American Nortel Communications Inc - Quarterly Report (10-Q)

U.S. Securities and Exchange Commission

Washington, D.C. 20549

____________________

FORM 10-Q

____________________

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2002.

o Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act

For the transition period from N/A to N/A

____________________

Commission File Number: 1-13134

____________________

American Nortel Communications, Inc.

(Name of small business issuer as specified in its charter)

Nevada	87-0507851
State of Incorporation	Employer Identification No.

7975 North Hayden Road, Suite D-333

Scottsdale, AZ 85258

(Address of principal executive offices)

(480) 945-1266

(Issuer’s telephone number)

Securities registered under Section 12(b) of the Exchange Act:

None

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

Common Stock, $0.001 par value per share

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required 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 ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non–accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b–2 of the Exchange Act. (Check one):

Large accelerated filer ¨

Accelerated filer ¨

Non–Accelerated filer ¨

Small Business Issuer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes ¨ No x

Transitional Small Business Disclosure Format (check one): Yes  No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at July 3, 2008
Common stock, No par value		17,531,780

AMERI CAN NORTEL COMMUNICATIONS, INC.

INDEX TO FORM 10-Q FILING

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2002

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PART I

	FINANCIAL INFORMATION	PAGE


		Page No
PART I - FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements (unaudited)
	Condensed Balance Sheets	3
	Condensed Statements of Income	4
	Condensed Statement of Cash Flows	5
	Notes to Condensed Financial Statements	6

Item 2.	Management Discussion & Analysis of Financial Condition and Results of Operations	9

Item 3	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 1A	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 5	Other information	19

Item 6.	Exhibits	19

CERTIFICATIONS

Exhibit 31 – Management certification

Exhibit 32 – Sarbanes-Oxley Act

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A MERIC AN NORTEL COMMUNICATIONS, INC.
CONDENSED BALANCES SHEETS

ASSETS:
	March 31, 2002			June 30, 2001
	(unaudited)
CURRENT ASSETS
Cash	$	362,219		$	219,816
Accounts receivables - net		666,704			2,153,652
Investment in marketable securities					3,221,470
Deferred income taxes					295,229
Total current assets		1,028,923			5,890,167

PROPERTY AND EQUIPMENT, net		12,792			23,592

Note receivable affiliates		29,192			32,982
Investment in unconsolidated subsidiary		568,600			165,282
Other assets					6,667
TOTAL ASSETS	$	1,639,507		$	6,118,690

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	542,240		$	280,644
Accrued liabilities		-			259,167
Disputed claims		-			339,101
Notes payable affiliate					50,000
Factoring arrangement					237,806
Income taxes payable					396,431
Total current liabilities		542,240			1,563,149

TOTAL LIABILITIES		542,240			1,563,149

COMMITMENT AND CONTINGENCIES		-			-

STOCKHOLDERS' EQUITY
Common stock, no par value, 50,000,000 shares authorized, 15,920,785 and 15,510,643 issued and outstanding as of March 31, 2002 and June 30, 2001, respectively		22,134,402			21,980,202
Unrealized gain on investments held for sale					15,201
Paid-in capital		51,795			51,795
Treasury stock		(759,773	)		(759,773	)
Accumulated deficit		(20,329,157	)		(16,731,884	)
Total stockholders' equity		1,097,267			4,555,541

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,639,507		$	6,118,690

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

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A MERIC AN NORTEL COMMUNICATIONS, INC.
CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2002 AND 2001
	Three Months Ended						Nine Months Ended
	2002			2001			2002			2001
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
REVENUES
Airtime Income		891,704		$	1,859,173		$	2,930,553		$	6,967,147
		891,704			1,859,173			2,930,553			6,967,147
COST OF SERVICES		393,661			1,314,758			1,714,626			5,648,327
GROSS PROFIT		498,043			544,415			1,215,927			1,318,820

OPERATING EXPENSES
General and administrative expenses		491,646			363,313			1,154,523			1,006,367
Sales and marketing expenses		17,060			11,294			60,727			159,716
Depreciation and amortization		3,600			-			10,800			-
Total operating expenses		512,306			374,607			1,226,050			1,166,083
OPERATING LOSS		(14,263	)		169,808			(10,123	)		152,737

OTHER (INCOME) AND EXPENSES
Interest expense		-			8,141			1,183			15,534
Interest income		(818	)		(15,907	)		(4,266	)		(50,636	)
Impairment of assets		-						3,712,846			-
Legal settlement					-			33,000			-
Other income		(6,165	)		-			(155,614	)		-
Total other (income) expense		(6,983	)		(7,766	)		3,587,149			(35,102	)
NET INCOME BEFORE INCOME TAXES		(21,246	)		177,574			3,577,026			187,839

Provision for income taxes					(51,810	)					(75,186	)

NET LOSS		(7,280	)	$	125,764		$	(3,597,273	)	$	112,653

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted:		15,920,785			15,273,785			15,920,785			15,273,785

NET LOSS PER SHARE:
Basic and diluted:		(0	)	$	0.01		$	(0.23	)	$	0.01

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

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AMERI CAN NORTEL COMMUNICATIONS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2002 AND 2001
	2002			2001
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(3,597,273	)	$	112,653
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		10,800			10,800
Issuance of stock as consideration for services		154,200			-
Impairment of assets		3,712,846			-
Changes in operating assets and liabilities:
Trade accounts receivables		987,038			2,898,331
Prepaid and other current assets		-			(19,690	)
Deferred tax asset		295,229			(2,869	)
Accounts payable		261,596			(1,387,169	)
Accrued expenses and other liabilities		(549,830	)		(26,297	)
Income tax payable		(396,431	)		78,053
Accrued interest		(48,438	)		14,359
Net cash provided in operating activities		829,737			1,678,171

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities		-			(1,524,222	)
Notes receivables		-			(35,000	)
Purchase of equipment		-			(1,499	)
Investment in subsidiary		(403,318	)		(235,000	)
Net cash used in investing activities		(403,318	)		(1,795,721	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments toward note receivable		3,790
Repayments of notes payable		(287,806	)		(728,230	)
Net cash used in financing activities		(284,016	)		(728,230	)

INCREASE (DECREASE) IN CASH		142,403			(845,780	)
CASH, BEGINNING OF YEAR		219,816			1,405,002
CASH, END OF YEAR	$	362,219		$	559,222

SUPPLEMENTAL CASH FLOW INFORMATION:


Interest paid	$	8,141		$	15,534
Taxes paid	$	140,450		$	-

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

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PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

AMERICAN NORTEL COMMUNICATIONS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS THREE AND NINE MONTHS ENDED MARCH 31, 2002 and 2001

BASIS OF PRESENTATION

The Company has existed in various forms since 1979 and has evolved from a mining exploration and development business to a telecommunications business. The Company has been known as American Nortel Communications, Inc. (“ANC”) since 1992 and is a Nevada corporation. ANC currently operates only in the telecommunications business, providing long distance telephone service as a reseller in combination with additional related services in the United States and a number of foreign countries.

Prior to September 14, 1994, ANC conducted almost all of its telecommunications business through NorTel Communications, Inc. (“NorTel-US”), a wholly-owned subsidiary in Salt Lake City, Utah. All subsidiaries, including NorTel-US, were not active and were sold for nominal consideration or were dissolved.

On September 14, 1994, ANC and NorTel-US filed petitions under Chapter 11 of the U.S. Bankruptcy Code, under case numbers 948-24604 and 948-24605 respectively in the U.S. Bankruptcy Court, District of Utah, and Central Division. ANC’s bankruptcy proceeding was subsequently converted to a Chapter 7 proceeding and was thereafter dismissed on February 7, 1996. NorTel-US was sold June 27, 1996 for nominal consideration to an affiliate of former directors, leaving ANC as the sole surviving entity.

The Company was dormant when ANC’s current President, Chief Executive Office, and Board Chairman, William P. Williams, Jr. achieved control of the Company on June 27, 1995. On that day, the former officers and directors resigned and assigned their rights under certain agreements to Mr. Williams.

GOING CONCERN

The accompanying condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. However, the Company has year end losses from operations and had minimal revenues from operations the nine months ended March 31, 2002. During nine months ended March 31, 2002 the Company incurred a net loss of $3,597,273 and has an accumulated deficit of $20,329,157. Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders.

These factors raise substantial doubt about the ability of the Company to continue as a going concern. The condensed financial statements do not include any adjustments that might result from the outcome of these uncertainties. In this regard, Management is proposing to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.

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INTERIM FINANCIAL STATEMENTS

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-months period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending June 30, 2002. For further information, refer to the financial statements and footnotes thereto included in our Form 10-KSB Report for the fiscal year ended June 30, 2001.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions.

Critical Accounting Policies

Stock Based Compensation

In December 2004, the FASB issued a revision of SFAS No. 123 ("SFAS No. 123(R)") that requires compensation costs related to share-based payment transactions to be recognized in the statement of operations. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. SFAS No. 123(R) replaces SFAS No. 123 and is effective as of the beginning of January 1, 2006. Based on the number of shares and awards outstanding as of December 31, 2005 (and without giving effect to any awards which may be granted in 2006), we do not expect our adoption of SFAS No. 123(R) in January 2006 to have a material impact on the financial statements.

FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be applied in the first reporting period beginning after the date the FSP is posted to the FASB website. The Company has adopted SP FAS 123(R)-5 but it did not have a material impact on its consolidated results of operations and financial condition.

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Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain 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. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management’s initial estimates as reported. A summary of significant accounting policies are detailed in notes to the financial statements which are an integral component of this filing.

Revenue Recognition

The Company has adopted the Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) No. 104, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements.

EQUITY

During nine months ended March 31, 2002:

The Company has issued shares of its common stock as consideration to consultants for the fair value of the services rendered. The value of those shares is determined based on the trading value of the stock at the dates on which the agreements were entered into for the services and the value of services rendered. During the nine months ended March 31, 2002, the Company granted to consultants, 647,000 shares of common stock valued between $.75 - $.25. The values of these common shares issued were expensed during the year in the amount of $154,200.

RELATED PARTY TRANSACTIONS

The Company’s president and chairman is a 70% shareholder and its sole officer and director of the Company. The chairman controls MedCom USA, Incorporated (“MedCom”) which the company owns is a 31% shareholder in MedCom. The chairman also controls Card Activation Technologies, Inc. (“Card”) in which MedCom owns 30% of Card. During the year ended June 30, 1995, the Company moved its administrative offices into space occupied by this related entity. The Company shares office space and management and administrative personnel with this related entity. Certain of the Company’s personnel perform functions for the related entity but there was no allocation of personnel related expenses to the related entity in the nine months ended March 31, 2002 and 2001.

The Company frequently receives advances, and advances funds to an entity controlled by the Company’s president and which is a significant shareholder of the Company to cover short-term cash flow deficiencies.

SUBSEQUENT EVENTS

The Company issued 4,856,648 shares of common stock for repayment of debt on November 17, 2005. This common stock was issued for services performed for the benefit of MedCom, specifically to pay expenses for MedCom. The Company also issued 4,856,648 of common stock in accordance with the compensation package of Mr. Williams on August 24, 2007. MedCom owes ANC approximately $250,000 as of December 31, 2007.

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RECENT PRONOUNCEMENTS

Disclosure about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, “ Disclosure about Derivative Instruments and Hedging Activities ,” an amendment of FASB Statement No. 133, (SFAS 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS No. 161 on the Company’s consolidated financial statements.

Determination of the Useful Life of Intangible Assets

In April 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets,”, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under FASB 142 “Goodwill and Other Intangible Assets”. The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of the expected cash flows used to measure the fair value of the asset under FASB 141 (revised 2007) “Business Combinations” and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS 142-3 on its consolidated financial statements.

The Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115”. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. This Statement applies to all entities, including not-for-profit organizations. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2008. The Company is currently evaluating the impact of SFAS 159 on its consolidated financial statements.

ITE M 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this quarterly report on Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance on key customers and competition in its markets, market demand, product performance, technological developments, maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC in terms of recognition of software licenses and recurring revenue. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.

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Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-KSB for the year ended June 30, 2007, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

Overview

American Nortel, Inc. ("ANC" or the "Company"), was formed as a Wyoming corporation in 1979. In 2008, we redomiciled to the State of Nevada. We are a reseller of 1-Plus and 1-800 long-distance telecommunications services. ANC resells to customers’ long distance telephone time that it purchases or leases from other long distance carriers.

ANC resells long distance telephone services to both small business and residential customers. As a reseller it purchases or leases long distance time from other carriers and resells that time to others. ANC is charged for the time it beyond certain minimum requirements and in turn charges its customers a certain amount per minute. To a large extent, ANC’s profits are dependent upon the spread between its cost per minute and the amount it charges its customers. Telemarketing is a recurring expense and is its sales and marketing expense. ANC out-sources its marketing efforts to telemarketers and it pays those telemarketers a certain amount for each new customer obtained. The Company does not direct-bill its customers, but rather utilizes the Local Exchange Carriers (LEC) which provides local area telephone service to the Company long-distance customers, for billing and collections. LECs receive a fee based upon a certain percentage of amounts collected. Management believes that the practice of billing through LECs has substantial advantages since it increases the likelihood and promptness of collections.

ANC’s method of operations has certain advantages and disadvantages. It substantially reduces its out-of-pocket expenses of such things as capital, equipment costs, rent and salaries. But it also makes ANC more dependent upon the performance of others whom it does not control, and upon its ability to contract for such services at a reasonable price. With regard to its cost of obtaining long distance time, there is presently a surplus of lines and capacity held by carriers who sell long distance usage time to ANC on a bulk basis, and ANC believes that such surplus will continue in the foreseeable future.

Competition

The long distance telephone industry is intensely competitive. There are many large and small competitors in the industry, many of which share the same target market as ANC. Many of the Company’s competitors have much larger resources, and are more established and have a larger customer base than ANC. There are also a large number of resellers, many of who operate in a manner similar to ANC. Competition among resellers and other providers of long-distance services generally is conducted on the basis of price. Prices have been decreasing over the last several years, sometimes dramatically, for a variety of communication services. Customers have become more sophisticated and price conscious. They are likely to switch services when new competitor communication packages become available, and switching from one service provider to another typically has few, if any, cost implications for a customer. ANC constantly obtains new customers to replace its customer account attrition. Other sources of competition may be developing because of new offerings by telecommunication providers, such as cable television industry, Internet telephony, and voice and data communication.

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Regulatory Background

The Company is subject to regulation by the U.S. Federal Communications Commission (the "FCC").

The existing domestic long distance telecommunications industry was principally shaped by a 1984 court decree (the “Decree”) that required the divestiture by AT& T of its 22 bell operating companies (“BOCs”), organized the BOCs under seven regional Bell operating companies (“RBOCs”) and divided the country into some 200 Local Access Transport Areas or “LATAs.” The incumbent local exchange carriers (“ILECS”), which include the seven RBOCS as well as Independent local exchange carriers, were given the right to provide local telephone service, local access service to long distance carriers and intra-LATA long distance service (long distance service within LATAS), but the RBOCs were prohibited from providing inter-LATA service (service between LATAs). The right to provide inter-LATA service was given to AT&T and the other interexchange carriers (“IXC”). Conversely, IXCs were prohibited from providing local telephone service.

A typical inter-LATA long distance telephone call begins with the local exchange carrier (“LEC”) transmitting the call by means of its local network to a point of connection with an IXC. The IXC, through its switching and transmission network, transmits the call to the LEC serving the area where the recipient of the call is located, and the receiving LEC then completes the call over its local facilities. For each long distance call, the originating LEC charges an access fee. The IXC also charges a fee for its transmission of the call, a portion of which consists of a terminating fee which is passed on to the LEC which delivers the calls. To encourage the development of competition in the long distance market, the Decree required LECs to provide all IXCs with access to local exchange services “equal in type, quality and price” to that provided to AT&T. These so-called “equal access” and related provisions were intended to prevent preferential treatment of AT&T and to level the access charges that the LECs could charge IXCs, regardless of their volume of traffic. As a result of the Decree, customers of all long distance companies were eventually allowed to initiate their calls by utilizing simple 1 plus dialing, rather than having to dial longer access or identification numbers and codes.

The Telecommunications Act (enacted on February 8, 1996) has significantly altered the telecommunications industry. The Decree has been lifted and all restrictions and obligations associated with the Decree have been eliminated by the new legislation. The seven RBOCs are now permitted to provide long distance service originating (or in the case of “800” service, terminating) outside the local services areas or offered in conjunction with other ancillary services, including wireless services. Following application to the FCC, and upon a finding by the FCC that the RBOC faces facilities-based competition and has satisfied a congressionally-mandated “competitive checklist” of interconnection and access obligations, an RBOC will be permitted to provide long distance service within its local service area, although in so doing it will be subject to a variety of structural and nonstructural safeguards intended to minimize abuse of its market power in these local service areas. Having opened the interexchange market to RBOC entry, the Telecommunications Act also removes all legal barriers to competitive entry by interexchange and other carriers into the local telecommunications market and directs RBOCs to allow competing telecommunications service providers, such as the Company, to interconnect their facilities with the local exchange network, to acquire network components on an unbundled basis and to resell local telecommunications services. Moreover, the Telecommunications Act prevents IXCs that serve greater than five percent of pre-subscribed access lines in the U.S., (which includes the nation’s three largest long distance providers) from jointly marketing their local and long distance services until the RBOCs have been permitted to enter the long distance market or for three years, whichever is sooner. This provision of the Act is intended to give all other long distance providers a competitive advantage over the larger long distance providers in the newly opened local telecommunications market. As a result of the Telecommunications Act, long distance carriers will allow significant new competition in the long distance telecommunications market, but will also be afforded significant new business opportunities in the local telecommunications market.

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Legislative, judicial and, technology factors have helped to create the foundation for smaller long distance providers, such as the Company, to emerge as alternative long distance service. The FCC has required all IXCs to allow the resale of their services, and the Decree substantially eliminated different access arrangements as distinguishing features among long distance carriers. In recent years, national and regional network providers have substantially upgraded the quality and capacity of their domestic long distance networks, resulting in significant excess transmission capacity for voice and data communications. The Company believes that, as a result of digital fiber optic technology and installation of fiber optic transmission networks, excess capacity has been, and will continue to be, an important factor in long distance telecommunications. The Company believes that resellers and the smaller long distance service providers represent a source of traffic such to carriers with excess capacity. Thus, resellers have become an integral part of the long distance telecommunications industry.

Industry Evolution

Resellers represent a paradox in the telecommunications marketplace. They are simultaneously an important source of revenues to the major long distance providers and yet resellers represent a risk to the product quality, reputation and pricing. Not only do long distance service resellers receive legal protection to compete with the network based major carriers, but also the resellers’ sale of network based carriers, excess capacity represents a source of additional traffic for such carriers. The Company believes that the three major carriers and most regional carriers have a substantial excess telecommunication transmission capacity and that the constant technological and facility upgrading will continue, with resultant excess capacity in there carriers’ network for the foreseeable future.

Resellers primarily exist due to their ability to offer substantially discounted long distance toll rates, and increasingly, discounted calling card rates and other discounted services, to their prime target markets, which are small and medium sized businesses. The main target market for most resellers is not as profitable as other markets for wholesale or major carriers to serve and the major carriers have focused on the larger businesses, generally those who are currently paying less than $25,000 a month in long distance charges.

Traditionally, many resellers originated as customer base groups or aggregators of customers, and their operations generally are marked by relatively low overhead and low capital investment in property, plant & equipment. Resellers often offer services that larger carriers are not prepared to offer, such as customized location billing, non-telecom billing services, international call-back, customized calling cards, multiple carrier service at single locations with single invoices, and split dedicated service. Although there is an existence of some regulatory barriers, the costs of overcoming these are low. With low entry barriers, a significant portion of the telecommunications market is still open to significant competition on a price and service basis. To date, resellers have been able to quickly build sizable customer bases on marketing and telemarketing strengths. In many cases rapid growth has strained some reseller’s ability to manage their growing revenues and their general business enterprise. Therefore, their ability to attract capital to finance receivables, improve facilities and equipment, and develop management and systems infrastructure, will be the difference between resellers that survive as independent companies and those that will merge or be acquired.

The Company believes that the major carriers and some of the regional carriers will continue to derive a portion of their revenues from their wholesalers and resale market sales, since resellers can currently serve their target market at a price that the major or regional carrier cannot or will not provide. The Company believes that opportunities for future growth of its business exists in high gross profit product/service area segments, including prepaid calling cards, international services, cellular and wireless services, video and data transmission, web-sight and internet-access, 800 number service, voice mail and electronic mail. As a result, the Company expects that the number of call minutes billed by resellers will continue to rise at an annual rate that, measured on a percentage basis, is substantially greater than the number of call minutes billed by the major carriers. Within the resale market as a whole, switchless resellers, such as the Company, appear to have experienced in recent periods a higher percentage growth than have facilities-based carriers in all the segments previously mentioned. However, more switchless resellers will become facilities-based as they acquire small companies and as their traffic increase in geographic zones, which will increase their ability to purchase or lease a switch. More traffic flowing in a given area would enhance a reseller’s ability to make a switch economically viable and more profitable for that geographic zone.

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Service and Products

The Company offers a basic 1 plus and 800 long distance services. ANC is successful as a provider of these basic services because of the volume discounts it has been able to negotiate with its underlying carriers.

The Company charges its customers on the basis of minutes or partial minutes of usage at rates which vary with the distance, duration, time of day of the call, and type of call. Rate charges for a call are not affected by the particular transmission facilities selected for the call transmission, but are affected by the type of call a user may select. All billing is done through the local exchange carrier (“LEC”). The Company offers a flat-rate long distance calling service throughout the United States; these providers’ rates usually are the same per minute rate regardless of the call’s origin or destination. Billing occurs in six-second increments.

On December 9, 1996 ANC entered into a Billing Services Agreement (One Plus (1+)) with Integretel Incorporated (“IGT”) whereby IGT would provide ANC telephone company billing and collection and associated services to the telecommunications industry. The agreement term is for two years, automatically renewable in two-year increments unless appropriate notice to terminate is given by either party. The agreement automatically renewed on December 9, 1998, as neither party had given notice of terminations prior to that renewal date. Under the agreement, IGT bills, collects and remits the proceeds to ANC net of reserves for bad debts, billing adjustments, telephone company fees and IGT fees. If either the Company’s transaction volume decreases by 25% from the preceding month, less than 75% of the traffic is billable to major telephone companies, IGT may at its own discretion increase the reserves and holdbacks under this agreement. IGT is the only provider of this service to the Company.

On December 19, 1996 ANC entered into a Master Agreement for Purchase and Sale of Accounts with IGT whereby IGT purchases accounts from ANC for a purchase price consisting of an advance component and a deferred component. The advance component, which is calculated by multiplying the estimated purchase price by the advance component percentage, is payable within ten days of receipt of the transaction batch pertaining to the purchased accounts. The deferred component is the differential of the amount actually collected by IGT and the advance component and is payable when the amount is determined. Except for the right of IGT to refuse to accept or reject acceptance of accounts and except for the right of IGT to charge back amounts to ANC under certain circumstances, the sale of accounts is without recourse and IGT assumes the full credit risk. Certain charge backs and fees are recourse obligations of ANC. IGT maintains both Non-recourse and Recourse accounts comprising the combined account for ANC. The maximum purchase obligation of IGT to ANC was set at $700,000 when the agreement was entered into in December 1996. This amount was subsequently increased to $3,000,000 as of March 31, 1998.

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Marketing Strategy

The Company is no longer in the long distance business and is seeking new acquisitions. The revenues collected are residuals from the long distance business.

Delinquent Filing of SEC Reports and Inadequacies of Disclosures

ANC failed to timely file with Securities and Exchange Commission (“SEC”) its periodic reports, including its annual reports on Form 10K for fiscal 2002, 2003, 2004, 2005, 2006, 2007, and its Form 10-Q reports for those years. The Company intends to shortly complete the filing of all the required periodic reports.

Revenues

A dditional Information

ANC files reports and other materials with the Securities and Exchange Commission. These documents may be inspected and copied at the Commission’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. You can also get copies of documents that the Company files with the Commission through the Commission’s Internet site at www.sec.gov .

Results of Operations

Revenues for the three months ended March 31, 2002 decreased to $891,704 from $1,859,173 for the three months ended March 31, 2001. Revenues for the nine months ended March 31, 2002 decreased to $2,930,553 from $6,967,147 for the nine months ended March 31, 2001. This decrease in revenue is directly the result of changes in the Company's strategic direction in core operations. The Company purchased new accounts in the past but has reduced the purchase of new accounts and reduced it customer base.

Cost of services for three months ended March 31, 2002 decreased to $393,661 from $1,314,758 for three months ended March 31, 2001. Cost of services for nine months ended March 31, 2002 decreased to $1,714,626 from $5,648,327 for the nine months ended March 31, 2001. The reduction in the cost of services is directly related to the reduction in airtime services. The company has reduced it telecommunication business to refocus the direction of the company.

Selling expenses for three months ended March 31, 2002 increased to $17,060 from $11,294 for three months ended March 31, 2001. Selling expenses for nine months ended March 31, 2002 decreased to $60,727 from $159,716 for the nine months ended March 31, 2001. The decrease in selling expenses was a result of the decrease in marketing costs expended by the company. The Company was able to negotiate a lower cost per customer throughout their telemarketing out-source.

General and administrative expenses for the three months ended March 31, 2002 increased to $491,646 from $363,313 for three months ended March 31, 2001. General and administrative expenses for nine months ended March 31, 2002 increased to $1,154,523 from $1,006,367 the nine months ended March 31, 2001. This increase is attributed to the Company's increase in cost of long distance traffic. The Company reduced its workforce operations as the Company has streamlined overall employee use. That is the Company has implemented and advanced its in-house software to perform many of the services the prior employees were performing manually.

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The (loss) income for three months ended March 31, 2002 increased to ($7,280) from $125,764 for the three months ended March 31, 2001. The (loss) income for the nine months ended March 31, 2002 increased to ($3,597,273) from $112,653 for the nine months ended March 31, 2001. The decrease is due to the reduction in revenue, sales force, and reduction in operations.

No tax benefit was recorded on the expected operating loss for March 31, 2002 and 2001 as required by Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. For the quarter ended we do not expect to realize a deferred tax asset and it is uncertain, therefore we have provided a 100% valuation of the tax benefit and assets until we are certain to experience net profits in the future to fully realize the tax benefit and tax assets.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s operating requirements have been funded primarily on its sale of long distance services. During the nine months ended March 31, 2002, the Company’s net proceeds from long distance of were $2,930,553 as compared to March 31, 2001 of $6,967,147. The Company believes that the cash flows from its monthly service and transaction fees are inadequate to repay the capital obligations.

Cash provided from operating activities for the nine months ended March 31, 2002 was $829,737 compared to $1,678,171 for March 31, 2001. The Company’s focus on core operations results in a decrease in the sale of long distance services. The Company receives payments from customers automatically through electronic fund transfers. Collection cycles of the long distance services agreements are generally paid monthly. The Company has grown its operations in the past but has decided to refocus the operations on a new direction. The Company impaired its assets in marketable securities as they were worthless in value of $3,712.846. The Company issued its common stock for services of $154,200.

Cash used in investing activities was ($403,318) for nine months ended March 31, 2002, compared to ($1,795,721) for March 31, 2001. Streamlining operations and capital budget curtailment practices promoted a reduction in purchase of marketable securities for the Company. The Company no longer invests small cap marketable securities. The Company invested in its unconsolidated subsidiary of ($403,318) for nine months ended March 31, 2002 as compared to ($235,000) for March 31, 2001.

Cash used in financing activities was ($284,016) for the nine months ended March 31, 2002 as compared to ($728,230) for March 31, 2001. Financing activities primarily consisted of proceeds from the increase in the long distance services through Integretel, Inc. The Company does not have adequate cash flows to satisfy its obligations although have improved cash flow and anticipates have adequate cash flows in the upcoming fiscal periods. The Company repaid its loans for nine months ended March 31, 2002 of ($287,806) as compared to March 31, 2001 of ($728,230).

Other Considerations

There are numerous factors that affect our business and the results of its operations. Sources of these factors include general economic and business conditions, federal and state regulation of business activities, the level of demand for the Company’s product or services, the level and intensity of competition in the medical transaction processing industry and the pricing pressures that may result, the Company’s ability to develop new services based on new or evolving technology and the market’s acceptance of those new services, the Company’s ability to timely and effectively manage periodic product transitions, the services, customer and geographic sales mix of any particular period, and the ability to continue to improve infrastructure including personnel and systems, to keep pace with the growth in its overall business activities.

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ITE M 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not hold any derivative instruments or other market risk sensitive instruments and do not engage in any hedging activities. As a result, we have no exposure to potential loss in future earnings, fair values or cash flows as a result of holding any market risk sensitive instruments. The Company is in the business of long distance services.

ITE M 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Based upon an evaluation of the effectiveness of the Company’s disclosure controls and procedures performed by the Company’s management, with participation of the Company’s Chief Executive Officer, Chief Operating Officer, and its Chief Accounting Officer as of the end of the period covered by this report, the Company’s Chief Executive Officer, Chief Operating Officer, and its Chief Accounting Officer concluded that the Company’s disclosure controls and procedures have been effective in ensuring that material information relating to the Company, including its consolidated subsidiary, is made known to the certifying officers by others within the Company and the Bank during the period covered by this report.

As used herein, “disclosure controls and procedures” mean controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States . Under the supervision and with the participation of the Chief Executive Officer, the Chief Operating Officer and the Chief Accounting Officer, we conducted an evaluation of the effectiveness of our control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our evaluation under the framework, management has concluded that our internal control over financial reporting was effective as of March 31, 2002 and June 30, 2008.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

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Our management, with the participation of the Chief Executive Officer, the Chief Operating Officer and the Chief Accounting Officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation under the framework, our management concluded that our internal control over financial reporting was effective as of March 31, 2002 and June 30, 2008.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter ended March 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

I TE M 1. LEGAL PROCEEDINGS

We were involved in various legal proceedings and claims as described in our Form 10-KSB for the year ended June 30, 2001. No material developments occurred in any of these proceedings during the quarter ended March 31, 2002. The costs and results associated with these legal proceedings could be significant and could affect the results of future operations.

ITE M 1A - Risk Factors

I. Risk Factors That May Affect Our Results of Operations and Financial Condition

You should carefully consider the following risk factors before making an investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected. In such cases, the trading price of our common stock could decline and you may lose all or a part of your investment.

Our Common Stock Is Subject To Penny Stock Regulation

Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on the NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant's net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be "penny stock", trading in the shares will be subject to additional sales practice requirements on broker/dealers who sell penny stock to persons other than established customers and accredited investors.

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The Liquidity Of Our Common Stock Is Seriously Limited And There Is A Limited Market For Our Common Stock

Our stock is currently being traded on the NASDAQ Over-The-Counter Bulletin Board, and the liquidity of our common stock is limited. The Bulletin Board is a limited market and subject to substantial restrictions and limitations in comparison to the NASDAQ system. Any broker/dealer that makes a market in our stock or other person that buys or sells our stock could have a significant influence over its price at any given time.

We May Not Have Access to Sufficient Capital to Pursue our litigation and therefore Would Be Unable to Achieve Our Planned Future Growth:

We intend to pursue a growth strategy that includes development of the Company business and technology. Currently we have limited capital which is insufficient to pursue our plans for development and growth. Our ability to implement our growth plans will depend primarily on our ability to obtain additional private or public equity or debt financing. We are currently seeking additional capital. Such financing may not be available at all, or we may be unable to locate and secure additional capital on terms and conditions that are acceptable to us. Our failure to obtain additional capital will have a material adverse effect on our business.

Our Lack of Diversification In Our Business Subjects Investors to a Greater Risk of Losses:

All of our efforts are focused on the development and growth of that business and its technology in an unproven area. Although the medical billing is substantial, we can make no assurances that the marketplace will accept our products.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES

There were no changes in securities and small business issuer purchase of equity securities during the period ended March 31, 2002, except as described below.

We issued 647,000 shares of common stock for services valued at $154,200. We have sold or issued the following securities not registered under the Securities Act by reason of the exemption afforded under Section 4(2) of the Securities Act of 1933, within the last quarter. Except as stated below, no underwriting discounts or commissions were paid with respect to any of the following transactions. The offer and sale of the following securities was exempt from the registration requirements of the Securities Act under Rule 506 insofar as (1) except as stated below, each of the investors was accredited within the meaning of Rule 501(a); (2) the transfer of the securities were restricted by the company in accordance with Rule 502(d); (3) there were no more than 35 non-accredited investors in any transaction within the meaning of Rule 506(b), after taking into consideration all prior investors under Section 4(2) of the Securities Act within the twelve months preceding the transaction; and (4) none of the offers and sales were effected through any general solicitation or general advertising within the meaning of Rule 502(c). Also, was a Form D filed and blue sky filings made (if a private placement)

We issued 4,340,132 shares of common stock on November 17, 2005 for a repayment of debt to the Company president valued at $1,692,651. We have sold or issued the following securities not registered under the Securities Act by reason of the exemption afforded under Section 4(2) of the Securities Act of 1933, within the last quarter. Except as stated below, no underwriting discounts or commissions were paid with respect to any of the following transactions. The offer and sale of the following securities was exempt from the registration requirements of the Securities Act under Rule 506 insofar as (1) except as stated below, each of the investors was accredited within the meaning of Rule 501(a); (2) the transfer of the securities were restricted by the company in accordance with Rule 502(d); (3) there were no more than 35 non-accredited investors in any transaction within the meaning of Rule 506(b), after taking into consideration all prior investors under Section 4(2) of the Securities Act within the twelve months preceding the transaction; and (4) none of the offers and sales were effected through any general solicitation or general advertising within the meaning of Rule 502(c). Also, was a Form D filed and blue sky filings made (if a private placement)

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We issued 4,856,648 shares of common stock on August 24, 2007 for payment of compensation package previously authorized by the Board of Director which was valued at $1,942,659. We have sold or issued the following securities not registered under the Securities Act by reason of the exemption afforded under Section 4(2) of the Securities Act of 1933, within the last quarter. Except as stated below, no underwriting discounts or commissions were paid with respect to any of the following transactions. The offer and sale of the following securities was exempt from the registration requirements of the Securities Act under Rule 506 insofar as (1) except as stated below, each of the investors was accredited within the meaning of Rule 501(a); (2) the transfer of the securities were restricted by the company in accordance with Rule 502(d); (3) there were no more than 35 non-accredited investors in any transaction within the meaning of Rule 506(b), after taking into consideration all prior investors under Section 4(2) of the Securities Act within the twelve months preceding the transaction; and (4) none of the offers and sales were effected through any general solicitation or general advertising within the meaning of Rule 502(c). Also, was a Form D filed and blue sky filings made (if a private placement)

ITE M 3. DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities during the period ended March 31, 2002.

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

There were no matters submitted to the vote of securities holders during the period ended March 31, 2002.

ITE M 5. OTHER INFORMATION

On May 26, 2000, we dismissed its principal certified public accountant for the past 3 years, LaVoie, Charvoz & May, and P.C. and retained King, Weber & Associates, P.C.

King Weber & Associates PC was acquired by Epstein Weber & Conover PLP. Epstein Weber & Conover PLP was acquired by Moss Adams LLP. Moss Adams contacted the SEC and informed the SEC that they were resigning from many auditing engagements including American Nortel Communications, Inc.

In March, 2008 we engaged Jewett, Schwartz, Wolfe and Associates as our auditors.

EXHI BITS

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.

32.1	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.

32.2	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.

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SIGNATURES

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

Registrant	American Nortel Communications, Inc.
Date: July 14, 2008	By: /s/ William P-. Williams

	William P. Williams
	Chairman, President Chief Executive Officer (Principle Executive Officer, Principle Financial Officer)