly-owned subsidiary, Sky Way
Aircraft, Inc.

Our management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. We have not and do not
intend in the future to formulate a policy for the resolution of such conflicts.

PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial statements; see index to financial statement and schedules
under Item 7 herein.

2. Financial statement schedules; see index to financial statements and
schedules under Item 7 herein.

3. Exhibits:

The following exhibits are filed with this Form 10-KSB and are identified by the
numbers indicated: see index to exhibits immediately following financial
statements and schedules of this report.

3(i) Certificate of Incorporation, as amended (1)

3.2 Bylaws, as amended (1)

(1) Incorporated by reference to the Registrant's Form 10-SB, filed on November
30, 2000(SEC File No. (000-32033 ).

(b) Reports on Form 8-K

We filed reports on Form 8K or 8K/A on the following dates:

2003-06-24
2003-06-19
2003-06-16
2003-06-03
2003-04-01

ITEM 14. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our principal executive officer and principal financial officer evaluated our
disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934, as amended) as of a date within 90
days before the filing of this annual report (the Evaluation Date). Based on
that evaluation, our principal executive officer and principal financial officer
concluded that, as of the Evaluation Date, the disclosure controls and
procedures in place were adequate to ensure that information required to be
disclosed by us, including our consolidated subsidiaries, in reports that we
file or submit under the Exchange Act, is recorded, processed, summarized and
reported on a timely basis in accordance with applicable rules and regulations.
Although our principal executive officer and principal financial officer
believes our existing disclosure controls and procedures are adequate to enable
us to comply with our disclosure obligations, we intend to formalize and
document the procedures already in place and establish a disclosure committee.

Changes in internal controls

We have not made any significant changes to our internal controls subsequent to
the Evaluation Date. We have not identified any significant deficiencies or
material weaknesses or other factors that could significantly affect these
controls, and therefore, no corrective action was taken.

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, there unto duly authorized.

SKYWAY COMMUNICATIONS HOLDING CORP.

---------------------------- -------------------------- -------------------------- --------------------------
Title Name Date Signature
---------------------------- -------------------------- -------------------------- --------------------------
Principal Executive Officer Brent C. Kovar 8-14-2003 /s/Brent C. Kovar
---------------------------- -------------------------- -------------------------- --------------------------
Principal Accounting James Kent 8-14-2003 /s/James Kent
Officer
---------------------------- -------------------------- -------------------------- --------------------------
Principal Financial Officer James Kent 8-14-2003 /s/James Kent
---------------------------- -------------------------- -------------------------- --------------------------

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.

---------------------------- -------------------------- -------------------------- --------------------------
SIGNATURE NAME TITLE DATE
---------------------------- -------------------------- -------------------------- --------------------------
/s/Brent C. Kovar Brent C. Kovar Director 8-14-2003
---------------------------- -------------------------- -------------------------- --------------------------
/s/Joy Kovar Joy Kovar Director 8-14-2003
---------------------------- -------------------------- -------------------------- --------------------------
/s/James Kent James Kent Director 8-14-2003
---------------------------- -------------------------- -------------------------- --------------------------

CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

I, Jamee Kalimi, certify that:

1. I have reviewed this annual report on Form 10-KSB of SkyWay Communications
Holding Corp.

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

3. Based on my knowledge, the financial statements, and other financial
information included in this yearly 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
yearly report;

4. I am 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 a registrant is made known to me
by others within those entities, particularly during the period in
which this yearly 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 yearly report (the "Evaluation Date"); and

(c) presented in this yearly report my conclusions about effectiveness of
the disclosure controls and procedures based on my evaluation as of
the Evaluation Date;

5. I have disclosed, based on my 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 weakness in
internal controls; and

(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. I have indicated in this yearly report whether there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Dated: As of April 30, 2003
/s/ Jamee Kalimi
--------------------------
Jamee Kalimi
Principal Executive Officer,
Principal Financial Officer

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS
AS OF AND FOR THE FOUR MONTHS ENDED
APRIL 30, 2003 AND FOR THE YEAR ENDED DECEMBER 31, 2002
AND FOR THE PERIOD DECEMBER 16, 1998 (DATE OF INCEPTION)
THROUGH APRIL 30, 2003

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

Page(s)

Independent auditors' report 1

Balance sheets 2

Statements of operations 3

Statements of changes in stockholders' deficit 4 - 5

Statements of cash flows 6 - 7

Notes to financial statements 8 - 16

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Skyway Communications Holding Corp.

We have audited the accompanying balance sheets of Skyway Communications Holding
Corp. (a development stage Company) as of April 30, 2003 and December 31, 2002
and the related statements of operations, stockholders' deficit and cash flows
for the periods 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits 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 Skyway Communications Holding
Corp. as of April 30, 2003 and December 31, 2002 and the results of their
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.

Seligson & Giannattasio, LLP
N.White Plains, New York
August 7, 2003

F-1

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS
APRIL 30, DECEMBER 31,
2003 2002
-------------------- --------------------
ASSETS

CURRENT ASSETS:
Cash $ 0 $ 27
-------------------- --------------------

Total current assets 0 27
-------------------- --------------------

TOTAL ASSETS $ 0 $ 27
==================== ====================

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 56,903 $ 46,853
Accrued payroll tax liabilities 68,950 67,250
Loan payable - ECI Communications 25,000 25,000
Notes payable-related parties 3,600 9,600
Loans and advances payable-related party 0 4,304
-------------------- -------------------

Total current liabilities 154,453 153,007
-------------------- -------------------

STOCKHOLDERS' DEFICIT:
Preferred stock, par value $.0001 per share;
10,000,000 shares authorized; none issued
and outstanding at

April 30, 2003 and December 31, 2002, respectively 0 0
Common stock, par value $.0001 per share; 2,500,000,000
shares authorized; 46,819,466 and 40,398,148 shares
issued and outstanding at April 30, 2003 and

December 31, 2002, respectively 4,682 4,040
Additional paid-in capital 231,909 200,445
Deficit accumulated during the development stage (391,044) (357,465)
-------------------- -------------------

Total stockholders' deficit (154,453) (152,980)
-------------------- -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 0 $ 27
==================== ===================

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

F-2

KYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOUR MONTHS FOR THE PERIOD
ENDED YEAR ENDED DECEMBER 16, 1998
APRIL 30, DECEMBER 31, (DATE OF INCEPTION) TO
2003 2002 April 30, 2003
------------------- ------------------- -------------------

DEVELOPMENT STAGE REVENUES $ 0 $ 0 $ 0
------------------- ------------------- -------------------

DEVELOPMENT STAGE EXPENSES:
Accounting 7,940 19,688 56,751
Bank charges 60 190 954
Consulting fees 11,199 116 13,352
Equpiment rental 0 0 1,599
On-line services 100 300 825
Dues and subscriptions 0 0 175
Insurance expense 0 0 7,782
Legal fees 6,495 4,250 31,246
Corporate fees 4,319 7,654 27,415
Office general 0 0 871
Wages 0 0 179,739
Seminars and conferences 0 0 2,115
Payroll taxes 0 0 12,153
Telephone 0 0 4,790
Travel 0 0 8,954
Website development 0 0 18,538
Printing 0 0 315
------------------- ------------------- -------------------

TOTAL DEVELOPMENT STAGE EXPENSES 30,113 32,198 367,574
------------------- ------------------- -------------------

LOSS FROM OPERATIONS (30,113) (32,198) (367,574)
------------------- ------------------- -------------------

OTHER EXPENSE:
Interest expense (3,466) (11,721) (23,470)
------------------- ------------------- -------------------
(3,466) (11,721) (23,470)
------------------- ------------------- -------------------

NET LOSS $ (33,579) $ (43,919) $ (391,044)
=================== ==================== ====================

LOSS PER COMMON SHARE
Basic & diluted $ (0.00) $ (0.00)
=================== ====================
Weighted-average number of common
shares outstanding 41,405,457 32,176,965
=================== ====================

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

F-3

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------------- ---------------- ---------------- ---------------- ----------------

Balance, December 16, 1998 (inception) 0 $ 0 $ 0 $ 0 $ 0

Common stock issued to related party for
management services 19,000,000 1,900 (1,800) 0 100

Loss for the period December 16, 1998 (Date
of Inception) through December 31, 1998 0 0 0 (100) (100)
---------------- ---------------- ---------------- ---------------- ----------------

Balance, December 31, 1998 19,000,000 1,900 (1,800) (100) 0

Loss for the year ended December 31, 1999 0 0 0 (7,549) (7,549)
---------------- ---------------- ---------------- ---------------- ----------------

Balance, December 31, 1999 19,000,000 1,900 (1,800) (7,649) (7,549)

Loss for the year ended December 31, 2000 0 0 0 (228,960) (228,960)
---------------- ---------------- ---------------- ---------------- ----------------
Balance, December 31, 2000 19,000,000 1,900 (1,800) (236,609) (236,509)

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

F-4

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (continued)

DEFICIT
ACCUMULATED
ADDITIONAL DURING THE
COMMON STOCK PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
---------------- ---------------- ---------------- ---------------- ----------------

Balance, December 31, 2000 19,000,000 1,900 (1,800) (236,609) (236,509)

Cancellation of debt - related party 0 0 102,364 0 102,364
Increase in common stock issued resulting from
agreement and plan of distribution ("spin-off") 14,120 1 (1) 0 0

Common stock issued for management services 1,000,000 100 0 0 100

Loss for the year ended December 31, 2001 0 0 0 (76,938) (76,938)
---------------- ---------------- ---------------- ---------------- ----------------
Balance, December 31, 2001 20,014,120 2,001 100,563 (313,547) (210,983)

Common stock issued for the conversion of
promissory notes 20,384,028 2,039 99,882 0 101,921

Loss for the year ended December 31, 2002 0 0 0 (43,918) (43,918)
---------------- ---------------- ---------------- ---------------- ----------------
Balance, December 31, 2002 40,398,148 $ 4,040 $ 200,445 $ (357,465)$ (152,980)

Common stock issued for the conversion of
promissory notes and advances 4,221,318 422 20,684 0 21,106

Common stock issued for consulting services 2,200,000 220 10,780 0 11,000

Loss for the four months ended April 30, 2003 0 0 0 (33,579) (33,579)
---------------- ---------------- ---------------- ---------------- ----------------
Balance, April 30, 2003 46,819,466 $ 4,682 $ 231,909 $ (391,044)$ (154,453)
================ ================ =============== ================ ================

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

F-5

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOUR MONTHS FOR THE PERIOD
ENDED YEAR ENDED DECEMBER 16, 1998
APRIL 30, DECEMBER 31, (DATE OF INCEPTION)
2003 2002 TO APRIL 30, 2003
----------------- ----------------- -----------------

Loss accumulated during the development stage $ (33,579) $ (43,919) $ (391,044)

Adjustments to reconcile net loss to net cash used in
operations:
Stock issued for management services 0 0 200
Stock issued for consulting services 11,000 0 11,000
Stock issued for payment of interest 1,639 0 1,639

Changes in assets and liabilities:
Decrease in prepaid expenses 0 0 0
Increase in accounts payable and accrued
expenses 12,178 34,642 135,702
----------------- ----------------- -----------------

Net cash used in operating activities (8,762) (9,277) (242,503)
----------------- ----------------- -----------------

Net advances from related party 8,234 4,304 12,538
Proceeds from loan payable 0 0 25,000
Notes payable - related party 501 5,000 204,965
----------------- ----------------- -----------------

Net cash provided by financing activities 8,735 9,304 242,503
----------------- ----------------- -----------------

(27) 27 0

27 0 0
----------------- ----------------- -----------------

$ 0 $ 27 $ 0
================= ================= =================

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

F-6

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOUR MONTHS FOR THE PERIOD
ENDED YEAR ENDED DECEMBER 16, 1998
APRIL 30, DECEMBER 31, (DATE OF INCEPTION)
2003 2002 TO APRIL 30, 2003
----------------- ----------------- -----------------

SUPPLEMENTAL OF CASH FLOW INFORMATION:

Interest paid $ 0 $ 0 $ 0
Income taxes paid 0 0 0

NON-CASH INVESTING AND FINANCING ACTIVITIES

Conversion of debt into common stock $ 21,107 $ 92,500 $ 113,607
Conversion of debt into contributed capital 0 0 102,364
Conversion of accrued interest into common stock 429 9,421 9,850

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

F-7

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

i-TeleCo.com, Inc. ("the Company"), formerly Mastertel Communications
Corp., was incorporated on December 16, 1998 under the laws of the State of
Florida. The Company's operations have been devoted primarily to
structuring and positioning itself to provide telecommunication services in
various markets throughout the United States. The Company intends to grow
through internal development, strategic alliances and acquisitions of
existing business. The Company is a development stage company and has had
limited activity. In 2003, the Company changed its name to SkyWay
Communications Holding Corp.

In May 2003, the Company merged with Skyway Aircraft Inc. (see Note 12)
whose primary business developing a unique ground to air in-flight aircraft
communication network.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, the company considers all highly
liquid investments purchased with an original maturity of three months or
less to be cash equivalents.

CARRYING VALUES

The Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment. Whenever events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable, the Company will reduce the carrying value of the assets and
charge operations in the period the impairment occurs.

INCOME TAXES

The Company utilizes Statement of Financial Standards ("SFAS") No. 109,
"Accounting for Income Taxes", which requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of
events that have been included in financial statements or tax returns.
Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates applicable to the periods
in which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized. The accompanying financial statements
have provided a valuation allowance to offset net deferred tax assets.

F-8

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

NET LOSS PER SHARE

The Company has adopted SFAS No. 128 "Earnings Per Share". Basic loss per
share is computed by dividing the loss available to common shareholders by
the weighted-average number of common shares outstanding. Diluted loss per
share is computed in a manner similar to the basic loss per share, except
that the weighted-average number of shares outstanding is increased to
include all common shares, including those with the potential to be issued
by virtue of warrants, options, convertible debt and other such convertible
instruments. Diluted earnings per share contemplates a complete conversion
to common shares of all convertible instruments only if they are dilutive
in nature with regards to earnings per share. Since the Company has
incurred net losses for all periods, and since there are no convertible
instruments, basic loss per share and diluted loss per share are the same.

FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107 "Disclosures about Fair Value of Financial Instruments"
requires the disclosure of the fair value of financial instruments. The
Company's management, using available market information and other
valuation methods, has determined the estimated fair value amounts.
However, considerable judgment is required to interpret market data in
developing estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company could
realize in a current market exchange.

STOCK COMPENSATION

Stock-based compensation is recognized using the intrinsic value method
prescribed in Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.
Accordingly, compensation expense for stock options is measured as the
excess, if any, of the fair value of the Company's stock at the date of the
grant over the amount an employee must pay to acquire the stock and is
amortized over the vesting period. The Company has adopted the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, which
requires the Company to disclose the pro forma effects on earnings and
earnings per share as if SFAS No. 123 had been adopted.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On July 30, 2002, the FASB issued Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"), that is applicable to exit or disposal activities
initiated after December 31, 2002. This standard requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal
plan. This standard does not apply where SFAS 144 is applicable. The
Company does not currently have any activities subject to this
pronouncement.

F-9

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)

On December 31, 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation-Transition
and Disclosure" ("SFAS 148"), that is applicable to financial statements
issued for fiscal years ending after December 15, 2002. In addition,
interim disclosure provisions are applicable for financial statements
issued for interim periods ending after December 15, 2002. This standard
amends SFAS 123 and provides guidance to companies electing to voluntarily
change to the fair value method of accounting for stock-based compensation.
In addition, this standard amends SFAS 123 to require more prominent and
more frequent disclosures in financial statements regarding the effects of
stock-based compensation.

3. DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN MATTERS

The Company's initial activities have been devoted to developing a business
plan, structuring and positioning itself to take advantage of opportunities
available in the internet industry and raising capital for future
operations and administrative functions.

The ability of the Company to achieve its business objectives is contingent
upon its success in raising additional capital until adequate revenues are
realized from operations.

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, development stage losses from December 16, 1998 (date of
inception) to April 30, 2003 aggregated ($391,044). The Company's cash flow
requirements during this period have been met by contributions of capital
and debt financing. No assurance can be given that these sources of
financing will continue to be available. If the Company is unable to
generate profits, or unable to obtain additional funds for its working
capital needs, it may have to cease operations.

The financial statements do not include any adjustments relating to the
recoverability and classification of assets or liabilities that might be
necessary should the Company be unable to continue as a going concern.

F-10

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

4. INCOME TAXES

No provision for income taxes has been made because the Company has
sustained cumulative losses since the commencement of operations. As of
April 30, 2003 and December 31, 2002, the Company had net operating loss
carryforwards ("NOL's") of approximately $219,000 and $186,000,
respectively, which will be available to reduce future taxable income
through April 30, 2023.

In accordance with SFAS No. 109 the Company has computed the components of
deferred income taxes as follows.

APRIL 30, DECEMBER 31,
2003 2002
---------------------- ----------------------

Net operating losses $ 82,584 $ 69,948
Startup costs 59,943 59,943
---------------------- ----------------------
Deferred tax assets 142,527 129,891
Valuation allowance (142,527) (129,891)
---------------------- ----------------------

Deferred tax asset, net $ 0 $ 0
====================== ======================

At April 30, 2003 and December 31, 2002, a valuation allowance has been
provided, as the realization of the deferred tax benefit is not likely.

The effective tax rate varies from the U.S. Federal statutory tax rate for
both the periods ended April 30, 2003 and December 31, 2002, principally
due to the following:

U.S. statutory tax rate 34.0 %
State and local taxes 5.5
Valuation allowance (39.5)
------------

Effective rate 0.0 %
============

F-11

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of April 30, 2003 and December 31,
2002 consisted of the following:

APRIL 30, DECEMBER 31,
2003 2002
---------------------- --------------------

Accounts payable $ 37,700 $ 35,719
Accrued expenses 11,943 5,250
Accrued interest 7,260 5,884
---------------------- --------------------

Total accounts payable and
accrued expenses $ 56,903 $ 46,853
====================== ===================

6. ACCRUED PAYROLL TAX LIABILITIES

During 2000 and 2001, the Company incurred liabilities for payroll taxes.
As of April 30, 2003, approximately $69,000, including interest and
penalties, remains unpaid. Included in this amount is a notice of federal
tax lien filed against the Company by the Internal Revenue Service ("IRS")
totaling approximately $46,000. The Company is currently attempting to
negotiate a settlement with the IRS.

7. LOAN PAYABLE - ECI COMMUNICATIONS

Pursuant to the provisions of a proposed acquisition of ECI Communications,
Inc. ("ECI") which was later aborted, the Company received a loan from ECI
for $25,000. The loan as amended was due January 20, 2002 and bears
interest at the rate of one and a half percent (1.5%) per month.

8. NOTES PAYABLE - RELATED PARTIES

At December 31, 2001, the Company had notes to three related parties
outstanding aggregating $96,100. The notes incurred interest at rates
ranging from 10% to 11%. In March 2002, the notes to two of the related
parties aggregating $92,500 were converted into 20,384,028 shares of the
Company's common stock.

During 2002, the Company obtained notes from a stockholder totaling $6,000.
The note incurs interest at the rate of 10% per annum and was due August
13, 2002. These notes were converted to common stock on April 17, 2003
(See Note 9).

F-12

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

9. STOCKHOLDERS' EQUITY

On June 27, 2002, the Board of Directors approved an amendment to its
Articles of Incorporation to increase the authorized shares of common stock
of the Company from 50,000,000 shares to 2,500,000,000 shares, par value
$.0001 per share and authorized 10,000,000 preferred shares, par value
$.0001 per share.

On June 2, 2003, the Company designated 1,180,000 shares of its preferred
stock as Series A Convertible Preferred Stock. Each share of Series A
Preferred Stock has a stated value of $15,000,000 and is convertible, at
the option of the Series A Preferred holder, into one hundred (100) shares
of our common stock. We have the right to redeem the Series A Preferred
Stock within the first (1st) year of closing the transaction for the Stated
Value plus 5%. Also, each share of Series A preferred stock shall have that
number of votes on all matters that is equal to the number of shares of
Series A Preferred Stock are then convertible and shall have a liquidation
preference equal to the Stated Value plus one (1%) percent per annum
thereon from the date of issuance.

On June 2, 2003, the Company designated 1,000,000 shares of its preferred
stock as Series B. Each share of Series B preferred Stock has a stated
value of $15,000,000 and is automatically convertible into two hundred
(200) shares of our common stock, if and only if, from the issuance date to
the third (3rd) year anniversary of the issuance date (the "(Conversion
Period"), (a) the Corporation shall complete a Qualified Public Offering in
the aggregate amount of $25,000,000, (b) during any period of thirty (30)
consecutive trading days, the average closing price per share of the Common
Stock, as reported on a national securities exchange, the NASDAQ NMS or
Small Cap Market, or the OTC Bulletin Board, equals or exceeds $4.00
(subject to appropriate adjustment to reflect stock splits, stock
dividends, reorganizations and other capitalization changes, and all other
events contemplated in), or (c) the Corporation Launches its Product and
Services (as defined in the Certificate of Designation for the Series B
Preferred Stock). If the above requirements are not met during the
Conversion Period, then the Series B Preferred Stock shall be canceled and
returned to treasury. The Series B Preferred Stock has similar voting and
redemption rights as the Series A preferred Stock. At this time, the
holders of the Series B Preferred Stock would not be able to convert their
shares into our common stock and there is no assurance that they will meet
the requirements at a later date.

Spinoff

On January 19, 2001, the Company entered into an agreement and plan of
distribution ("spin-off") with its then parent company i-Incubator.com,
Inc. ("Incubator"). Shareholders of Incubator received .7810 shares of the
Company's common stock for each share of Incubator. The spin-off resulted
in the issuance of 14,120 additional shares due to rounding. In addition,
prior to distribution, the total debt owed to Incubator of $102,364 was
cancelled and recorded as additional paid-in capital.

F-13

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

9. STOCKHOLDERS' EQUITY (Continued)

Conversion of Notes Payable

On March 14, 2002, the Company issued 14,201,502 shares of common stock to
Atlas Equity Group at $0.005 per share for the conversion of promissory
notes in the amount of $64,750 and accrued interest of $6,258 (Note 8).

On April 17, 2003, the Company issued 4,079,148 shares of common stock to
Michael Farkas in exchange for the $20,395.74 in loans advances and accrued
interest outstanding at the time. On the same date, the Company issued
142,170 shares of common stock to Atlas Equity Group in exchange for $711
in promissory notes.

Additional Share Issuances

In 1998, the Company issued 19,000,000 shares of its common stock to
i-Incubator.Com, Inc. in consideration of management services in
connection with the formation of the Company.The shares were valued at
$100, the approximate market value of the stock on the date of issuance and
the par value of the shares on such date.

In May 2001, the Company issued 1,000,000 shares of its common stock in
consideration for management services rendered. The Company has valued
these services at $100, the approximate market value of the shares on the
date of issuance.

10. PURCHASE OF DOMAIN NAME

On September 1, 2000, the Company entered into an agreement with Michael
D. Farkas, the director of Incubator and a related party, to purchase a
domain name, i-Teleco.com, for $50,000. On August 24, 2001, the Company and
Michael D. Farkas entered into an agreement to cancel this transaction.
Accordingly, the $50,000 due to Michael D. Farkas under the original
agreement was cancelled by Mr. Farkas in consideration for the return of
the Company's domain names.

11. SERVICE AGREEMENTS

On April 1, 2003, the Company entered into service agreements with four
individuals. Pursuant to the agreements, the Company issued 2,200,000
shares of common stock in exchange for consulting services rendered and to
be rendered. The Company had reported the cost of these services as
consulting expenses valued at $.005 per share, the value of the Company's
common stock on the date of the agreement.

F-14

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

12. SUBSEQUENT EVENTS

Bonus Stock Issuance Agreement

On May 30, 2003, the Company entered into an agreement with its then
president. Pursuant to the agreement, the Company agreed to issue 500,000
shares of the Company's common stock as a bonus. The shares will be valued
at $.17 per share, the value of the shares on the date of the agreement.

Legal Consulting Fees

On June 20, 2003, the Company issued 2,000,000 shares of the Company common
stock to its special counsel in exchange for legal services to be rendered
through December 31, 2003.

Investment Banking Agreement

On June 2, 2003, the Company entered into an Investment Banking/Advisory
Agreement with Atlas Capital Services for non-exclusive financing services
and merger and acquisition services. Upon closing of an acquisition Atlas
was to be paid 2,330,493 shares of the Company's common stock for services
rendered in connection with the acquisition. Upon completion of a
financing, Atlas is to be paid a fee totaling 10% of the financing secured.

Employment Agreements

On June 20, 2003, the Company entered into two employment agreements with
two of its current officers. Pursuant to the agreements, the Company
agrees to pay its CEO and its President each $150,000. In addition, both
are entitled to be granted an option to purchase 210,000 shares of common
stock at an exercise price at the closing market price on the date of his
appointment.

Merger With Skyway Aircraft

In May 2003, the Company merged with Skyway Aircraft, Inc. ("SWAI").
Pursuant to the merger agreement, the outstanding common shares of SWAI
were converted into 1,000,000 shares of Series A Preferred Stock and the
outstanding preferred shares of SWAI were converted into 1,000,000 shares
of Series B Preferred Shares.

Proposed Merger With Star Navigational Systems

On July 7, 2003, the Company entered into a letter of intent with Star
Navigational Systems Group Ltd, a Canadian company.

F-15

SKYWAY COMMUNICATIONS HOLDING CORP.
(FORMALLY I-TELECO.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

12. SUBSEQUENT EVENTS (Continued)

Consulting Agreements

On July 1, 2003, the Company entered into a six months consulting agreement
with Michael Farkas. In consideration for consulting services to be
rendered, the Company issued 1,200,000 shares of the Company's common stock
and five year warrants to purchase 2,000,000 shares of common stock at an
exercise price of $.15 and four five year warrants to purchase 1,000,000
shares of common stock each with exercise prices of $.30, $.55, $1.00 and
$1.10 per share.

On July 1, 2003, the Company entered into a six month consulting agreement
with a third party. In consideration for consulting services to be
rendered, the Company issued 1,000,000 shares of common stock and warrants
to purchase an aggregate of 4,000,000 common shares at exercise prices
determined by the price of the Company's common stock.