TELECOM COMMUNICATIONS (TCOM)

[nlightn]

Telecom Communications, Inc. Releases Letter to Shareholders on Market Cap Growth in 2005 with an Updated Revenue Forecast
Tuesday January 11, 2:48 am ET
CEO Discusses an Annual Meeting of Shareholders and Regulation SHO

HONG KONG, Jan. 11 /Xinhua-PRNewswire/ -- Telecom Communications, Inc. (OTC Bulletin Board: TCOM) today released a Letter to Shareholders from Mr. Shanhe Yang, CEO of Telecom Communications.

Dear Shareholders,

The Company has just experienced the first quarter of a new fiscal year with three-months of over 200% revenue growth. Reported revenue in 4th quarter of 2004 was $0.575 million and the Company expects to report $1.8 million revenue with a 40% profit ratio in the first quarter of 2005 against annual total revenue of $1.43 million reported the fiscal year end on September 30, 2004. At the same time the Company built a balance sheet with over $4 million in shareholder equity that has consistently included over $0.5 million in cash. While investing aggressively in growth, the Company still expects to break even for the year with the possibility of booking some modest net income.

During 2004, the price per share experienced notable fluctuations. The first three quarters saw significant price decreases. The fourth quarter, which saw significant price increases, has essentially re-established the market capitalization value to the $40 million dollar mark previously established in the first quarter of 2004.

The publicly listed market experiences various dynamics that can impact a company's price per share and overall market capitalization independent of that company's performance. However, at over 200% revenue quarterly growth and a ten-fold increase in shareholder equity, a negligible impact in market capitalization is difficult to accept as a result of independent market dynamics. With a profitable $15 million revenue and 40% profit ratio forecast in 2005, management plans to take measures aimed at mitigating or eliminating the independent market dynamics constraining the Company's market capitalization growth.

Annual Meeting of the shareholders

You are cordially invited to attend an Annual Meeting of the shareholders of Telecom Communications, Inc. (the "Company") to be held before the end of March. At the Annual Meeting, you will be asked to consider and vote upon the following proposals: such as to reincorporate the Company in the State of Delaware; and other relating business.

In connecting with detail information for the Annual Meeting of the shareholders, Telecom managements will file with the SEC a "SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14 (A) OF THE SECURITIES EXCHANGE ACT OF 1934," as soon as possible. Any inquiries, please contact the Company for details at [e-mail] or call (852) 2782 0983.

SEC Regulation SHO

On last Monday, a new Securities and Exchange Commission regulation governing short selling, known as Regulation SHO, will take effect. The regulation aims at modernizing rules on short selling and addresses failures to deliver stock on settlement date. Under Regulation SHO, exchanges are required to provide daily lists of securities that have large amounts that had a failure to deliver.

This required list is referred to as the threshold securities list. Under Regulation SHO, threshold securities are defined by two criteria: 1) there are at least 10,000 shares in aggregate failed deliveries for the security for five consecutive settlement days and, 2) these fails constitute 0.5% or more of outstanding shares. Exchanges will begin publishing daily threshold lists starting January 10th.

Telecom management is optimistic Regulation SHO will have a positive impact on mitigating one independent market dynamic that can constrain the Company's market capitalization growth in spite of significant revenue and shareholder equity growth. Previously, short position data has been difficult if not impossible to obtain. Now such information should be a matter of public record.

In practice, brokerage firms generally have to locate securities before accepting a short sale, a process known as affirmative determination. Brokerage firms also have to borrow a security or be able to provide it for delivery on demand on settlement date, three days after the transaction. If a firm cannot deliver the securities by settlement, the trade is considered failed. Such failed trades are supposed to be rectified promptly, but the industry has not been diligent in rectifying these failed trades or open short positions. Regulation SHO is intended to enforce the settlement of failed trades by providing rules, guidelines and potential trading penalties.

Mary Ann Bartels, global equity trading strategist at Merrill Lynch reports that Regulation SHO could result in higher borrowing costs and put upward pressure on threshold stocks. "Short interest as a percentage of float should become the more important ratio measure to determining stock potentially at risk of moving on to the threshold list," writes Bartels in her report published on Dec. 21, 2004. "A market impact could happen earlier than expected as potential threshold securities stocks could become more attractively traded in the beginning of the year as the market begins to anticipate future movements in these stocks."

Telecom management intends to monitor the implementation of Regulation SHO and consolidate all related information as it pertains to Telecom shareholders. Management supports the new SEC regulation and is optimistic the Regulation will help alleviate one dynamic that currently impairs trading in Telecom's equity and delays the recognition by the markets of our revenue and shareholder equity growth.

Telecom anticipates tremendous year in 2005 of revenue and shareholder equity growth. In tandem with our efforts to minimize the independent market dynamics that pressured the growth in our market capitalization, we believe 2005 will be an exciting year for all shareholders. As always, thank you for your ongoing support.

Best Regards,
Shanhe Yang
CEO and President
Telecom Communications, Inc.


About Telecom Communications, Inc.

Telecom Communications, Inc. is a Total Solutions Provider that offers Integrated Communications Network Solutions and Internet Content Service in universal voice, video, data web and mobile communications for interactive media applications, technology and content leaders in interactive multimedia communications. It develops, markets and sells a universal media software solution for enterprise-wide deployment of integrated voice, video, data web and mobile communications and media applications.

Telecom Communications, Inc. does business in Asia via its wholly owned subsidiaries, Alpha Century Holdings Limited, Huiri Electric (PY) Limited, Arran Services Limited and IC Star MMS, Limited ( http://www.ICStarMMS.com ). This announcement contains forward-looking statements that involve risks and uncertainties, including those relating to the Company's ability to grow its business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the company's limited operating history, the limited financial resources, domestic limited management infrastructure or global economic conditions -- especially those relating to China, activities of competitors and the presence of new or additional competition, and changes in Federal or State laws, restrictions and regulations on doing business in a foreign country, in particular China, uncertainty that this or any other acquisition can be completed and conditions of equity markets. More information about the potential factors that could affect the company's business and financial results are included in the Company's filings, available via the United States Securities & Exchange Commission.

For more information, please contact:

Mr. Benny Huang
Telecom Communications, Inc.
Tel: [phone]
Email: [e-mail]